Metrics that Matter, by Paul Silva

What are the Metrics That Matter for your venture? No… not the vanity metrics that so many of us were taught to pay attention to.  What are the metrics that actually show you if your venture is on the right track?

I watch my students struggle with this a great deal.  I’d like to offer some patterns that can serve as a starting point to anyone considering these questions.

1. Cost to acquire/get a customer helps you evaluate different channels for their relative value, shows you when your website is doing a terrible job of converting visitors into contacts, steers you towards labor-efficient/scalable techniques, etc.
   Somesubmetrics:
   1. Sales & marketing costs: out-of-pocket + labor (assume a market-rate labor cost so you do not underestimate labor-intensive marketing channels)
   2. # of hits to your website, # of cold calls
   3. % that convert to contact you, % that meet with you
   4. % that purchase
2. Cost to keep/retain a customer helps you spot when you are using unsustainable customer service / product delivery procedures.
   Somesubmetrics:
   1. Cost of customer service team, returns, refunds, etc.
   2. # of customers
3. Lifetime value of a customer helps you think about customer retention and how to grow revenue from existing customers by keeping them longer or by solving other problems for them via new products.
   1. % of customers who renew
   2. Revenue per customer

These three metrics, while not all-inclusive, are a fantastic starting point.

Show, Don't Tell

In creative writing it is well known to "show, don’t tell." In other words, don’t TELL us she is a brilliant scientist, SHOW her doing something brilliant.

The same holds true for startups and entrepreneurs. We all tend to TELL the potential investor or customer what we will do for them. Talk is cheap. Anyone can say anything. SHOW us what you have DONE and it will mean so much more. What is amazing is one entrepreneur can TELL me they will take over the world (let’s assume they do it with a wonderful slide deck, charisma, and are darn believable), but if another entrepreneur comes in and SHOWS me they have taken over Rhode Island… I know who I’ll be more excited about.

Life's a Pitch!

Dr. Jeff Cornwall has a great post about how to pitch, which matters not only to entrepreneurs trying to get funding, but to anyone who ever needs to persuade someone of something in a short time... in other words... all of us .  

Short Version:

1. Present a clear case of the problem and the solution. 
2. Present with passion.
3. Work on your delivery. 
4. Know the audience.
5. Practice, Practice, Practice.

I would add a #0: front-load credibility.  Make your second and third sentences be quick examples of ACTIONS/RESULTS you have taken to make the venture go from a concept towards success.

Read the whole thing here.