What Does It Mean To Be “Metric Driven” For A Startup?

What Does It Mean To Be Metric Driven For A Startup

As an entrepreneur, you’ll surely agree with me that starting a new business from scratch and running it smoothly requires many things. For instance, it’s essential to keep track of your business performance using the right metrics dashboard. If you don’t know, business performance metrics are crucial for startups – they help keep every member of your company, including the teams, executives, investors, and even customers informed about how the business is performing.

A startup is “metric-driven” when it relies only on specific metrics to make critical decisions regarding the business. One way to be metric-driven is by developing a set of KPIs on how to measure the performance of your business. Apart from KPIs, other good metrics for startups are Pirate metrics, IPA, and TIE. 

What exactly does it mean to be metric-driven for a startup? Why does your company need to be metric-driven? What is the best way to choose the right metrics for your startup business? These and more are the questions that you’ll find answers to as you read through the rest of this article.

What Does It Mean To Be Metric Driven For A Startup?

The primary goal of every startup business is to grow and become successful. No doubt, all entrepreneurs have visions for success. However, setting up a business and achieving success doesn’t always come easy.

For startup businesses to attain success, they need to take proactive approaches, and one way to do that is by using metrics. Furthermore, you need to understand that “metrics-driven” is one of the many philosophies entrepreneurs can use to drive their startups forward.

A startup is metric-driven when it uses the right metrics dashboard, such as the key performance indicators (KPIs), to keep track and understand its business performance in real-time. A startup metric is more of a quantifiable measure that businesses employ to keep track and assess the success or failure of each of their business processes.

With good metrics, you can always determine how operational inputs are influencing your business progress. It’ll allow you to make the right decisions regarding how to run your business and keep it growing. That’s not all; metrics will also keep your employees, including the shareholders and customers, informed about how the company is moving.

Imagine checking your startup performance only to find out that things aren’t going as expected. The best thing to do is employ other approaches to keep the business running properly. Here’s exactly why using good metrics is vital for your business.

Opting for a business metric will allow you to improve the overall performance of your startup. That’s not all; it’ll also enable you to align your employees and processes with your company’s objectives.

So, the bottom line is that “metric-driven” for startups means the companies are paying attention to specific performance targets. Rather than being driven organically, “metrics-driven” means that particular processes are driven towards a deadline and objective pre-set.

Why Does Your Startup Company Need To Be Metric Driven?

Here’s a frequently asked question; why is it essential for you to start focusing on measuring your startup’s key metrics and performance?

There are several reasons why your startup company needs to be metric-driven. Although I won’t be mentioning all of them in this post, let’s take a quick look at some of them below:

  1. Metrics drive operating model

By opting for a “metrics-driven” philosophy for your startup, one of the things you’ll get is the ability to drive your operating model. Every startup has functional areas, and these key areas are your company’s marketing department, sales department, operations department, product development department, finance department, and many more.

So, here’s a quick question, how do you determine the performances of each of these areas? Well, one of the best ways to do that is by identifying at least some of the metrics that drive the outcomes you so desire for your business.

By opting for a metric-driven approach for your startup, you’ll be able to get clear on the outcome of each of the functional areas of your company. The benefit of that is that it’ll allow you to make the best decision to improve and get better results.

  1. Keep your team motivated

According to Bill Gross, having a solid team is one of the few factors that could influence the success of every startup. As a founder, one of your roles is to ensure that your employees are engaged and motivated at all times. Doing that will not only make them happy, it’ll also help them to outperform their competition, according to a study by Gallup.

Furthermore, there are several different ways to keep your team motivated. One of them is by using the metric-driven philosophy. When you have the right metrics dashboard, you can always track your employees’ performance.

By understanding the individual performance of your team members, you’ll be able to motivate them, keep them aware of where they are lacking, and help them get better. In addition to that, an excellent metric-driven approach will allow your company to identify the best players on your team, doing everything (such as rewarding them) to keep them in your organization.

  1. Managing your company more objectively

Another reason why it’s essential to opt for the metric-driven approach for your startup company is that it’ll allow you to manage your company more objectively. What does that mean?

Management by objectives is a strategic management model that focuses mainly on improving the performance of your startup company. By using an effect metric dashboard, you can always determine the performance of your business and see whether it’s in line with your set objectives. So, by understanding the performance of each of your functional areas, you’ll get a better idea of what to tell each team leader.

What Is The Best Way To Choose The Right Metrics For Your Business?

Have you ever asked yourself what having the right metric for your startup looks like? This is one of the frequently asked questions by young entrepreneurs – what exactly is a good metric?

To start with, there are several different metrics out there that you can choose for your business. Furthermore, it would help if you kept in mind that all these metrics have their strengths and weaknesses, and they aren’t created the same way, as each of them has its specific functions.

Characteristics Of A Good Metric

Generally, a good metric is anyone that lets you know that your business is performing as expected. That said, you can check below to see some of the features of a “good metric.”

  • First, choosing the right metric means it has to be closely linked to your business goals and objectives. So, when you have a good metric, what that means is that your startup business is performing well when you check it with your set objectives.
  • Another feature of a good metric for startups is that it needs to have more room for improvement. Here’s the thing; metrics help to measure the progress of your business. That said, any metrics you get is good when it shows progress and is improbable, providing your company with a room for more improvements.
  • That’s not all; a good metric is also one that helps to inspire action. Yes, it should get your employees to work and make them believe they can do better than the current result.

What Are The Different Types Of Metrics?

As earlier mentioned, there are several different types of metrics out there. However, they are grouped into two categories; “leading indicators” and “lagging indicators.”

Speaking of the leading indicators, they are a metric that measures the critical processes needed for your startup to achieve the set goals. They only provide an early indication of your company’s performance and nothing more.

Furthermore, leading indicators offer startups tons of benefits. One of them is that it’ll provide you with faster feedback on your team’s efforts. Apart from that, it also allows your team to get involved in the tracking process.

As for the lagging indicators, they help you measure the exact outcome of business activities. With this type of metric, you’ll understand whether or not your startup meets the set objectives. However, lagging indicators often take a more extended period to track performance.

Furthermore, with a lagging indicator, you’ll certainly get a clear, better result of your efforts’ impact. No doubt, it takes time to deliver, but you’ll get a better outcome of your performance when it does.

Choosing The Right Metrics For Your Startup Business

When it comes to choosing the right metric, one thing is sure, and that’s – you might not get it right the first time. That said, choosing the right metric is more of an iterative process, and it requires you to pick the one you think is best for you. And when it is not working, you can always opt for another one.

So, what is the right metric for your startup?

  • Is it pirate metrics?

Pirate metrics represent a better way of bringing together metrics, depending on the area of the startup business you’re looking to measure. For this framework, six different metrics come together. These are Awareness, Acquisition, Activation, Retention, Referral, and Revenue, or “AARRR,” like a pirate would call them. These six metrics represent the different stages of your customers’ behavior. 

Opting for the pirate metrics will help you gain better insight into your startup business’s exact areas that need your attention. So, this type of metric is good for you if you’re looking for a framework to structure your key metrics.

  • What about IPA?

IPA is another effective metric that you can use for your startup. It means “Important,” “Potential Improvement,” and “Authority.”

“Important” means asking yourself whether the metric is necessary and whether or not it matters for your business. As for “potential improvement,” it means you need to check whether the metric has any potential for improvement, and if the answer is no, all you need to do is avoid using it. “Authority” means understanding whether or not you have all it takes to improve the metric. If it’s something you don’t have authority on, avoid tracking it on the dashboard.

The bottom line is that for you to choose the IPA rule, it means you’ll only be focusing on having the most critical metrics displayed on your dashboard.

  • Is it TIE?

TIE means “trackable,” “important,” and “explainable.” First, is the metric trackable, critical, and expandable if there’s a need for that? All these factors are characteristics of a good metric.

If you’re looking to choose the right metric, using the TIE rule is one of the best approaches you can think of. It’s suitable for validating and revising your existing metrics.

  • Key performance indicators (KPIs)

We often use the words “KPI” and “metrics” interchangeably. But you need to understand that there is a slight difference between the two terms. The “key” in KPIs is what makes the difference – it means that KPIs are the metrics that matter for your business.

That said, the key performance indicators (KPIs) are an option that allows you to choose only the essential metrics for your business. These metrics should enable you to understand clearly how your startup business is performing against your set goals and objectives.

Furthermore, to use key performance indicators for your startup business, you’ll have to tie the metrics to your set objectives. According to Geckoboard, choosing KPIs will ensure that your business objectives don’t end up getting stuck as just abstract ideas.


What does it mean to be “metric-driven” for a startup? One of the keys is identifying your key metric, and this should help you determine how well you are doing or what needs improvement and where to focus time, money, and resources on to grow your company. 

The value of being metric-driven can’t be overstated – even if that means sacrificing some other aspect of business operations like customer service at times. 

Suppose you’re not using metrics as one part of your decision-making process. In that case, you may have missed out on important information about what’s working (or failing) about marketing strategies or product offerings. 

A metrics-driven approach will help keep you accountable for everything that’s happening with your business so that it stays on track and achieves its potential more quickly. 

You should always have at least one key metric in mind when setting up any new action plan – this way, you’ll know if you’ve been successful or not after taking the necessary steps.


A vanity metric is an arbitrary company-specific metric that doesn’t say anything but makes the company look good. For example, telling a company has increased its number of Facebook likes by 20% in the last year is meaningless until you add context: ‘Facebook likes’ are vanity metrics.

An actionable metric is something that you can take a specific action on. For example, suppose we measure marketing effectiveness by the number of new users and don’t include what happens between signup and using the product. In that case, that’s not an actionable metric. But if we measure it by, for instance, conversions from registration to purchase or engagement over time with the product – that would be an actionable metric.

Recurring revenue is a stream of future earnings that an individual or company can anticipate earning in the future. These revenues are often from existing customers who regularly recur for service, product, or payment with no end in sight.

SaaS Metrics are a measurement for use with SaaS company providers. They’re metrics that measure progress towards key business goals and quantitative measures of how well the service is performing.

Sales metrics refer to the series of numbers used as a benchmark or standard for comparing an ongoing business’s ability to generate revenue. Metrics are often vital to determining whether or not a company is meeting its goals.

Startup metrics are a way of tracking and monitoring the performance of startups. This can include what most users are viewing, time spent on the site, pages per visit, visits per user, bounce rate, page views per user, and more.

Churn rate is the percentage of customers who discontinue service in any given year. It’s a valuable metric for customer retention, especially when acquiring new customers and preventing the closures of brick-and-mortar shops.

Gross margin is the difference between cost and net sales, which are found in a company’s income statement.

Conversion rate is the percentage of visitors to a website who purchase or complete another type of interaction.

A revenue churn is when a customer changes vendors before their subscription to service runs out and becomes inactive. The more often your customers cancel, the faster you’re losing money. This is known as “churn.” It can be calculated by taking the total monthly sales of cancellations over the total monthly sales from new sign-ups.

A customer churn is a measure of the number of customers abandoning your business during a given period. Calculating and factoring in customer churn rate is an essential but often overlooked metric determining how well your company does.

Customer lifetime value is the expected future revenue that a customer will generate from retail purchases. It is often abbreviated as LTV.

Monthly Recurring Revenue (MRR) is software or service billing that customers automatically pay for every month. Usually, this happens with predetermined intervals, such as every month, every quarter, etc.

Financial metric is what investors and traders make use of when predicting stock market behavior. Financial metrics define different asset classes, such as real estate, bonds, or stocks. These metrics often include investor sentiment and behavioral patterns toward a particular group of shares or bonds, changes in volatility indicators, etc.

Market Metric is the metrics generated in a marketing campaign that allows tracking the response to and effectiveness of marketing campaigns.

Average revenue is the most common way of measuring a company’s profitability. It is calculated by taking the total revenue and dividing it by the number of shares outstanding. Average Revenue is an indicator of how much each shareholder gains in profit as a fraction of the company’s total profit.

Venture-backed startup average deal size in the United States is $5 million. Globally, one could chalk that up to an even higher estimate of $8 million on average. These numbers are skewed mainly by larger VC firms who invest massive sums of cash in one company at a time.

The Marketing KPI (Key Performance Indicator) indicates how marketing investments are performing relative to their targeted outcome.

Operational KPI is metrics or measurements that a company uses to understand its work and how well it is achieving its goals.

The startup KPI would be any measurable and trackable parameter of a company that will provide information on whether or not it is meeting its objectives.

The important metric in business is measurements of revenue, expenses, profits, and assets. Key performance indicators (KPIs) are financial assessments that measure the financial standing of a company.

The customer acquisition cost is the ratio of marketing and sales expenses per new customer achieved, and it’s usually expressed as a percentage or dollar amount.

Product market fit is when the product offering is solving a pain point for a specific customer base, and no changes are to be made to the company’s approach.

Customer retention is the act of keeping your customers happy and coming back to you, rather than looking elsewhere or going away ultimately.

Was this article helpful?

Wasim Jabbar

Hi, I'm Wasim - a startup founder and proud dad of two sons. With 15 years of experience building startups, I'd like to share my secret to achieving business success - quality marketing leads. Signup today to gain access to over 52 million leads worldwide.

Recent Posts