Startups track business metrics. Newsrooms should learn from them.
I've rarely seen newsroom business teams discuss metrics like LTV, CAC, and even ARR outside fundraising or finance. They should be commonly known.
Link: Your SaaS Metrics Are A Result, Not A Strategy, by Itay Sagie in Crunchbase News
I still subscribe to sites like Crunchbase News from my time in startup-land; although it’s been a while since I’ve run the financial side of a business, I’m interested, and I know that I’ll run one again. I see stories like this and wonder: what would it look like for a newsroom to think this way? In startups, these metrics are known top to bottom, but I’ve rarely heard business teams talk about LTV (customer Life Time Value), CAC (Customer Acquisition Cost), or even ARR (Annual Recurring Revenue).
This may be happening in finance and fundraising teams, but the culture of talking about customers / donors in teams more widely often simply isn’t there: metrics aren't communicated, dashboards aren't made available, the concepts of the metrics themselves are not explained. Not everyone should be thinking about this all the time – the firewall between business and editorial is important to maintain – but in order to make sharp prioritization and experimentation decisions, the business side should be much more customer / donor focused than they often are.
Beyond that, this piece points out, rightly, that metrics are not strategy: they’re the measurable outcome of your strategy. They’re important tools to help you figure out cause and effect and improve your revenue efficiency, but they are not the underlying mechanism.
Interesting provocation here from the author:
“The Rule of 4 adds a simple durability check: ARR growth divided by annual customer churn should be above four. If it is low, growth may be hiding a leaking bucket.
[The board should ask:] are we growing on top of a loyal customer base, or replacing customers we should have kept?”
Growth in annual recurring revenue — the portion of your revenue that is from recurring customers like subscribers or monthly / annual donors — is expressed as a percentage. So is churn: what percentage of customers (paid subscribers, members, recurring donors) cancel their commitments and don’t return?
How many newsrooms have those numbers handy? What would it take to measure them? Which systems are missing that would let you do that?
There is so much that newsrooms — including non-profit publications — can learn from for-profit startups and other businesses. There’s a lot to be gained by sharing knowledge from those other domains. Figuring out which metrics successful businesses track and mapping the data gaps inside a newsroom is a good place to start.
