This post was written by Mariana Santos, Analytics Manager at Beta-i. She has a Masters on Management from Nova SBE and joined Beta-i to contribute detailed analysis of Lisbon Challenge and its impact on the startups and their growth. Mariana focuses on the importance of selecting the right metrics.

The skill of monitoring one’s progress during a project is not for everyone - not everyone does it. We don’t like to be confronted by negative results that show us we’re probably not (yet) in the right track. Throughout the startup life, the temptation of ignoring important KPIs might be even stronger as there is no “boss” to report to. Metrics are more than the usual theoretical stuff that takes your precious time; if well chosen they can give you very relevant insights about the health of your business.

But that’s exactly where the problem arises - what’s the right metric to choose?

I regret to tell you that there’s no secret formula, but there are definitely ways to help you getting there. Some crucial characteristics of your startup, influence the type of metrics you should be looking at, namely, the type of product you are working with, your business model and your startup’s stage. There’s probably no need to explain that hardware and software products behave very differently, so must they be treated in distinct ways. Also, your business model plays a determinant role on the way your business will evolve - different acquisition channels, revenue streams, pricing strategies, among others, determine how you will progress and, consequently, the KPIs you should be looking at.

As of the startup stage, a quick look at the Marmer Stages (Startup Genome Report) will help you understand the four different phases your startup will go through. Discovery, Validation, Efficiency and Scale. Understanding the problem, achieving problem-solution fit and solution-market fit are the main objective of the first three phases, respectively. Scale, as the name indicates, is about finding ways of growing your business, either by targeting new markets, improving/adding new product features or creating new product lines. Your KPIs should reflect the milestones that will help you to attain these objectives.

To start implementing analytics in your daily business management, there are some practical tips you might want to consider:

• Understand in which stage you’re at
• This might seem a stupid question with an obvious answer, but be careful to not think you’re at a later stage than you actually are. Ask yourself demanding questions to make sure you’re being realistic.

• Choose the one metric that matters
• Instead of adding complexity and trying to monitor a list of different metrics, define for a certain period the metric that matters the most to you and indicates your performance the best. It’s normal that this metric will change often as you try to find the right one.

• Understand your business model
• Your business model will be validated throughout time, so as you start taking some conclusions adapt your metrics accordingly.

• Build a roadmap
• It’s important to have short, medium and long term goals on how you intend to conduct your business, even if these change/adapt over time. Set objectives and evaluate your progress towards these goals. In case you’re not able to achieve them, try to understand why and learn from it.

It might be hard to adapt to this type of data-driven lifestyle, but once you start collecting relevant insights, it will be worth it, and you will start to realize you can’t really live without them anymore.