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5 Innovation Metrics You Need to Know

5 Innovation Metrics You Need to Know
What's new: K-Startup Grand Challenge 2020 for Australian/New Zealand Startups! More information here.

5 Innovation Metrics You Need to Know

When it comes to early stage innovation, we can’t rely on metrics such as ROI or NPV to determine success, particularly given that such metrics favour short term returns whereas disruptive innovation can take years to deliver the kind of returns that large companies are seeking. If you’re evaluating disruptive innovation through a short term lens then disruptive concepts will either not get funded or the plug will be pulled prematurely in the event that they receive some initial funding.

What we want to measure early on in the innovation lifecycle is learnings.

In order to validate that the assumptions underpinning an idea or business model are flawed or valid, we must experiment, learn and iterate relentlessly in order to move closer to product market fit.

Leveraging Dave McClure’s Startup Metrics for Pirates, here are five innovation metrics you need to know:

1. Rate of Acquisition - validating the problem

The first indication that people actually care about an idea is whether or not they actually click through to a website via say, an advertisement.

2. Rate of Activation - validating the solution and features

Upon people finding out a little bit more about the solution, do they leave their email address, contact the company or sign up to a mailing list?

3. Rate of Conversion - validating the revenue and pricing model

Do people ultimately pay for a product or service?

4. Rate of Return - validating stickiness and engagement

Do people come back?

5. Viral coefficient - validating viral qualities

Do people refer friends and family?

Case Study

At Collective Campus, we’ve been working with a global life insurer in this space.

The insurer is interested in building an online

Rather than overcommit and invest millions in design, development, marketing, accounting and legal support before finding out whether people will actually engage, we’re helping them generate the

Based on an evaluation of the portal’s business model we were able to define:

  • Target customer segments
  • The problem being addressed
  • The solution to the problem
  • Key features
  • The revenue and pricing model

We then performed the following activities to generate the metrics that matter across the different tiers of the funnel.

Acquisition: Ran an assortment of customer segment targeted Facebook ads and Google display ads with ad copy addressing the problem we defined and to a lesser degree, the solution.

Desired

Activation: Developed a large number of landing pages with different copy to reflect the solutions and features being proposed.

Google Analytics was

Desired

Conversion: Once people click Find Out More, they are asked to enter their details and click submit. Once they do this a pop-up box appears inviting them to sign up to the portal for one month at a special early bird rate of $10 per month. Note: the portal doesn’t exist at this point and upon clicking ‘sign up’ users are told that “we’re not ready yet and you will be notified as soon as we are”. It’s important to use a mock brand to avoid reputational damage here.

Desired action: Click 'Sign Up' button

Return: We send marketing emails to emails we’ve collected and see if they will open the emails and click back into the site.

Desired

Refer: We send marketing emails to users asking them to share the product with friends in order to receive a month’s free subscription. A simple calculation you can run to test how viral your platform is the viral coefficientInvitebox is a great tool to help you embed a referral function into your emails.  

Desired action: Shares product with friends

Ultimately, you want to determine what your metrics look like today, where you want to be tomorrow and what you need to do to start tweaking these metrics towards where you want to be tomorrow.

However, if after numerous tweaks the numbers still aren’t moving, then it might speak volumes about the commercial viability of the problem, solution or business model you’ve identified.

Don't want to take this approach? The alternative is simply taking big bets on unvalidated ideas and pay up to 1,000x more for an exponentially riskier approach. This alternative approach, which ultimately shuns the customer in favour in inside the building

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Innovation in Local Government

This eBook explores why councils need to change, and what they could be doing to not only maintain relevance, but provide greater value to their communities.

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Steve Glaveski

Steve Glaveski is the co-founder of Collective Campus, author of Time Rich, Employee to Entrepreneur and host of the Future Squared podcast. He’s a chronic autodidact, and he’s into everything from 80s metal and high-intensity workouts to attempting to surf and do standup comedy.

Ask me a question!