By having these diagrams you know what business you are in, and what stage you are at.

Based on that you can focus on the ONE METRIC for that specific model & stage.

In a Startup - Focus is really hard to achieve, its your biggest problem.

http://bit.ly/BigLeanTable - PDF with explanation

Must have metrics

If you are not growing your customer or your revenue by 5% a week you should not be a startup!

In the early stages of growth, if you cant find 5-7% of growth a week - you need to have a long hard conversation with your founders.

Knowing the normal is important, your 3% doesn't mean anything.

Baseline:

30% users/month use web or mobile app
10% visitor engagement/day
1% will be on the site concurrently.

2-5% churn is pretty good ( the best SaaS companies get 1.5 - 3% a month)
You get to this before you move to your 'scaling' stage. 
eg: Facebook crying pic (reduces abandonment by 7% - EMOTIONAL appeal works well here)

Calculating Customer Life Time

If you know 25% of your customers leave every month, then average Lifetime of a customer is four months.

25% churn = 100/25 = 4 months
5% churn = 100/5 = 20 months
2% churn = 100/2 = 50 months

Figuring out what the acquisition cost should be?

Rule of thumb - Don't spend more than 1/3 of your customer LV on your customer acquisition cost.

Eg:
5% churn = Lifetime of 20 months
Paying $30/mo = $600 LV
1/3 spend = $200 
Now you are still lending $200/-
At this stage you segment and find out who sticks around longer - eg - twitter user are longer term users, moms etc.

 

 

5 / 6

Model + Stage = One Metric That Matters

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