5 Reasons Why Signals Matter More than Metrics When Starting Your Business

As you start your business, you’re likely to encounter a deluge of data points and metrics.

In addition, you'll likely be seeking metrics that show confirmation of your success. But metrics can be a wasteful distraction.

From website traffic to sales figures, these numbers seem to tell the story of your company’s success or failure.

But in the early stages of your startup, it’s essential to discern between mere metrics and meaningful signals. Here’s why.

1. Depth over Breadth

Metrics are quantitative data points, like the number of website visitors or app downloads. They’re superficial indicators and can give you a false sense of progress. For example, you might celebrate 10,000 downloads of your app, but if only 10 people are using it daily, then you’re missing depth.

Signals, on the other hand, delve deeper. They’re qualitative insights that provide context to metrics. For instance, understanding why most downloaders aren’t using your app daily is a signal. Perhaps there’s a usability issue, or maybe your onboarding process is not clear. Signals provide actionable insights, while mere metrics can often lead to vanity victories.

2. Quality Relationships

Metrics might tell you how many followers you have on social media or how many people have signed up for your newsletter. However, they won’t tell you about the quality of these relationships.

Signals, like customer feedback, testimonials, or direct interactions with clients, will tell you about the strength and quality of these relationships. It’s more valuable to have 100 dedicated customers who love and advocate for your product than 10,000 passive ones.

3. Avoiding Misdirection

Metrics can be seductive. It’s easy to chase after increasing numbers, believing they equate to success. This can lead to decisions that prioritize short-term boosts over long-term value.

For instance, you might run aggressive marketing campaigns to inflate your user numbers, but if these users aren’t genuinely interested in your product, your churn rate will skyrocket.

This post was partly inspired by a story I heard on a (recent episode)[https://www.lennyspodcast.com/an-inside-look-at-figmas-unique-gtm-motion-claire-butler-first-gtm-hire/] of Lenny’s Podcast.

Claire Butler was the first marketing hire at design software company Figma. After the team had worked on building Figma “in the dark” for over two years, they started showing the product to potential customers and an interesting signal started to emerge….

Early potential users would excitedly grab the founder’s laptop to try the software themselves. They couldn’t wait to get their hands on it.

This is the kind of signal that’s impossible to gain from traditional startup metrics.

Talking to your customers early and often is needed to gather these type of signals.

Signals guide you to focus on what genuinely matters, ensuring you’re moving in the right direction.

4. Understanding the “Why”

Metrics tell you the “what,” while signals clarify the “why.” If you notice a spike in website traffic (a metric), understanding the reason behind it (a signal) is paramount. Maybe a popular blogger mentioned your product, or perhaps there’s a technical issue leading to false stats. By prioritizing signals, you’re in a better position to make informed decisions.

5. Adapting with Agility

For startups, agility is a superpower.

Signals, being more insightful and actionable than metrics, enable quick pivots. If customers provide feedback (a signal) about a missing feature, startups can adapt swiftly. Whereas, if you’re only looking at user numbers (a metric) without understanding their needs, you’re likely to miss out on opportunities to iterate and improve.

In summary, metrics are undeniably valuable and play a role in monitoring your business's health. But when starting out, you should prioritize signals.

They offer depth, context, and actionable insights, paving the way for a more effective approach to growing your new business.

So, as you embark on your entrepreneurial journey, remember to look beyond the numbers and listen to the signals—they often have the most significant stories to tell.

Nerd Out on Business

I launched a niche SaaS business in 2017 and sold it for mid-8 figures in 2020. I'm here to help you in your journey to achieve financial freedom while having fun doing so.

Read more from Nerd Out on Business

Few things in business are worse that working with an asshole. Building a business is inherently filled with uncertainty and high pressure. Expect it. Drawing inspiration from Dale Carnegie’s timeless advice in “How to Win Friends and Influence People”, you can greatly benefit by avoiding the three Cs: Criticizing Condemning Complaining The tone at the top matters. You set the cultural blueprint for the entire organization. By refraining from criticizing, condemning, or complaining, founders...

When I was starting my SaaS business, I was referred by a mentor to local startup consultant. I set up a meeting. As I walked into his office, I was full of energy about the idea I had. Sitting down in a chair in his office, he welcomed me and stood up in front of his whiteboard ready to share his secrets of success with me. He wrote in big, bold words: A BUSINESS PLAN I immediately thought, “I’m pretty sure I know what I want to build but I’m not an asshole so I’ll listen”. He went on to...

Going from no knowledge of software development in 2015 to beginner a year later changed my life. “The 7 Habits of Highly Effective People” by Stephen R. Covey is a classic personal development book. One of its core principles is “Put First Things First,” which is Habit 3. In the book, Covey introduces a time management matrix to help categorize tasks based on their urgency and importance. Here’s a breakdown: Quadrant I – Urgent and Important: These are crises, pressing problems, and...