What is One Metric That Matters and How to Use it
About the author
Bart Stemkens is a growth advisor for tech startups. He loves building online businesses and bringing them to live through bold ideas.
When it comes to developing your app’s acquisition strategy, there are a number of metrics that you can track.
Even though you’ll need to collect a lot of data regarding your app’s performance, such as customer lifetime value, activation and retention, you’ll typically need to find one metric that will determine what you should be focusing on to grow your app.
This article will help you identify how to determine the one metric that matters (OMTM), by detailing what it is, why it’s so important, one metric that matters examples, how it compares to North Star Metric, how to determine OMTM, and what to do after you’ve found your OMTM.
What is the One Metric That Matters (OMTM)?
One Metric That Matters or OMTM is a number that is used as your main focus in your daily work as an app growth hacker or growth hacking team.
Every marketing function that you carry out has to relate to the growth of this metric. OMTM is the number on which a growth hacker expects to experience the most growth in the next 2-4 months.
The term itself was first mentioned in 2013 by Alistair Croll in his book Lean Analytics, when he realized that startup founders and marketers are easily distracted by “vanity metrics” and other numbers that don’t necessarily contribute to a business’ growth.
Why is OMTM Marketing So Important?
One Metric That Matters helps you focus all your time and energy on one thing, so you can perform more successfully in one area rather than do things in many areas that don’t produce enough results. It is an essential component of a growth hacker’s mindset.
Locating your One Metric That Matters can help you:
- Know exactly what to do to grow your app without being distracted by other metrics.
- Reach faster results by completely focusing all your actions on one goal.
- Create long-term influence by focusing on something that needs to be continuously improved.
What Are Some OMTM Examples?
Based on your app’s model, you’re going to have an OMTM that may differ from other apps’ OMTM.
For example, if you have a hotel bookings app, your number of nights booked would make a great metric to focus on, since it combines both the value of the booker and the lessor. If you have a marketplace that earns revenue from transaction fees on payments, then you may find that your OMTM is your gross processing volume, or GPV.
So, generally speaking, your OMTM will reflect the type of your app you have and what its main revenue-earning function is, so that you can focus on developing the best version of that as possible.
One Metric That Matters vs. North Star Metric
There are a few key differences between OMTM and North Star Metric. North Star Metric is a single quantitative indicator that enables the growth of your app, and there’s typically only one North Star Metric for each business.
The North Star Metric is equivalent to your app’s profit, lifetime average revenue, or customer realization of value.
The North Star Metric you choose should build a link between your internal stakeholders and your app. Your app product management team can then evaluate what part of your app needs optimization.
Granted, it can be hard to select just one metric that reflects your app’s growth. This is the case if your app model offers a vast range of products or services for different types of users.
For this reason, One Metric That Matters (OMTM) lets you choose one specific metric for each one of your app’s sections.
Each OMTMs is a separate key performance indicator (KPI) for each one of your departments. This allows every member of your growth hacker team to track metrics that should be optimized individually.
How To Determine Your One Metric That Matters?
Your One Metric That Matters is always going to change according to your app’s context. Ultimately, you should choose an OMTM that directly reflects your app’s performance in a specific period.
Now, let’s look at the steps you can take to determine your own OMTM.
1. Determine what stage your app is at
It can be difficult to pinpoint which stage your app is at right now, but you have to define it because this is what defines your OMTM. If you’re in the maturity stage of your app, then your main focus should be acquisition and user expansion.
Defining your app’s stage is vital because you need to create different marketing strategies for every stage. If you have a new app, your goals will be drastically different to an app that’s been around for many years.
In your app’s initial phase, you begin to work on understanding what issues you need to address within your app.
In the next stage, you can start researching the market and your competitors to see if your app is doing well in that market. Your app’s value should relate to the needs of your existing and potential users.
After that stage, you need to focus on optimizing your channel-product funnel, where the nature of your app should match its distribution channel.
In your app’s growth phase, you can start to allocate resources to different areas of the app that you know are crucial to its growth.
In your app’s maturity stage, your goal is to acquire users and bring about revenue increase through your retained users.
2. Uncover the bottleneck of the pirate funnel
A pirate funnel can accommodate the nature of your app.
The 6 stages of the pirate funnel are AAARRR, which stands for awareness, acquisition, activation, revenue, retention, and referral.
- Awareness – Potential users get to know you through your promotional activities.
- Acquisition – Visitors signup for a trial.
- Activation – Trial users realize the value of your app, reaching their “a-ha moment.”
- Revenue – Users generate revenue and spend more money through upsells, cross-sells, and add-ons.
- Retention – Users renew their subscriptions because they get continuous value from you.
- Referral – Users become loyal advocates for your app and brand, giving positive reviews, and providing word-of-mouth marketing.
You can discover the bottlenecks in the pirate funnel and develop your OMTMs by using the conversation rates between any of these two steps.
3. Specify your app’s goals
Your OMTM depends on your app’s goals, which is determined by your app’s stage. So if you’re in the growth stage, you can study your customer base based on your revenue, feedback, and product usage rate.
This lets you address the high-risk zones in your app and determine your OMTM accordingly.
4. Create a regular reporting schedule for OMTMs
Finally, you can create a reporting schedule for each one of your OMTMs.
Once you’ve determined an OMTM for a specific period, regular reporting schedules can help you study and understand the journey towards achieving your goal.
It also ensures that your growth hacking team is always working for the benefit of your OMTM. For instance, if your goal is to achieve your OMTM within 5 months, you need to create monthly reports and analyze your progress through short sessions.
What to Do After You Find Your OMTM?
Once you’ve determined your OMTM, you can use the “Squeeze Toy Test” to find your next One Metric That Matters. The inventor of the concept, Alistair Croll, describes it as when you squeeze a squeeze toy like a stress ball, and how everytime you squeeze it in one place there is new pressure appearing in another place.
Here are some examples of how the “Squeeze Toy Test” can help you determine your next OMTM:
- If you only have a few new users, you will have to make sure that they keep coming back to your app by working on your retention strategy.
- If you manage to secure a high ranking in SEO, you will have to cause your Lead Magnet to be downloaded more frequently.
Now that you’ve studied the definition “One Metric That Matters,” your growth hacking team can start to use it to experience sustainable growth.
It’s good to keep in mind that OMTMs are able to change from time to time and will depend on your app’s goals at a given time.
Do you have trouble improving your app’s key metrics and determining your OMTM? Get in touch with us now.