We’ve all heard the phrase, “You can’t manage what you don’t measure.” But after reviewing several dozen startup updates and seeing blogpost after blogpost with lists of metrics, it feels like a founder could spend a significant amount of time just compiling and tracking metrics. Every investor has their favorite metric. So, many startups end up monitoring nearly everything. Or, the opposite – monitoring nothing.
The key is to find the happy medium – monitor the metrics you can take action on. More specifically, track the metrics related to the actions you are taking. Sure, over time you will want to know your CAC (customer acquisition cost), your CLV (customer lifetime value), and ARPU (average revenue per user). These metrics take time and experience to both measure and improve. But to start, just track the metrics on the marketing investments you are making. See an example from our Kickstarter campaign analysis here. The early part of the journey is about experimentation and figuring out what works/doesn’t work. So, you have to look at the data so you can figure out what needs to be fixed. If you are running ads on Facebook, look for your Facebook engagement to improve. If you’ve got inbound marketing programs, then website visitors should be increasing.
A second challenge to metrics is recognizing that companies tend to be successful on the metrics that reflect the goals they set up. So set your goals to reflect the metrics that are important to your progress. If your goal is to increase awareness, you will design programs that improve awareness. But if your goal is to increase sales, then you need to be focused on how to increase sales. And let’s be honest, most startups want their marketing efforts to increase sales. Let me share two examples from healthcare insurance.
Kaiser Permanente, a leading HMO headquartered in California, wanted to reduce consumer resistance to their brand. In 2003, 75% of non-members would not consider Kaiser as a healthcare provider. This was even more ironic since it had the highest customer satisfaction among insurers in California. So it changed its positioning to focus on total health with the campaign slogan of “Kaiser Permanente empowers me to maximize my well-being and live a happier, healthier life. In other words, to thrive.” They spent $410 million over 9 years (BTW – wouldn’t it be amazing for a startup to have a $410 million ad budget?). As the graph below details, they did increase awareness and knowledge, but not interest. Moreover, over that time period, they had net fewer members. The goal was to increase awareness and knowledge. And that’s where the campaign was successful. But sales did not necessarily follow.
On the other hand, Access Connecticut was a state-run insurance exchange created by the Affordable Care Act (ACA). Its goal was to sign people up for Connecticut’s ACA insurance once it was available in October 2013. At that time, there were approximately 345,000 uninsured. Access Connecticut’s goals were to reduce the % of Connecticut residents that were uninsured. It put comprehensive programs in place –secured offerings from the best insurers, created multiple ways to sign up (online, call centers, brokers and navigators), and produced a comprehensive advertising plan, including $7 million before enrollment and $9 million during the first 6 months of the enrollment period. The graph below shows that by focusing on sales, they not only reduced the percentage of uninsured by nearly 50%, but they also increased awareness by 42% points. To be fair, Access Connecticut had a much easier task than Kaiser. But, they were also focused more on the bottom-line of getting people to take action.
The takeaway is to align your goals and your metrics with what you really need to accomplish. Then, monitor the results to see what worked. Adjust and make more improvements as you progress. Focus on the short-term so you can be where you need be in the long-term.
Want to learn more about metrics for startups? Then purchase a copy of The Titanic Effect: Successfully Navigating the Uncertainties that Sink Most Startupsand check out chapters 6 and 7 about The Strategy Ocean. In the meantime, join us at the book launch on June 12 to celebrate its release! Register here.