What is the lean analytics?
Lean Analytics are used to measure progress, helping us to get clear answers quickly. In product management, it is one of the essential activities to improve your products
Too Many frameworks
If you look for books about lean analytics, you can find tons of them. However, they are only specific patterns of analytics and no silver bullet for versatile usages.
I like this comprehensive analytics, but still it is too specific and can not put weight to truly crucial one.
Back to the fundamental
So, let's go back to the starting point. What are the most important metrics for product management?
- $new MRR(Monthly recurrent revenue)
- $LTV(Churn rate and revenue)
- $CAC
They are really important, but there are still two problems.
- Time-delay
- Less actionable
Why LTV/CAC matters?
However, still LTV/CAC is a great indicator of unit of economics.
Why it is so important?
For example, LTV/CAC is between 1 and 2, it would be a dangerous sign.
Normally, LTV is recurrent revenues expecting far future.(depends on churn rate)
If your LTV/CAC is not great shape, you definitely have a cash flow problem.
This metric is the most important indicator of your cash.
The risk of cash-out is the biggest risk you need to control if you are in startups.
Steps to explore
- Identify metrics that impact CAC, LTV and new MRR.
- Instrument your product to capture everything for improve those core metrics.
- Measure what's working, What's not working? Think about Why?
- Make changes to product
