The one metric that matters

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Today’s startups are more data-driven than ever. We can measure and optimize so many aspects of our businesses. That’s a good thing. But, sometimes, we can get lost in all that data. And if you’re lost as a founder or exec team member, imagine how lost the rest of the team must be!

If you’re an individual contributor at a growing company capturing lots of data, how do you know what metrics matter? And how do you know whether the results you have for those metrics are good or bad?

Some companies bubble up a dashboard of key metrics that then get shared with the company. Some go even further, focusing their entire company on one metric. This is a tremendous focusing exercise. One that I recommend you consider.

One of my companies made a decision very early on to focus on week over week revenue growth as the one metric that mattered. There are hundreds of decisions and tactics that can influence revenue growth. But rather than having some parts of the company focusing on generating new leads, other parts focusing on conversion, etc, etc, everyone was tasked with making decisions that contributed in immediately measurable ways to revenue growth. Today that company is very large and growing 100% per year.

Another possible metric to focus on is Lifetime Value (LTV) added during a given period such as a month. As with revenue growth, this is kind of a meta-metric. It encapsulates aspect of retention, churn and other measures into one overall metric. The great thing about tracking LTV added is it gives you lots of visibility into future revenues. If you’re hitting revenue targets this year, but are behind on LTV added, you can expect to have a much harder time hitting next year’s revenue targets.

If you think that focusing your company on one metric could work for you, bear one thing in mind: The metric you pick today may not be the right metric in the future. And that’s perfectly OK. In the early stages you may be super focused on driving user growth. From there, you might focus on engagement. Eventually you may focus on revenue.

Whatever metric you choose, focusing your entire company on it will have powerful effects!