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Introduction

5min

Module 1: The Lean Startup Mindset

Module 2: Defining Your Vision

Module 3: The Build-Measure-Learn Feedback Loop

The Loop Explained: A Step-by-Step Guide

5min

The "Build" Phase: Creating Experiments and MVPs

5min

The "Measure" Phase: Key Metrics That Matter

5min

The "Learn" Phase: Turning Data into Insights

5min

Module 4: The Minimum Viable Product (MVP)

Module 5: Validating with Customers

Module 6: Pivoting or Persevering

Learn the Lean Startup Methodology

9/23 Lessons

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3.3: The "Measure" Phase: Key Metrics That Matter

Now, You've built an MVP to test your Leap-of-Faith Assumption. As you already know, the next step is to measure the results of your experiment. This is a critical stage where you gather the data that will inform your decision to pivot or persevere. Measuring effectively is a skill, and it starts with focusing on the right metrics.

1. Vanity vs. Actionable Metrics

A common trap for entrepreneurs is to get caught up in "vanity metrics". These are numbers that look impressive but don't actually tell you anything about your business or customer behavior. They can be misleading and give you a false sense of security.

a row of dominos sitting on top of each other

Vanity Metrics could be the total website visits, number of registered users, social media followers. The reason why they might be misleading is because a million website visits don't matter if no one is actually engaging with your product.

In the Lean Startup, we focus on "actionable metrics". These are metrics that help you make decisions. They are tied directly to customer behavior and prove whether your hypothesis is correct.

a row of dominos sitting on top of each other

Actionable Metrics could be the percentage of visitors who signed up for your product, the retention rate of paying customers, the number of users who completed a key action.

And they are valuable because they give you clear data to analyze. For example, if only 1% of visitors signed up for your product, you know you need to adjust your value proposition or your marketing message.

2. A Framework for Measuring: The AARRR Funnel

A great way to organize your actionable metrics is with the AARRR Funnel, also known as Pirate Metrics. This framework, developed by Dave McClure, breaks down customer behavior into five key stages:



  1. Acquisition: How do users find you? (e.g., social media ads, search engines)


  2. Activation: Do users have a great first experience? (e.g., did they sign up and complete a key task?)


  3. Retention: Do users come back? (e.g., the number of active users per week or month)


  4. Referral: Do users like the product enough to tell others? (e.g., the number of referrals per user)


  5. Revenue: How do you make money from this user? (e.g., monthly subscription fees)




By measuring each stage of this funnel, you can identify where customers are dropping off and focus your efforts on improving that specific stage.

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