How do you handle proxy or vanity metrics for your startup?

1 Define your goals and hypotheses

Before you start tracking any metrics, you need to have a clear idea of what you want to achieve and how you plan to get there. What problem are you solving? Who are your target customers? What are your assumptions and hypotheses about your product-market fit, customer behavior, and revenue model? These questions will help you define your goals and hypotheses, which will guide your choice of metrics.

2 Choose actionable and relevant metrics

Once you have your goals and hypotheses, you need to select the metrics that will help you test them and make informed decisions. These are called actionable and relevant metrics, and they are the opposite of proxy or vanity metrics. Actionable and relevant metrics are directly linked to your value proposition, customer satisfaction, and revenue potential. They show you how well you are delivering value, solving problems, and generating income. Some examples of actionable and relevant metrics are customer retention, churn rate, lifetime value, conversion rate, and revenue per user.

3 Validate your metrics with qualitative feedback

Even if you choose actionable and relevant metrics, you still need to validate them with qualitative feedback from your customers. Metrics alone can't tell you the whole story. They can't explain why customers behave the way they do, what they like or dislike about your product, or what they need or expect from you. Qualitative feedback can help you understand the context, motivations, and emotions behind the numbers. You can collect qualitative feedback through surveys, interviews, reviews, or user testing.

4 Review and refine your metrics regularly

Finally, you need to review and refine your metrics regularly. Metrics are not static. They change as your product, market, and customers evolve. You need to keep track of your metrics over time, compare them with your goals and hypotheses, and analyze the trends and patterns. You also need to be ready to change your metrics if they become irrelevant, outdated, or misleading. You may need to add new metrics, remove old ones, or adjust your calculations or definitions.

By following these tips, you can handle proxy or vanity metrics for your startup and focus on the ones that matter. This will help you improve your product, grow your customer base, and increase your revenue.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?