Interestingly, I see this same problem play out in many consumer Internet startups. I often see teams that maniacally focus on their metrics around customer acquisition and retention. This usually works well for customer acquisition, but not so well for retention. Why? For many products, metrics often describe the customer acquisition goal in enough detail to provide sufficient management guidance. In contrast, the metrics for customer retention do not provide enough color to be a complete management tool. As a result, many young companies overemphasize retention metrics and do not spend enough time going deep enough on the actual user experience. This generally results in a frantic numbers chase that does not end in a great product. It’s important to supplement a great product vision with a strong discipline around the metrics, but if you substitute metrics for product vision, you will not get what you want.

FOCUSING TOO MUCH ON THE NUMBERS In the second example, I managed the team to a set of numbers that did not fully capture what I wanted. I wanted a great product that customers would love with high quality and on time — in that order. Unfortunately, the metrics that I set did not capture those priorities. At a basic level, metrics are incentives. By measuring quality, features, and schedule and discussing them at every staff meeting, my people focused intensely on those metrics to the exclusion of other goals. The metrics did not describe the real goals and I distracted the team as a result. Interestingly, I see this same problem play out in many consumer Internet startups. I often see teams that maniacally focus on their metrics around customer acquisition and retention. This usually works well for customer acquisition, but not so well for retention. Why? For many products, metrics often describe the customer acquisition goal in enough detail to provide sufficient management guidance. In contrast, the metrics for customer retention do not provide enough color to be a complete management tool. As a result, many young companies overemphasize retention metrics and do not spend enough time going deep enough on the actual user experience. This generally results in a frantic numbers chase that does not end in a great product. It’s important to supplement a great product vision with a strong discipline around the metrics, but if you substitute metrics for product vision, you will not get what you want.

I managed the team to a set of numbers that did not fully capture what I wanted. I wanted a great product that customers would love with high quality and on time — in that order. Unfortunately, the metrics that I set did not capture those priorities. At a basic level, metrics are incentives. By measuring quality, features, and schedule and discussing them at every staff meeting, my people focused intensely on those metrics to the exclusion of other goals. The metrics did not describe the real goals and I distracted the team as a result.

Customer retention requires customer satisfaction, but customer satisfaction is a moving target.

Many organizations make the mistake of using metrics in place of thematic and strategic goals. This is a problem because metrics do not inspire enthusiasm among employees.

optimizing for engagement metrics is a great way to hide

It’s important to supplement a great product vision with a strong discipline around the metrics, but if you substitute metrics for product vision, you will not get what you want.

For a company to be valuable it must grow and endure, but many entrepreneurs focus only on short-term growth. They have an excuse: growth is easy to measure, but durability isn’t. Those who succumb to measurement mania obsess about weekly active user statistics, monthly revenue targets, and quarterly earnings reports. However, you can hit those numbers and still overlook deeper, harder-to-measure problems that threaten the durability of your business.

The study came up with four metrics that matter most: 1.​HAPPINESS: having feelings of pleasure or contentment in and about your life 2.​ACHIEVEMENT: achieving accomplishments that compare favorably against similar goals others have strived for 3.​SIGNIFICANCE: having a positive impact on people you care about 4.​LEGACY: establishing your values or accomplishments in ways that help others find future success

The right measure is not how many customers you've got, but how closely you hold them.

Number of users may not be the perfect test, but it will be very close. It’s what acquirers care about. It’s what revenues depend on. It’s what makes competitors unhappy. It’s what impresses reporters, and potential new users.

The total net profit that you earn on average over the course of your relationship with a customer (Customer Lifetime Value, or CLV) must exceed the amount you spend on average to acquire a new customer (Customer Acquisition Cost, or CAC).

The study came up with four metrics that matter most: 1.​HAPPINESS: having feelings of pleasure or contentment in and about your life 2.​ACHIEVEMENT: achieving accomplishments that compare favorably against similar goals others have strived for 3.​SIGNIFICANCE: having a positive impact on people you care about 4.​LEGACY: establishing your values or accomplishments in ways that help others find future success They also came up with a simple way to interpret the feelings these four need to provide in your life: 1.​HAPPINESS = ENJOYING 2.​ACHIEVEMENT = WINNING 3.​SIGNIFICANCE = COUNTING (TO OTHERS) 4.​LEGACY = EXTENDING

potential to increase the lifetime value of the customer. Usually marketing departments assume that the lifetime value of a customer is fixed when doing their ROI calculations. We view the lifetime value of a customer to be a moving target that can increase if we can create more and more positive emotional associations with our brand through every interaction that a person has with us. Another common trap that many marketers fall into is focusing too much on trying to figure out how to generate a lot of buzz, when really they should be focused on building engagement and trust. I can tell you that my mom has zero buzz, but when she says something, I listen. To that end, most of our efforts on the customer service and customer experience side actually happen after we’ve already made the sale and taken a customer’s credit card number.