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‘Well, It Looks Like the App Is Working’: 6 MVP Metrics for Founders and Investors

The app is on the market… What’s next? You could start looking for investments, but first we suggest checking how the project works. And it’s not enough just to ask the first users for feedback — you need actual numbers. We at Purrweb have gathered all the most vital product metrics and explained their meaning in this article. Plus, we’ll tell you which metrics investors and accelerators look at.

Reading time: 3 minutes

Table of contents

Other reasons to use metrics

MVP release — is one-third of the way to the actual market entry:

Develop an MVP → release an MVP → ✔(you’re here) collect user feedback → improve the product → release the full-fledged app

The metrics below will help you collect unbiased user feedback. With them, it’s easier to change hypotheses and adjust the app.

Retention Rate

Shows how successfully your business interacts with customers: what percentage of users renew their subscriptions or make new purchases.

How to calculate it. Subtract the number of new customers from the total number of the customers who made purchases during the month. Then, divide by the number of customers at the beginning of the month.

For example, this is what the formula for an online store looks like:

RR = (120 − 40) ÷ 100 × 100 % = 80 %

100 + 40 – 20 = 120 — the total number of customers at the end of the month.

100 — the number of customers at the beginning of the month.

40 — the number of new users.

20 — the number of the users who bought nothing over the month.

How to increase it. Figure out what affects the customer churn and launch marketing mechanics, such as promotions and a free trial period.

Daily / Weekly / Monthly Active Users

Represents the size of the audience and characterizes how much the product gets used.

How to calculate it. Figure out the number of unique users. For example, if 10 people installed your app yesterday, and 4 of them have opened it today, then today’s DAU equals 4.

How to increase it. Implement product reminders . For example, build a notifications schedule so that push notifications  are received on the days with the lowest DAU. 

Conversion Rate

Shows the percentage of the users who performed the target action, for example followed a link or registered.

How to calculate it. Figure out the percentage of the interested customers. For example, if 2,000 people downloaded your app during the month, and 200 of them registered, the CR formula will look like this:

CR = 200 ÷ 2 000 × 100 % = 10 %

How to increase it. Track the entire user journey and find the stage when they ‘drop out’. Fix the flaws, for example, refine the ads and monitor the CR changes.

Lifetime Value

Shows the total profit you get from a single customer, during the whole period they use your product. This metric reveals the payback rate of your business strategy. For example, if LTV is below the cost of attracting new users, then your project is losing money.

How to calculate it. LTV = ARPU * LT

ARPU (Average Revenue per Unit) is an average revenue you get from a customer.

LT (LifeTime) is the average time a customer uses your product. For example, ARPU over half a year is $100, then

LTV = $100 * 6 = $600

How to increase it. Increase ARPU or LT. For example, reduce the customer acquisition costs by choosing more efficient channels.

Churn Rate

Characterizes the number of users that stop any kind of interaction with a product. 

How to calculate it. Figure out the percentage of the lost users. For example, at the beginning of June, the newsletter base included 3,000 subscribers. During the month, 300 new subscribers were added. By the end of the month, the total number of subscribers was 3,100.

The number of the lost subscribers = 3 000 + 300 – 3 100 = 200

CR = 200 ÷ 3 000 * 100 % = 6,7 %

How to reduce it. Focus on the individual approach. For example, offer a unique pricing plan to the significant ex-customers.

Customer Acquisition Cost

Shows the amount of money your company spends to ensure acquisition of new users.

How to calculate it. Figure out the ratio of marketing costs to the number of new customers. For example, your company spent $100 on X ads and got 50 customers. In this case, CAC equals:

CAC = $100 ÷ 50 = $2

How to reduce it. Optimize the marketing strategy. For example, identify the inefficient user acquisition channels.

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