Actionable metrics are the core set of metrics specific to growing your unique business, that when identified, tracked and strategically grown, significantly reduces data fatigue and greatly increases the chances of success for your company. They help to fully align your team around the metrics that matter most to grow your business.
Did you know:
A report by Forrester Research supports this by concluding that businesses with proper alignment see a 32% increase in revenue growth, while organizations with less alignment actually see a 7% decrease.
Only 8% of companies say their marketing and sales teams are aligned, according to Forrester Research.
Team alignment, in many ways, is the single most important aspect of a business's success from an operational perspective.
The opposite of actionable metrics are vanity metrics. Vanity metrics are metrics that are often used to perceive success but don't actually matter. They're easily changed or manipulated, and they don't bear a direct correlation with numbers that speak your business's success.
At Inturact we have helped grow and exit a number of SaaS companies. Throughout this experience we have learned what works and what doesn’t to grow any SaaS business. Of course, all businesses are different, but getting your actionable metrics right from the start holds true as one the most important areas for success.
With this knowledge, we have created a framework for defining a company’s Actionable Metrics, naturally called the Actionable Metrics Canvas.
The canvas is a framework for helping to define the metrics that matter most for growing your particular business. This is important because every business is different. If you are just tracking traditional KPIs or vanity metrics that are not related to the problem you are solving then it’s going to be difficult to understand how to grow.
At a high-level, the concept of these 5 pillars were originally derived from Steve McClure’s pirate metrics (AARRR). However, we have created significant changes to this concept and at this stage the only thing you would really recognize is that the names of the pillars are the same, but not even in the same order.
Before we dive into the canvas we should get on the same page with an overview of each of the growth pillars.
The canvas is meant to be an alignment tool and starting point for your team. However, each growth pillar represents many moving parts that need to be considered but are not necessarily defined within the canvas.
How do users find you?
The first step where visitors sign up on your website for your software to begin exploring.
When it comes to SaaS, all products have a customer acquisition strategy where a sign up usually starts with a free trial, free sign up or some type of demo that allows the customer to experience a full or limited version of what your business has to offer.
Here is a list of some of the Core Strategies, System Strategies and Tactics within Acquisition:
Do users have a great first experience?
They are now using your product and we want to make sure we help them quickly understand the value of the software and you deliver on the promise of your business.
Ever heard of the 'aha moment' or time-to-first-value (TTFV)? This is where it comes in, and it's one of the most important things to get right. You can have the best messaging and trial sign up conversion rates but without proper activation you will never succeed.
You have a limited time to show your new potential customer value, otherwise they don't upgrade, you never get paid and you potentially lose them forever.
So let's look at what you need to track to get this right.
Here is a list of some of the Core Strategies, System Strategies and Tactics within Activation:
How do you make money?
Users subscribe to your tool and become customers.
Without revenue you simply don't have a business. This is the most common metric that everyone tracks but not always the easiest to grow. Either way we can't forget revenue, but be prepared to kickoff customer success efforts as soon as that payment comes through and look for expansion revenue opportunities.
Here is a list of some of the Core Strategies, System Strategies and Tactics within Revenue:
Do users come back?
Users are coming back to your tool and logging in, they are considering buying the product for either the first time or looking at expansion or upgrades.
Without solid retention you end up with a churn problem, the silent killer of SaaS businesses. One of the main goals for a healthy SaaS company is to not only show that initial value, but continue to deliver value. Make sure your customer success team is engaged and executing your CS strategy.
Additionally, one of our partners, InnerTrends, has another great point. They say your customers need to have a dialogue with your product. If they are logging in to simply view something (ie a dashboard) and then logging back out, they are having a monologue. You need to think of ways to get them further engaged.
Here is a list of some of the Core Strategies, System Strategies and Tactics within Retention:
Do users tell others?
Users are loving your product and start sharing it with their network of friends, colleagues and co-workers.
Referrals aren't always difficult to track but they may be the hardest metric to grow. Many businesses don't even consider referrals because they are so focused on acquisition. However, if you can apply an effective referral strategy you can potentially put acquisition on auto-drive.
Here is a list of some of the Core Strategies, System Strategies and Tactics within Referral:
As you can see there are many aspects to consider within each growth pillar. However, not all of them are not a priority for growing your specific business. You may be at a stage in your business that requires certain Core Strategies, System Strategies or tactics. Or maybe your customer acquisition strategy is more product-led vs sales-led which requires different strategies as well.
With this in mind we need a framework to designate what is important for your business and then let your team determine how to best shift focus around these definitions.
So, within the Actionable Metrics Canvas we are going to only work to define the areas of your business that will not change. If they do it will be very minimal since it only considers vital aspects of your business. Additionally, a simple update to the canvas will realign the team.
Often the easiest way to explain a concept is to give an example.
Let’s use a group meeting scheduling tool called Taggg that we are building at Inturact. It's a simple tool that helps you schedule group meetings with 3 or more people at its core.
NOTE: If you have multiple products that deliver separate promises then you would need an Actionable Metrics canvas for each of those products.
Let’s go back into each of the 5 growth pillars now and work through the canvas together:
|Attract & Convert|
Within Acquisition we look at 3 simple metrics:
These are the visitors that don’t have an account on your product. We only want to look at the visitors that have a potential to create an account.
Sign Up Intent
These are all the visitors that initiated sign up by doing some action that we define as sign up intent. This is a metric that we group all the actions that a visitor does that determines they had reason to sign up into a single metric.
This usually includes:
Primary Customer Acquisition Strategy
Many software tools offer multiple customer acquisition strategies such as:
However, we want to define the primary customer acquisition strategy that is currently being used. This is generally the strategy that you are putting precedence on most or that is getting the most sign ups.
Don’t worry, we will create a segment, which I will get into later, with all customer acquisition strategies that you offer to analyze the performance of each, but we want the primary for this metric.
Taggg Acquisition Example Metrics
Within Activation, we want to define your user onboarding steps. However, we have a few rules to accomplish this.
First, we know that user onboarding always starts with Account Created. Next we need to define what your product does at its core to define Onboarded.
For Taggg it schedules meetings at its core.
“Onboarded” is defined as the first time a user experiences your core metric, or the promise of your business.
We know that our definition of onboarded will be scheduling our first meeting.
This process of User Onboarding is vital to the success of your product and this is also why defining what “Onboarded” is becomes very important as a team.
You may ask, buy what if the first time someone accomplishes this is a test?
This is ok, they have still experienced the initial value of the product. Onboarded does not equal upgraded-to-paid. We need to understand the first time someone experiences this so we can begin to then understand how many times it takes for them to do this on an ongoing basis for someone to begin to see value. This core metric will show up again in Retention in a bit.
So scheduling our first meeting will be our final onboarding step.
Next, we need to break down the steps between Created Account and Scheduled First Meeting.
I know defining onboarding steps for products can be difficult, so here are the 3 rules to determine these vital, or core steps within your user onboarding:
For Taggg we have these onboarding steps:
|Upgrade & Expand|
Within revenue we want to look at not only the initial upgrade but also all areas of your product that create expansion revenue.
So we always include an initial upgrade as one of the metrics. The other areas that are common to include are upgrading tiers, add-ons or plugins, and managed services. There are many other potential metrics to consider depending upon the business. `
For Taggg we have these Revenue metrics:
For retention we really break down this into two primary categories, core features and success goals.
We want to understand your core features to understand how much they are being utilized and contributing to retention.
We want to define something called goals in which we determine few goals for us to track that we believe will contribute to retention. As these goals are analyzed they may be adjusted, subtracted or added depending upon how they are contributing to retention.
First we start by listing out all core features. For Taggg these are:
With these core features being tracked we can also analyze events happening within them.
Next, we determine a few goals we would like to track.
We have chosen these for Taggg:
Once you track these specific goals that correspond to increased engagement and product usage you can analyze when they get achieved on average and how each of them affect an increase in retention, or not.
The last pillar but not the least important is referral. With referral we want to look at the main metrics that create referrals or that get new users to sign up for your product or added to accounts.
To identify these areas we usually ask 4 questions:
The answers to the questions above should give you the metrics you need to track your referrals and advocacy.
For Taggg these are our referral metrics:
We have partnered with InnerTrends to create a wizard that now creates your Actionable Metrics Canvas automatically by simply answering a series of questions about your business.
The outcome will look similar to this: