Lean Analytics

Chapter 18. Stage Four: Revenue

At some point, you have to make money. As you move beyond stickiness and virality, your metrics change. You’ll track new data and find a new OMTM as you funnel some of the money you collect back into acquiring new users. Customer lifetime value and customer acquisition cost drive your growth, and you’ll run experiments to try to capture more loyal users for less, tweaking how you charge, when you charge, and what you charge for. Welcome to the Revenue stage of Lean Analytics.

The goal in the Revenue stage is to turn your focus from proving your idea is right to proving you can make money in a scalable, consistent, self-sustaining way. Think of this as the piñata phase, where you beat on your business model in different ways until candy pours out.

Some startup advocates recommend charging for the product at the outset. This depends on several factors, from churn to cost of acquisition to the kind of application you’re building. But there’s a difference between charging up front and focusing on revenue and margins. In the earlier stages, it’s OK to run the business at a loss, or to give away accounts, or to issue refunds, or to let highly paid developers field support calls. Now, that has to change. Now, you’re not just building a product—you’re building a business.

Metrics for the Revenue Stage

Measuring revenue is easy enough, but remember that while raw revenue might be going “up and to the right,” revenue per customer is a better indicator of actual ...