You probably know this statistic: roughly 90% of startups fail. 🥵 And you’re probably aware that 2023 was a year of record-lows in venture capital investments. With stats like those, the pressure is high for Minimum Viable Products (MVPs) to prove their promise. Key Performance Indicators (KPIs) and metrics play a crucial role in assessing the viability of not just your custom solution, but your business. But which metrics matter? It depends on the type of business and the goals you established in the early stages of your product ideation, but if you stay focused on your MVP’s objectives and take a pragmatic approach to revenue, the metrics will be fairly straightforward.
Stay Focused on the MVP’s Objectives
Remember that the primary objectives of building a Minimum Viable Product are concept validation and product-market fit testing. The most important metrics in the early days of your MVP will be anything related to user acquisition and retention:
Do users want your product? You can find out by looking at acquisition metrics:
Signups
Downloads
Visits
Bounce rates
Once they’re on your platform, do they want to stick around? Are they finding what they’re looking for? Take a look at the engagement metrics:
Active users
Session durations
Feature adoption
Click-through rates
Churn or retention rates
User feedback is crucial in the earliest stages of the MVP game – you need both quantitative feedback based on your platform analytics (outlined above), as well as qualitative feedback, or the why behind those behaviors. Integrations like automated feedback popups can help facilitate qualitative feedback, but the questions should be as streamlined as possible to avoid annoying the user. We strongly recommend that you build direct relationships with your initial user base and have regular real-time conversations with them to learn about their needs.
Platform performance metrics such as page load time, uptime, and error rate are all helpful metrics and they’re pretty easy to integrate into your platform’s analytics, but they’re secondary to user engagement.
Business First, Product Second: Revenue Matters
Ultimately, the most important metrics to measure the success of your MVP come down to revenue:
Cost Per Acquisition - How much does it cost to acquire a single user?
Conversion Rate to Paid - Percentage of users who upgrade to a paid plan or make in-app purchases.
Average Revenue Per User - Average revenue generated per user.
Customer Lifetime Value - The predicted revenue a customer will generate during their entire relationship with the MVP.
These are the crucial metrics in determining the viability of your product and its true value to your company. The MVP that gets built ultimately has to serve the greater well-being of the business, otherwise it isn’t serving its intended purpose. A “business first, product second” mindset will help your team stay focused and agile through the MVP development process. It can take a lot of time and iteration to reach revenue KPIs, but data points along the way will help guide the dev team toward true viability, and ideally, give your investors the reassurance they need to support you on the journey.
Why Build Metrics Into An Early-Stage MVP if Results Are Statistically Insignificant?
In the earliest iterations of your platform, you may have only a handful of users, especially if you’re a B2B platform. If you’re a science-related platform, your team of PhDs may be skeptical of our advice and say, “But the earliest metrics won’t be statistically significant because we only have a few users!” We get that mindset. However, statistical significance is not the only reason that metrics matter. When you’re pitching your platform to investors, they’re looking for signs that your team is building with growth in mind. So while the actual number of Cost Per Acquisition or Average Revenue Per User may be statistically insignificant or even economically unbalanced at the beginning, it’s still important to demonstrate to investors that you’ve taken the time to put the systems in place to measure those metrics as your platform grows. It shows a level of sophistication and forethought that is unfortunately rare in the startup world.
The Risk of Partnering with an Order-Taker
We’ve seen this a lot: a startup or SMB partners with a dev shop that is an order-taker: they do as they’re asked and build a project to scope, but they don’t provide insight or strategy in the development process, or they skip a crucial component, like integrating analytics into the earliest iterations of the product.😱 For clients that don’t have domain expertise in software development, this is a costly mismatch in skillsets and goals. Inevitably, there will come a point when there aren’t enough meaningful metrics and strategies for iteration to guide the client towards a viable product that grows their business.
At Mile Marker, we don’t just take orders. Our “business first, product second” mindset means that we’re invested in your long term success. We don’t think of metrics as a secondary set of features or “nice to haves,” we see them as key drivers behind building a successful MVP. Our goal is to give you the best possible guidance to make decisions and achieve a truly viable product that adds value to your business and to the market.
Curious to learn more about our process? Let’s talk.
About Mile Marker
Mile Marker is your strategic partner for agile software development. Created for founders, by founders, we offer strategic software at startup speed. We specialize in aligning your technical work with your business goals through collaborative planning, offering a multidisciplinary development team, and ensuring ongoing support for your software. If you’re searching for a software development company or need a technical partner, start the conversation with an introductory call.