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Chapter 5 of 9

Chapter 5: Metrics & Success Criteria

North Star Metric, Retention, NPS, and actionable analytics.

Playbook Chapters
What You'll Learn By the end of this chapter, you'll distinguish vanity metrics from actionable ones, define your North Star Metric, and understand why retention is the ultimate validator of product-market fit.

What Gets Measured Gets Managed

Startups drown in data. Every analytics tool offers hundreds of metrics—downloads, page views, sessions, sign-ups. The problem isn't lack of data; it's knowing which data actually matters.

The wrong metrics create a dangerous illusion of progress. The right metrics force honest confrontation with reality.

The Core Insight

There's only one metric that proves product-market fit: retention. If users don't come back, nothing else matters. Build your entire measurement strategy around understanding and improving retention.

Bug #1: Celebrating Vanity Metrics

Vanity metrics are the most dangerous trap in startup analytics. They always go up over time, making the team feel good—while the business slowly dies.

The Bug

"We hit 100,000 downloads!"

Cumulative metrics only go up. A product can have 100K downloads and 0 active users. These metrics create false confidence while your actual business hemorrhages.

The Fix

Focus exclusively on actionable metrics.

Track cohort retention, activation rate, and conversion rate—metrics that can go down, that tell you something is broken, and that you can directly influence.

Vanity vs. Actionable Metrics

Vanity Metrics

These lie. They only go up. They feel good but teach nothing.

Cumulative downloads
Total registered users
Total page views
Social media followers
"Time on site" without context

Actionable Metrics

These tell the truth. They can go down. They drive action.

Cohort retention (Week 1, Week 4, Week 8)
Activation rate (% who reach "aha moment")
Conversion rate (Visitor → Trial → Paid)
Net Promoter Score (NPS)
Revenue per user (RPU)
The Vanity Test

Ask yourself: "Can this metric go down?" If a metric can only increase over time (like cumulative downloads), it's vanity. If it can decrease and signal something is broken (like Day 30 retention), it's actionable.

The North Star Metric (NSM)

Your North Star Metric is the single number that best captures the core value your product delivers. It aligns the entire organization—product, marketing, sales, support—around one goal.

Criteria for a Good North Star Metric

Value-Based Reflects value delivered to customers, not just revenue extracted
Leading Indicator Predicts future success (revenue is a lagging indicator)
Actionable The team can directly influence it through product decisions
Understandable Every team member can explain what it means

North Star Examples by Category

Consumption Products

Spotify: Time Spent Listening
Netflix: Watch Time
YouTube: Watch Minutes

Transaction Products

Airbnb: Nights Booked
Uber: Rides per Week
Amazon: Purchases per Month

Productivity Products

Slack: Messages Sent
Zoom: Hosted Meetings
Notion: Blocks Created

Finding Your North Star

Answer this: "What single action, when done repeatedly, indicates the customer is getting value?" That action is your North Star. For Airbnb, it's booking nights. For Spotify, it's listening to music. For Slack, it's sending messages.

Retention: The Only Metric That Matters

For an early-stage MVP, retention is the only metric that truly proves product-market fit. If users don't come back, you haven't built something people want.

The Bug

"Let's focus on acquisition. We need more users."

Acquisition without retention is burning cash into a leaky bucket. You're paying to acquire users who immediately leave. Fix retention before scaling acquisition.

The Fix

Build a retention curve first.

Track cohort retention over time. Your curve should flatten (users stick around), not plummet to zero. Don't scale until the curve flattens.

Retention Benchmarks by Business Model

What "Good" Looks Like

Business Model Metric Weak Good Great
B2B SaaS Net Revenue Retention <90% 100-110% >120%
Monthly Logo Churn >5% 2-3% <2%
B2C Mobile Day 1 Retention <25% 30-40% >50%
Day 30 Retention <10% 15-20% >25%
Consumer Web Week 1 Retention <15% 20-30% >40%
Month 3 Retention <10% 15-25% >30%

The Retention Curve

Reading Your Retention Curve

Plot the percentage of users still active over time. What you're looking for:

Curve goes to zero You don't have product-market fit. Users try and leave. Fix the product.
Curve flattens low You have a niche audience. Consider if the segment is big enough.
Curve flattens high Product-market fit achieved. You can now scale acquisition.

Net Promoter Score (NPS)

NPS measures customer loyalty and predicts viral growth. It's simple, standardized, and benchmarkable.

How NPS Works

The Question: "On a scale of 0-10, how likely are you to recommend [Product] to a friend or colleague?"

Promoters (9-10)

Active advocates. Will refer others.

Passives (7-8)

Satisfied but unenthusiastic. Won't refer.

Detractors (0-6)

Unhappy. May actively discourage others.

Formula: NPS = % Promoters - % Detractors (ranges from -100 to +100)

NPS Benchmarks

Below 0

Danger zone. More detractors than promoters. Fix immediately.

0-30

Good. More lovers than haters. Room to improve.

30-50

Great. Typical for successful SaaS companies.

50+

World-class. Apple, Tesla territory. Strong viral potential.

The Real Value of NPS

The number matters less than the follow-up question: "Why did you give that score?" The qualitative feedback reveals what's broken (from detractors) and what's magical (from promoters).

Your Metrics Dashboard Checklist

The MVP Metrics Stack

North Star defined: One metric that captures core value delivery
Retention tracked: Cohort retention by week (D1, D7, D30 minimum)
Activation defined: Clear "aha moment" and % of users reaching it
NPS measured: Score + qualitative feedback collection
Vanity eliminated: No cumulative metrics in weekly reviews

Key Takeaways

Remember These Truths
  1. Vanity metrics lie. If a metric can only go up, it's hiding the truth.
  2. Define your North Star. One metric that captures the core value you deliver.
  3. Retention is everything. If users don't come back, nothing else matters.
  4. Flatten the curve first. Don't scale acquisition until retention stabilizes.
  5. NPS reveals why. The qualitative follow-up is more valuable than the score.

Now that you know what to measure, let's explore how to prepare for launch and manage beta testing effectively.

Define Your Success Metrics with AI

Use our unit economics and metrics tools to define KPIs that actually matter for your business model.

Pirate Metrics (AARRR) CAC/LTV Calculator Retention Diagnostic

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Works Cited & Recommended Reading
RAT vs MVP Philosophy
  • 1. Ries, E. (2011). The Lean Startup. Crown Business.
  • 2. "Why RAT (Riskiest Assumption Test) beats MVP every time." LinkedIn
  • 3. "Pretotyping: The Art of Innovation." Pretotyping.org
  • 6. "Continuous Discovery: Product Trio." Product Talk
  • 7. "MVP Fidelity Spectrum Guide." SVPG
Minimum Lovable Product
  • 8. Olsen, D. (2015). The Lean Product Playbook. Wiley.
  • 9. "From MVP to MLP: Why 'Viable' Is No Longer Enough." First Round Review
  • 10. "Minimum Lovable Product framework." Amplitude Blog
Hypothesis-Driven Development
Assumption Mapping
  • 15. Bland, D. & Osterwalder, A. (2019). Testing Business Ideas. Wiley.
  • 16. "Risk vs. Knowledge Matrix." Miro Templates
  • 17. "Identifying Riskiest Assumptions." Intercom Blog
User Story & Impact Mapping
  • 20. Patton, J. (2014). User Story Mapping. O'Reilly Media.
  • 21. Adzic, G. (2012). Impact Mapping. Provoking Thoughts.
  • 22. "Jobs-to-Be-Done Story Framework." JTBD.info
  • 23. "The INVEST Criteria for User Stories." Agile Alliance
  • 24. "North Star Metric Framework." Amplitude
  • 25. "Opportunity Solution Trees." Product Talk
  • 26. Torres, T. (2021). Continuous Discovery Habits. Product Talk LLC.
Pretotyping Techniques
Prioritization Frameworks
Build vs Buy & No-Code
Metrics & Analytics
Launch Operations & Analysis

This playbook synthesizes methodologies from Lean Startup, Design Thinking, Jobs-to-Be-Done, Pretotyping, and modern product management practices. References are provided for deeper exploration of each topic.