You can use The One Metric That Matters (OMTM) to simplify your growth strategy and focus on a single data point that has the most impact on your growth.
Here, we’ll be taking a look into this concept, so that you can start to apply it to your own business.
What is the One Metric That Matters?
The “One Metric That Matters” (OMTM) is the single most important number to your growth. Once defined, every marketing task or growth activity should be focused on improving this figure over a certain period.
Alistair Croll introduced the concept of OMTM in his 2013 book Lean Analytics. After working with many startups, he noticed that founders and growth marketers were getting distracted by “vanity metrics” – metrics that seemed important, but didn’t actually impact growth.
What are Vanity Metrics?
Vanity metrics are usually ones that are easy to track and gain lots of data on, but they don’t have a tangible Return on Investment (ROI) for your business.
For example, this could include engagement metrics, such as likes, shares, comments and follows on your social media pages.
Many startups track these numbers. While it is helpful to know how engaged your audience is, these numbers often don’t have any impact on key business outcomes like ROI or Customer Lifetime Value.
Image source: https://www.searchenginewatch.com/2014/06/30/content-conundrum-the-vanity-vs-performance-dilemma/
Your OMTM may change in response to market changes. For example, if your industry suddenly has more competitors, then you may want to shift your focus to retaining your current customers (and your market share) instead of getting new ones.
Here are some examples of OMTM for well-known companies:
- Square – gross processing volume (GPV)
Square earns revenue via transaction fees charged on payments made with its products. So Square’s OMTM is “gross processing volume”. In other words, this measures how much money is processed using their system.
This number has a clear link to their ROI, because the higher GPV, the greater the transaction-based revenue they receive.
- Airbnb – number of nights booked
Airbnb is an online marketplace for vacation rentals and tourism activities. Its OMTM is “number of nights booked”. This is a valuable OMTM for Airbnb because their revenue comes from a single location, so if their number of nights booked increases then their revenue will as well.
- Amplitude – weekly querying users (WQU)
Amplitude is a SaaS product analytics solution. Rather than simply being an analytics platform that customers purchase once and use themselves, Amplitude’s core offering is to answer questions from analysts and product managers, and provide insight and advice.
Their OMTM is “weekly querying users”, because it shows the volume of customers using their service, and is directly tied to their ROI. They can also compare this number to their total number of unique users, to show whether they are gaining new users or increasing the activity of current users.
- Salesforce – average records per account
Salesforce is a Saas company, which provides customer relationship management (CRM) platforms and services. Their OMTM is “average records per account” because it shows how extensively customers are using the platform. The more average records per account, the greater the growth and revenue for Salesforce.
How Do You Find Your OMTM?
Your OMTM may change up to a few times a year. In order to determine what the current OMTM is for your growth team, you can follow these steps
- Define which growth stage your company is in. Are you a brand new startup, a growing 3 – 5 year old company, or a stable and mature one?
- Discover the bottleneck of the Pirate Funnel (Awareness, Acquisition, Activation, Retention, Referral, Revenue) For instance, getting clicks to your website might not be an issue (awareness). But you might be struggling to convert those people into customers (activation).
- Select success metrics and goals. This will be a case of figuring out what data points have a direct impact on your ROI and growth. Be wary of getting distracted by vanity metrics like the ones explained above.
- Set up a regular reporting schedule for OMTMs. This will show you whether your growth team is successfully increasing the OMTM number, and whether an increase in the OMTM is having the expected impact on growth.
Need Help With Your OMTM?
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