The importance of defining an OMTM in your validation process

Frauke Schryers
11 January 2023
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The importance of defining an OMTM in your validation process

Frauke Schryers

1. The one to rule them all

We’re not just only referencing a certain ring here, but also the one metric that matters (OMTM) that you need in your business, daily. Are you in an innovation process or have you arrived at the validation step of your NPD? Then learn why having the OMTM, matters and what advantages it can bring to your team.

2. What is an OMTM?

Before we can tell you the importance of having an OMTM we need to explain to you what it means.

It is ‘the only metric you care about above anything else at any given time’ according to Ben Yoskovitz. A quick sidenote already: it doesn’t mean that you shouldn’t install other metrics as a sub-metric, you’ll need those too. This one metric just makes it easier to focus, amongst other advantages.

Some classic examples of an OMTM are:

  • Number of activations, retention, customer lifetime value…

There are best practices in choosing the OMTM, but already an indication of a good metric is when you make it a ratio, you make it comparable in time and when it helps you to change your behavior.

Before we dive deeper, it is good to know the difference between the north star metric (NSM) and OMTM. While the OMTM can be different for each team for a particular period, the NSM is the umbrella metric for the entire company. For example:

  • Number of nights stayed – Airbnb
  • Number of active users – Facebook
3. Why is having an OMTM important?

Having a One Metric That Matters brings different advantages, but they all come down to the same foundation, which is the focus.

It is meant to help you grow your business in the right direction. As you know there are thousands of metrics you can use and a lot of them you certainly should. But what is the direction you want to go in and how are you going to measure it? Do you want to have more customers, or do you want to focus on customer satisfaction first?

It will help you to prioritize what issue to focus on first. What problem do you want to fix that relates to the OMTM? If you’re focused on customer satisfaction, your after-sales care might get prioritized over your marketing fixes.

It will also help you and your team focus. You will be generating a lot of data and a lot of insights. It will help once you know what metric matters most for your team, so you can focus on that one.

It helps to keep your team unbiased. When you need to make decisions or make prioritizations this metric will guide you along the way.

It will help you to avoid innovation pitfalls. When you will get more adept at identifying and measuring metrics that matter, it will help you to keep primary stakeholders on board as well as their support. Next to that, it will also create an experimental environment, which is exactly what you need when it comes to innovation.

4. How to choose an OMTM IN YOUR VALIDATION PROCESS?

As a first and big disclaimer, it is important to take note that as your company and team(s) evolve(s) over time, that one metric can (and should) evolve with you.

So how do you choose the right metric, the one that rules them all? It is decided based on two big parameters; One, what is the state of your current business, and two, what type of business are you in?

That means that first, you need to know what your main goal is for your company (except making money for most). Are you a company that is focused on e-commerce where customers buy things? Are you in media where you get paid per click? Or is your business plan based on a subscription model, or even SaaS? This first step will help you to get in the right direction regarding the types of metrics that matter for your industry and the type of business you are in.

Secondly, you need to know what phase your business is in. What kind of validation do you need at this point? What different stages could look like for a startup:

If you are past the start-up phase, you know you will still have to innovate to stay relevant and optimize the product (or service) you offer to your client. In this case, you can extrapolate the same theory. Think about what stage of your innovation track you are in. Are you generating awareness for your innovation project and want to focus on the #of employees attending your town hall meeting? Are you looking for engagement and people to give input (#ideas, #initiatieves run…) or do you want to focus already on your output (# prototypes built, #experiments run…)? Or do you want to get out there with your MVP and get an OMTM in terms of # customers generated, #sign-ups or #cost savings?

When you look at the stages of product development you can see a lot of resemblance with startups, which is also the case for the right OMTM.  In NPD you will also need problem validation, solution validation, and business model validation with its hard measures.

As you can see linking the right OMTM to the right phase that suits your type of company can be quite a challenge. In the innovation approach of The House of Marketing, one of our cornerstones is that we can help you validate customer-centric solutions. We will guide you through workshops to get to that one metric that rules them all which is the perfect fit. Want to just grab a coffee and talk validation, don’t hesitate to give us a call.

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