Part 1: Ladder of metrics, North Star and AARRR

Module 7 · Sat 29 Aug

A metric is a number tied to a goal, with a clear definition, time grain and cohort. A KPI is the most important one for tracking progress. Good product success = user value + business value, so metrics should show both. Start from the user's job, then pick the metric.

Class case - UberPool: rider job = travel cheaper in a car (track trip completion, savings, wait time, ETA accuracy); driver job = earn efficiently (revenue per hour, utilisation, idle time). In two-sided markets, the scarcer side often gets priority.

• Ladder of metrics: input (a lever you control) → output (the result). Leading = early predictor; lagging = confirmation later.
• North Star = the single best measure of value. Class example - Spotify: total listen time. Inputs: playlists, follows, skip rate. Lagging: subscription and ad revenue.
• AARRR: Acquisition → Activation (first real value) → Retention (repeat use) → Referral (users bring users) → Revenue. Don't force it where the business model doesn't fit.

Retention curves: high and flat = habit product; sharp drop then flat tail = trial-and-filter; flat, drop, recover = seasonal. Class case - Cred mapped a metric to each AARRR stage (e.g. installs and ROAS for acquisition). Strategy tools to know: Porter's Five Forces, PESTEL, STP, SWOT.