Most innovations fail because they don’t solve a clients issue or because that issue is not important enough for a client to spend money on. Once the innovation-team has overcome this obstacle it needs metrics to measure the progress.
Many teams decide to use metrics such as «page visits» or «subscriptions» for an online service. But those easily accessible metrics don’t hold up.
We recommend the use of so called pirate metrics (AARRR). With this we can measure the progress in customer acquisition throughout the whole conversion funnel:
Acquisition: How many visitors are we getting to the landing page (and at what cost)?
Activation: How many of them register and become users?
Retention: How many users are for example downloading an App? How many of them actually use the App?
Referral: How many users recommend the service to how many friends?
Revenue: How many users purchase the service like a concert ticket (9%)?
The teams decide which improvements to tackle first based on the results of the pirate-metrics. They can quickly try out different variants with so called A/B- or Split-Tests and measure for instance which variant generates more downloads to seal the funnel. As soon as the funnel stops leaking at the Activation and Retention stage it makes sense to for example lead more visitors to the landing page with Google Ads!
How exactly you can use metrics and which sample metrics are interesting for your innovation can be seen in our Lean Innovation Training.
