There are so many possibilities as what you could focus on and yet, there is never enough time. Do you focus on:
- Increasing the number of new leads
- Improving the average order value of existing clients
- Is metric X more important than metric Y
The discussions start, everyone wants their metric to be reached. Fear strikes…
- Which metric is more important?
- What if we don't hit our KPI's?
- What will really drive growth right now?
Whilst it isn’t possible to make a “wrong” beginning when it comes to growth hacking, it all starts with getting everyone focused on the same goal. But what does that look like? I will share with you the first possible step to growth hacking in this article.
One metric that matters - The crucial growth hack you can't live without
The most successful companies from Silicon Valley (and the rest of the world!) all have one thing in common:
> They focus on just 1 key metric that they want to achieve
They ask themselves constantly the following:
- What is our end goal?
- What should we focus all our energy on?
Paul Graham, one of the founders of Y Combinator, suggested that this one metric should either focus on revenue or number of users. We believe strongly on the following:
Your OMTM should indicate that value is delivered to the end-user and your company.
An example is a well-known incubator from Silicon Valley, Y Combinator, they give their startups the following goal:
“Every week your company should grow at least 7%”
This week on week growth means they are helping more individuals with their startups and such an ambitious growth rate is only possible if you are also retaining customers and ensuring they are receiving value.
The one metric that matters methodology is different compared to regular goal setting. In regular goal setting, it is common to set multiple goals (one per department). So the social media team focuses on engagement whilst the website team on leads on the website.
Different focuses lead to different priorities. This leads to internal conflict and takes the focus away from what really matters: delivering value to the end-user.
However with the one metric that matters mentality, the focus is obsessively on achieving that one metric.
But it is not only these Y Combinator startups that have this mindset. There are countless other examples of companies who have successfully used this methodology.
What drove the growth of Facebook?
Facebook is one of the Silicon Valley companies that used the OMTM method. From the beginning, Mark Zuckerberg has pushed his growth teams on the following metric:
“grow faster than yesterday”
Every new idea was challenged on the added value to this metric. This resilient focus made it much easier to keep everybody in the company aligned.
After reaching 1 million users they realised that using the same strategy was no longer possible. Hence they decided to focus on a higher goal and the growth teams of Facebook are continuously coming up with new strategies to ensure that their one metric is reached.
How to get one billion page views in one year: the SumoMe case
The CEO of SumoMe, Noah Kagan, was one of the first product managers of Facebook and is one of the best-known growth hackers worldwide. When he started SumoMe in 2014 (a company that provides analytics tools) he focused his strategy based on what he learnt whilst at Facebook. The One Metric That Matters that Noah Kagan introduces was to get one billion page views on SumoMe in 2014.
With every step of the way Noah Kagan and his coworkers asked themselves: “will this step bring us closer to one billion views?” I bet you are thinking: this goal is practically impossible. Yet, nothing could be further from the truth. On the 30th of December 2014, the page views of the website surpassed the 1 billion mark. Hence, in less than a year Noah Kagan and his team reached their goal. Halfway through 2015 SumoMe had reached more than 5 billion views. Noah shared at Digital Elite Camp that his one metric that matters for 2015 was generating $1M dollar in revenues from SumoMe products. Though the efforts of Noah Kagan and his team at SumoMe are remarkable, these did not come easy and require continual learning through failure. In a presentation, Noah shared that 84% of their marketing efforts fail, but it's the 16% that do move the needle.
What is this “One Metric That Matters” all about?
The concept of One Metric That Matters is explained in the book Lean Analytics by Alistair Croll and Ben Yoskovitz. In this book, they refine the focus of a company on One Metric That Matters. They suggest that whilst this is not the only metric you measure, it is the most important. The ‘remaining metrics’ need to be in line with your overall goal; in other words, they should contribute to you reaching your goal.
The authors of Lean Analytics suggest your most important metric depends on three factors:
- The type of company you have
- The phase your company is in
- Your audience/target market
We would like to add to that the following. This OMTM also needs to be:
- SMART (Specific, Measureable, Achievable, Relevant, Time-Bound)
- Approved at board level
- Discussed and approved with each department
- Be clearly communicated throughout the whole organisation
The next step is that the whole structure of the organisation should be set up based on this One Metric That Matters. Sean Ellis, the man who introduced the term growth hacking, makes his team members write down 3 points where they can positively contribute to achieving the one metric that matters. Through this, everyone puts in their best effort with a strong focus on growing the firm.
What does an OMTM look like
Keeping all this in mind, you set up a sentence as following to describe your OMTM:
Our one metric that matters is [one metric], currently we are at [current status of metric] and we want to increase/decrease this to [goal] within [time period].
Our one metric that matters is our active daily users, currently, we are at 20,000 active daily users and we want to increase this to 30,000 within 6 months.
How to get from many Metrics to One
Often when pushing a client to figure out their OMTM we get the following reaction:
“Great all this OMTM stuff but my manager still expects me to reach other KPIs.”
This a common issue when the OMTM is either not approved on board level or communicated clearly. The result is that individuals are too scared of not meeting their own KPIs to make time free to focus on the OMTM. The only way to solve this is to have a clear list of priorities: that the OMTM is above other KPIs and that the board or management continuously communicate this to the whole team.
With the OMTM it doesn't mean you have one KPI because you still have a funnel and steps that lead to that KPI. Instead, it means you know the priorities of those other KPIs and how they contribute to your OMTM. As a whole organisation you need to agree on:
- Tier 1 Metric. This is the overarching OMTM that you are striving for as an organization.
- Tier 2 Metrics. These are metrics that strongly correlate with your OMTM that matters. For example additional leads on your website.
- Tier 3 Metrics. These are metrics that have a weaker correlation with the OMTM. For example page views, Facebook Engagement.
That way you don't forget other metrics but you agree as an organisation what the priority is.
Now I bet you’re thinking: my organisation is still way too big and complicated for this. How can I implement this in a simple way step by step?
How do I implement the One Metric That Matters? A step-by-step guide:
Often it is not possible to start organisation-wide. Instead, you should start small:
- Choose a small project
- Decide for this project the One Metric That Matters that should be reached by a certain date
- Let every team member write about how he/she will contribute to achieving this goal
- Keep a simple dashboard (Google spreadsheet) where you can track your position relative to your goal, this should be visible to your whole team
- Talk about it every day, what you plan to do to push towards this metric:
- What works and what should we pursue more aggressively?
- What doesn’t work and we should stop doing?
- What if we only had 1 day left to achieve this goal, what would we do to give it the last push?
If the above worked for the small project then it’s time to choose a bigger project. This should be repeated until the top-down management is able to lead the whole company following this principle.
This is the beginning of growth hacking.
By having a clear goal in mind, your whole company is also focused on ensuring that you can begin with growth hacking. Every time, you need to figure out what the weak points are in your growth system in order to “hack” your growth. Growth hacking does not work if you don’t have a One Metric That Matters.
The startups and corporations I have guided and coached all began with the implementation of the OMTM. This focus immediately ensured a higher growth rate. They stopped doing many things that didn’t help with the growth. The focus was shifted to the things that truly helped with their growth.
One Metric That Matters is your first growth hack. Get over the fear of growth hacking, start with it today and reap the rewards tomorrow.