AARRR! Employing “actionable metrics”

AARRR! Employing “actionable metrics”

One of the problems of running a business is keeping track on whether you are doing well or not. It’s easy to be busy. But you risk being a busy fool.

That’s why understanding & tracking the data that your business generates is so important. Because getting the right data – let’s call it information – means that you can make the right decisions.

Of course the great thing about embedding technology into your business – or if your business is an e-business – is that this information is readily available.

In this post we’ll explore ways to approach this issue, standing on the shoulders of some of the leading thinkers in Silicon Valley. And we’ll also look at how we’ve applied this thinking here at Techdept.

Maybe you can apply these lessons to your web business?

Introducing Dave

Dave McClure is a Silicon Valley legend. He’s a swashbuckling profane ball of energy, who runs the highly respected tech accelerator 500 startups. On his web site he describes himself as a “blood sucking Venture Capitalist.”

McClure has travelled the world holding forth on his theory of “startup metrics for pirates”: AARRR

AARRR stands for Acquisition, Activation, Referral, Retention, Revenue.

To properly understand this, I’d recommend you stop right now and watch this presentation:

Or if you have a bit more time, this is the full 20 minutes from Future Of Web Apps in London 2009

Central in McClure’s thinking is the Lean Startup methodology. Being “lean” involves a process whereby you build, measure and learn – as an iterative cycle. This is an incredibly effective method for start ups to test (and fail fast) different strategies and product features without wasting valuable time and money.

But this works for established businesses too. In many ways we should all have a start up mentality, rapidly trying things out in order to innovate and stay fresh.

However in order to do this right, you need to measure. But which parts of your business should you measure?

Wood / trees

There are so many potential sources of information, you can be presented with too much. This presents the same problem as not having enough. You’re in the dark.

McClure recommends drilling down to a handful (at most) of key metrics which you measure. You then take action based on these metrics. You create actionable metrics. 

You find the right information on which to take decisions – AND DO SOMETHING ABOUT IT!

If the information is good – do more of it, if it’s bad, then STOP!

How it works for us

We have spent a lot of time and energy implementing what we call The Open Business System. This involves a lot of work around culture, and also the systematisation of our business around a task management system.

The system we use is called AtTask, a cloud hosted platform. We track all aspects of our business through AtTask, from projects to credit control to marketing. In effect it is a series of checklists.

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Against these checklists we add deadlines, ownership and – importantly – time spent to complete the task.

Techdept’s business model is fairly straightforward. We sell time, and produce stuff with that time.

So our “actionable metrics” are all around the effectiveness of how we use our time – based on data extracted from AtTask. We can track which jobs – or types of job – are profitable, and which aren’t. We can refine production systems, sales strategies and training accordingly.

And ultimately these impact everyone’s most important actionable metric: profit.

How it can work for you

But I believe that these principles apply not only to running a business – but to managing a web site, or social media presence. Anything that requires ongoing management and continuous development.

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The reason it’s so effective is because it’s so simple. Focusing on the core metrics allows you to not focus on all the peripheral noise.

And the right information means that you can focus on making the right decisions, taking positive action.

So, what are the handful of pieces of information that will guide your business as you build, measure, learn?

AARRR me hearties!

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