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I was just thinking about using stats in startups. For sure you need to know your runway (and burn rate) - but then for SaaS (and similar business with recur
by zby 8y ago
I was just thinking about using stats in startups. For sure you need to know your runway (and burn rate) - but then for SaaS (and similar business with recurring revenues) the first useful statistics is churn. Customers quiting is the most important info when looking for product market fit. Customer groups with lowest churn are your target group (market). Before you start scaling business you need first to decrease churn - because you don't want to grow the holes in your system together with it (this metaphor is not mine - but I cannot now find where it came from - but I googled this article instead: https://pakman.com/churn-is-the-single-metric-that-determines-the-success-of-your-subscription-service-6e82d9d9ea01 https://pakman.com/churn-is-the-single-metric-that-determine...).
Sales statistics become important after you have satisfying churn rate (i.e. after product market fit). With advertising you can quickly grow sales - but if your churn is too big - then the LTV (https://en.wikipedia.org/wiki/Customer_lifetime_value https://en.wikipedia.org/wiki/Customer_lifetime_value) will be too low. And generally customers that come from advertising will have a bigger churn than those who learned about the product organically.