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Growth Hacking Metrics

Startup Metrics for Pirates​

A.A.R.R.R. which stood for Acquisition, Activation, Retention, Referral, and Revenue.

Key Performance Indicator (KPI)​

A KPI is a number that helps you get a quick grasp of how things are going within your company. If you are selling software subscriptions then a KPI would be how many new subscriptions you have sold today. Another KPI would be how many people canceled their subscription today.

  • Have an automated email send out KPI data every day, week, and month.
  • Have a dashboard that has KPI data displayed in such a way that you can see trends based on past performance. It's helpful to see if a KPI is going up or down in general.
  • Allow everyone in your company to access KPI data. This will inform people about which metrics matter to the company, thereby influencing their decisions.

Viral Coefficient (K)​

The viral coefficient is a number that tells you how many new people are brought into your product because of your existing users. If every 50 visitors to your product bring in 100 new visitors to your product then your viral coefficient would be 2. Anything above 1 means that you are growing virally. Here some things to know about virallity:

  • Going viral is based on an equation. It's not just a phrase thrown around to describe something that is seemingly everywhere online.
  • A viral coefficient over 1 is a great thing, but even if you are below 1 it's still a benefit to the company. Virallity isn't always the goal(or even possible). Anything above 0 means that you are amplifying your product distribution to some degree.
  • Virality is probably focused on too much. Growth hacking is a large set of skills, and it's possible to grow a product substantially, and profitably, without worrying about virality.

Cohorts​

A cohort is a portion of your users based on when they signed up for your product. Everyone that signed up in January is in the January cohort. Everyone that signed up in February is in the February cohort. It's important that you use cohorts because otherwise your data won't be as clear as it could be. If every month your KPIs are improving for new cohorts month over month then things are going in the right direction. If you just look at a single metric, and average it across all users since the beginning of your product, then your data is being skewed by the good and bad of past cohorts, and you are not seeing how things are currently going with your product as clearly as you should.

How to Improve Cohort Retention | Startup School - YouTube

Segments​

Segments are like cohorts, but instead of basing the group on signup date, you base the group on other segmenting factors. You might categorize your users into male and female groups, in order to see how they behave differently. You could even break cohorts into segments if this gives you relevant data for your product.

Customer Acquisition Cost (CAC)​

Customer acquisition cost is the amount of money it takes to get a new customer. If you spend $500 on Google Ads and this gives you 2 new customers then your customer acquisition cost for this channel is $250. It's important that you know the CAC for each channel because it can very greatly. Also, once you know the CAC per channel then you know how much you can spend on that channel, or if you should spend anything on that channel.

Lifetime Value of Customer (LTV)​

The lifetime value of the customer is the expected amount of money you'll make on someone throughout their entire lifecycle on your product. If people pay you $300 a month for your product, and stay customers for an average of 2 years, then your LTV is $300 x 24(months)= $7,200.

Segments come in handy when calculating LTV because you might discover that certain segments of your users have a much higher LTV than other users. This will also affect the CAC that you are willing to pay for those specific segments.

If you don't have a strong grasp of your CAC and LTV then it is very difficult to use any push tactics for getting traffic. It is also hard to forecast your financials, which can have an impact on hiring and other initiatives not related to growth hacking.