Defining the right metrics to track and continuously evaluating them is crucial for any start-up.

Only by seeing the metrics improve will you know you’re on the way towards your long-term goal of finding a sustainable business model.

The right core metrics differ from start-up to start-up, but often they’re things like increases in number of paying customers, average session length per customer, and number of recommendations generated per, say, one thousand customers.

Each start-up has to find its own right metrics to give it direction and a realistic view of its progress.

When analyzing data, it can be helpful to use the so-called cohort analysis. Instead of simply looking at how the revenues or user base have grown in general, compare how new customers behave compared to old ones.

Say one of your core metrics is your recommendation rate.

To understand how it advances, you should examine the following factors: On average, how often did customers who signed up six months ago recommend your product to their friends?; What about customers who signed up four months ago?; Two months ago?

By comparing cohorts (in this case, groups of users who signed up at different times) and their respective recommendation rates, you can see whether you’re advancing towards your goal.

Only if the metric is improving are you progressing; otherwise, you’re stagnating.

Every start-up has to define its core metrics and analyze them properly.