I’m a huge fan of measuring businesses from the beginning and setting key metrics to keep you on track. One model by Dave McClure of 500 Startups fame is called Pirate Metrics. This is a no frills metrics system designed for SaaS companies to ignore vanity metrics like total visitors, and focus only on the main stages of converting a visitor to a recurring revenue source.
The main metrics are:
- Acquisition – These are visitors that don’t bounce and see interested in your site
- Activation – These are “users” who signup for something or interact with a key part of your offering
- Retention – These are repeat users including people who read your newsletter every month
- Referral – Who’s talking about you and your product to others?
- Revenue – Who’s converted to paying?
http://500hats.typepad.com/500blogs/2007/09/startup-metrics.html
The awesome guys over at Expected Behavior have even turned this system into an app . You can connect it to your website to easily keep track. If you are a SaaS company you should definitely check it out:
If you’d like to discuss pirate metrics or metrics for other business types, contact me.
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