Two key metrics for startups to keep an eye on: retention and referrals

When it comes to business, it’s essential that you’re acquainted with the concept of “vanity metrics”: numbers that you can track in your business, but that don’t offer any real indicator of how well your business is doing.

Vanity metrics may give you an occasional ego boost and lift your spirits up, but they often act as distractions from more important metrics you need to follow.

As a business owner, you don’t want reassurance you’re doing a great job when you’re not.

“But look how many retweets this tweet got! We’re onto something!”


“Somebody left us thumbs up emojis on our last Instagram post! I wonder what color my Porsche should be?”

Very cute (and risky).

The number of downloads your app gets and the number of visitors to your website may sound like important metrics, but they are often vanity metrics.

So what metrics should you be tracking?

1- Retention
2- Referrals

Two key metrics for startups to keep an eye on: retention and referralsClick To Tweet

And here’s why:

Retention is how many people are returning to use your product or buy from you. It’s an indication of satisfaction. It means a customer was happy enough interacting with you that they’re willing to do it again (and hopefully, again and again).

But there’s more to retention than satisfaction!

Retention is also about strategy.

What additional services are you offering your customers? How do you ensure they continue to engage with you?

If you only offer beginner workshops, what happens to your customers when they become intermediate or advanced? How do you get to maintain your customers?

Your business model is also a part of retention: do you offer one-time payments or a subscription? Are you maintaining the relationship or passively waiting for customers to come back?

As a metric, retention helps to clarify what you need to work on and prioritize.

Referral is often done when the quality of service you offer is so high that people can’t stop talking about it and letting others know how great you are.

You can nudge your referral numbers by increasing the quality of your service, making it easier for your customers to let others know about you, and ensuring that you are the go-to company for the service you want to be known for.

That way, whenever a friend, family member, or colleague mentions a word to your customers, they know exactly who they would recommend.

This is actually one of the first lessons Sam Atlman had shared in his recent lecture on How to succeed with a Startup.

“The most important thing, the number one lesson we try to teach startups is that the degree to which you are successful approximates the degree to which you build a product that is so good people spontaneously tell their friends about it. Startups always ask us for the secret to success. They always want to believe it’s something other than this because this is really hard to do. But this is it. If you can build a product that is so good, people spontaneously tell their friends about it, you have done 80% of the work that you need to be a really successful startup. If you think about the most successful companies, you know Google, Facebook, whatever, you probably found out about them because a friend of yours said, you got to try this, it’s great. So this is the bar. Something that people love so much, they tell their friends about it.”

P.S. If you’re looking for strategies on how you can improve your retention and referrals, and you’re based in Kuwait, you might want to join my upcoming UX workshop: Design to Delight later this month. 

The focus of the workshop isn’t design, as such, but the business goals you wish to achieve through your product, and what changes you need to make to the product in order to achieve your goals.

Haider Al-Mosawi
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