OMMT: what is it? How it came to be?
The rise of technology startups in the early 2000s gave rise to the lean startup movement. In his book, Eric Ries talks about the importance of a more agile form of entrepreneurship, focusing on experimentation and being ready to adjust the concept (“iterate”), as you get more feedback.
This lean approach can be applied to any field. Doing more with less is something we should all apply, whether we are publishing a book, or running a restaurant.
Since this philosophy relies on feedback loop, having an idea on what to track is essential for the process. The one metric that matters or OMMT, a term popularized by Alistair Croll, can be best described as the one metric you should care about above any other metric.
In a world where you can pretty much track anything you want with a growing list of tools like Kissmetrics, Google Analytics, Hotjar…. Having an idea of what really to focus on, can spare a lot of time (and mental space) to focus on what really matters.
Two things to consider in identifying your OMMT:
There are many frameworks to use when identifying your OMMT. Here is a non-exhaustive list of some of the more famous ones :
– Eric Ries’s engines of growth
– Dave McClure’s pirate funnel
– Sean Ellis’s Growth pyramid
– Ash Maurya’s Lean Canvas
Identifying your OMMT is a relatively straight forward process, 1) if you understand what business you are in (your business model) and 2) what is your current growth stage, are you still polishing your MVP (minimal viable product)? Or you work for a big company with streamlined processes?
1) Your OMMT will depend on what type of business you are in
Each business model has some metrics that determine how the company is performing. Let’s take an ecommerce website. Obviously, the success of the product can initially be measured by revenue.
Metrics like conversion rate and average revenue per user are some of the metrics that can give you a straight forward idea about the health of the business.
2) Your OMMT will change as you move to new growth stages
Stage one : MVP construction and identifying key features
In the first stage, the focus should be on validating your presumption: does anybody want this thing we are building? This can only be answered by asking actual potential customers. Based on this kind of feedback, you build an MVP (minimal viable product). Only then we can move to a more quantifiable approach.
The OMMT for this stage should revolve around user interaction with your product or platform. How are they engaging with it? Are there any patterns? This will help you in deciding what goes into the MVP, and getting rid of unpromising features. Maybe this involves simplifying the buying process by removing steps, or it’s a recipe no one orders…
Stage two : making sure it is sticky
At this point, we have a set of core features that are battle tested. As we get to know users more, we will keep iterating the MVP. The primary Goal at this stage is retention, making sure that people are sufficiently engaged with key features.
If you are building a note-taking app, what is the percentage of users who open a new note each day? Do they do this repeatedly each month, or they stop using it after a few days?
Stickiness is not loyalty per se, although the two concept can seem closely related. Some businesses shouldn’t rely on making customers stay, especially if the product is a one time purchase like expensive equipment. Stickiness is more about creating an ecosystem where you turn your customers to advocates of your product, bringing a new stream of eager customers.
Stage three : viral growth
At this point, we have a recurring source of income coming to a small percentage of users. The next big question is how to make this thing bigger? You need a way to make customers invite their network to use/buy your product. Some businesses have it easier than others because their business model has an inherent network effect (think Gmail).
The one metric that matters in this stage will be the viral coefficient, or some other related metric that lets you measure the number of new users brought by each one of your customers brings.
Stage four: getting paid, OMMT for your revenue model
The best way to measure whether a business is thriving, is by looking at the return on investment you get for every dollar you put in. Your OMMT at this stage will revolve around the growth rate each quarter in relation to the previous quarter ((Current quarter-previous quarter)/Marketing & sales expenses previous quarter)).
Concepts like customer life value (CLV) in comparison to customer acquisition cost (CLA) will determine the health of your business. If you spend more than 200 dollars to acquire a customer that spends 50, clearly something needs to be adjusted.
Stage five: reaching critical mass
Now it’s time to look beyond the company, your OMMT will be related to your whole ecosystems as a whole: competitors, supply chain, comparing different acquisition channels. Running experiments (documented ones) is mandatory to stay on the competitive edge, especially ones related to finding ways to make your current business model more efficient.
It’s also the time to enter new markets and the need to de-risk the endeavor by evaluation lead metrics well before diving in.