My Situation
I’m going with a new format for this specific book review. I’m reviewing Lean Analytics through the story of why I read this book and the impact its had on me.
Last year I started this book review site because I devour a ton of books and I really believe that entrepreneurial thinking in life and business is necessary to improve society. So, it dawned on me that I could combine my two passions, reading books and exploring entrepreneurial thinking, into a hobby of reviewing the best books for entrepreneurs and those wanting to be more entrepreneurial. This is a project I work on outside of my professional work as a business consultant.
Barriers To My Success (Why I Read Lean Analytics)
I treat this book review website as a business in order to make it a sustainable project and to deliver the results I hope for it. To improve this website, I use my skills as an Idea Hunter to continually record and develop creative ideas, usually in the Evernote app. The problem is that I have so many ideas that I don’t know which ones to begin taking action on first. For example, should I start giving books away to those who leave the best comments in order to induce more conversation or should I create a free gift to entice more people to subscribe? Time is limited. Resources are scarce. Prioritization is necessary. But, its unclear how to prioritize during the initial stages of this website project. And, even if I were to prioritize my next actions by some framework, I still wouldn’t know how best to measure success or failure. Every startup and every entrepreneur faces a similar situation. Even intrapreneurs (entrepreneurs in large corporations) typically face some of the same constraints. Therefore, my story and this book are relevant to anyone wanting to make their organization more effective. I read this book to help me decide what to do next with my book review site and how to measure my results.
Lean Analytics was written by Alistair Croll and Ben Yoskovitz. Alistair is an entrepreneur, author, and public speaker (over the last 20 years). This is his fourth book on analytics, technology, and entrepreneurship. Ben is a serial web entrepreneur with over 15 years experience. He is the VP of Product at GoInstant, a venture-backed startup. Both authors have co-founded multiple startups throughout their careers. The authors founded this book upon the principles of Customer Development and Lean Startup. Given the credibility of the authors and my high regard for these principles I knew this book would be worth reading.
What I Learned From The Lean Analytics Book
Read more reviews of this book on Amazon.com by clicking on the above pic.
Right away I learned that we’re all liars. Interesting fact. Entrepreneurs are especially known to be liars. Liars to ourselves. Most humans prefer to tell themselves that things aren’t as bad as it seems. However, to make a business successful we must limit this lying to ourselves and use data to succeed. Chapter two taught me what makes for a good metric (there are 4 elements) and which metrics are simply just vanity metrics. Vanity metrics are those that always go up-and-to-the-right, such as page views and visits, etc.
Much of Lean Analytics is about finding a meaningful metric, then running experiments to improve it until that metric is good enough for you to move on to the next problem or the next stage of your business. ~ The Lean Analytics book
The authors soon had me write down the top 3-5 metrics I had been using to-date and examine them to see which ones were “good” and which were “bad”. I listed the following:
- Number of views
- Number of total email followers
- My Alexa Rank
- Number of total backlinks
- Number of clicks per keyword or referrer per month
4 out of the 5 I had been tracking were “bad” metrics. I wasn’t proud of that. But, from what I learned so far I decided to cross out the bad ones and added 4 new ones I thought were better. Although I do understand a fair amount about web metrics, for some reason I had become lax with monitoring the proper metrics for my own book review website. This wouldn’t happen in my professional work even though I had allowed it to happen for this project. Thankfully, this book inspired me to correct this.
Next, the book suggested I create a Lean Canvas for my business (my book review website) in order to get a snapshot of the business model on one page. This is meant to help one get clarity on the 9 major elements that make up a business model. Luckily, I had already created a business model canvas in the recent past after reading Running Lean by Ash Maurya, the creator of the Lean Canvas. Then, chapter four covered 10 common pitfalls entrepreneurs should avoid as they dig into data for their business.
With an excellent showcasing of analytics fundamentals, the authors next explained 4 popular startup frameworks (Ash Maurya’s Lean Canvas, Eric Ries’ Lean Startup, Dave McClure’s Pirate Metrics, and Sean Ellis’ Growth Pyramid). Then, I was shown how the newest framework, Lean Analytics, lines up next to these. The benefit of the Lean Analytics framework is that it uses the best of the previous frameworks and focuses on metrics at each major stage of a startup. The benefit is that you can now measure success or failure and know by way of gating metrics that tell you if you’re ready to proceed or not.
Chapter six provides the secret to a successful startup or business project: measuring the One Metric That Matters (OMTM) at your current stage. The authors give you four reasons why you should use the One Metric That Matters that will surely convince you of its necessity. There are many metrics you could measure, but there’s only one that matters for your particular business model and the particular stage your business is at. Your business likely falls into one of the six business models that the authors explain in full detail throughout six following chapters each devoted to one of the models. Then, the authors lay out in 5 subsequent chapters each of the 5 stages of the Lean Analytics framework (1. Empathy, 2. Stickiness, 3. Virality, 4. Revenue, and 5. Scale). Upon honing in on which business model you have and which stage you’re at, you’ll have discovered which is the One Metric That Matters to you right now.
The 5 stages of the Lean Analytics framework can be illustrated by a restaurant business. The book gives the following example (abbreviated here):
© Joe Stadele Photography 2013 (website)
- Empathy stage: The owner first learns about her likely customers and their food preferences before opening a restaurant.
- Stickiness stage: After opening, she then creates a menu that she tests out on customers. She makes iterations to the menu as she experiments with different meals and receives feedback on which items to keep.
- Virality stage: She later starts a measurable loyalty program to promote engagement among customers and to drive repeat business.
- Revenue stage: With customer traffic now up, she focuses on profit margins through cost controls.
- Scale stage: With a profitable business now developed, the owner has the opportunity to launch a second restaurant or create a franchise.
After reading the previous chapters, I concluded that my book review website is a “media site” business model, and that I’m currently at the “Stickiness” stage. The book helped me realize I’m at the “Stickiness” stage because:
- I passed the exit criteria for the “Empathy” stage (from my research I know that people want book reviews of the best books for entrepreneurs)
- I’m now looking to build a core set of features that get used regularly and successfully by my website email subscribers
- I’m not ready to go “viral” yet, because I haven’t confirmed through any metrics that my existing users are sufficiently engaged and sticking around
The book provides an extremely useful table on page 267 that lists all the most relevant metrics for each business model for each stage. From my reading so far, I concluded that the One Metric That Matters to me is “click-to-open rate” (CTOR) of my book review emails. This metric is all about measuring what % of subscribers are returning to visit the site after they receive an email informing them of my latest book review. It’s important for a media site such as mine at this stage to make sure it has created a product that engages customers in a meaningful, valuable way. It makes no sense for me to spend all my time and money to attract 1 million unique visitors each month to subscribe to my website email list if I can’t get a sufficient portion of existing subscribers to click through my emails to read my latest book review. Once I know I’m successfully engaging the eyeballs of my existing subscribers, I can afterward focus on going viral to get thousands of new subscribers.
The core idea behind Lean Analytics is this: by knowing the kind of business you are, and the stage you’re at, you can track and optimize the One Metric That Matters to your startup right now. ~ The Lean Analytics book
The book nicely wraps up with a detailed discussion on which benchmarks you should be using to know what is normal and whether you’re successful or not. These are the “lines in the sand” you should be using to know when you’ve completed your current goal and can move on to the next stage of your startup. This section on benchmarks alone is so valuable that you get more than your money’s worth from this.
Conclusion
In the end, I’ve benefited greatly from this book. I now know that I currently need to focus on measuring the level of engagement my audience has with my book review website. My stress level has decreased because I’m no longer worrying about which aspect of my business to work on next. Although the book won’t tell me how I should increase customer engagement, it has shown me that this is what I need to measure at this time and it has given me the tools to know when I’ve succeeded. It’s up to me now to begin experimenting with tactics for engagement. It’s time to Build→Measure→Learn.
Overall, I’m feeling peace of mind. For all this book has provided me with, I sincerely believe this might be the best book for entrepreneurs in 2013. I think you ought to read this book at least once and probably should have a copy handy for when you change your OMTM as you successfully move along in your startup or new business project.
Click the link below to read more about the book on Amazon.com. This is one book you should absolutely own.
Click here to check out Lean Analytics on Amazon.com
If you enjoyed this post, sign up for my monthly newsletter in which I give away free copies of my most recent book reviews.
