September 2, 2025
Blog
How to measure MVP success with the right metrics
When Airbnb launched, it wasn’t the global brand it is today, it was just two men in a small apartment trying to make rent. They built a simple website to rent out air mattresses during a design conference in San Francisco. No app, no booking system, not even payments online. But they had a goal to test if strangers would pay to stay in someone’s home.
That test, an MVP, gave them insightful data. They tracked how many people visited the site, how many signed up, and how many actually booked. Though only a few did, the feedback was gold. Guests loved the idea but wanted photos, better descriptions, and secure payments. With every iteration, they tracked what changed those numbers. Step by step, those metrics guided Airbnb from a side project to a billion-dollar business.
That’s how data validates an idea. Here’s how you can measure your MVP’s success using the right metrics, just like they did.
What should I track as key MVP metrics?
These are metrics people frequently mention when trying to understand whether an MVP is on the right path:
Active Users (DAU / MAU): How many users return daily or monthly.
Conversion Rate: From visitor to user, or user to paying customer.
Customer Acquisition Cost (CAC): How much you spend to get a customer.
Retention / Churn Rate: Are users continuing to use the product (or leaving?).
Average Revenue Per User (ARPU) / Lifetime Value (LTV): Value each user brings over time.
1. Active Users (DAU / MAU)
Active Users show how many people are using your product. DAU (Daily Active Users) measures daily engagement, while MAU (Monthly Active Users) gives a broader view of your reach.
How to measure:
Track how many unique users open or interact with your app or site during a day (DAU) or month (MAU). Most analytics tools like Mixpanel, Amplitude, or Google Analytics can calculate this automatically.
If people return often, it’s a sign your MVP provides recurring value. The DAU/MAU ratio (known as the “stickiness rate”) shows how engaging your product is.
A ratio above 20% means users are returning regularly.
Below 10% may mean users try it once and leave.
How to improve:
Send reminders or notifications that bring users back.
Simplify onboarding so new users reach value faster.
Focus on the feature users interact with most and make that experience smoother.
2. Conversion Rate
Conversion Rate measures how effectively you move people from interest to action. The action can be signing up, completing a task, or making a purchase.
How to measure:
Conversion Rate = (Number of conversions ÷ Total visitors) × 100
Define what “conversion” means for your MVP:
If you’re testing interest, then track sign-ups.
If you’re testing usability, then track first-time actions (e.g., creating a project).
If you’re testing willingness to pay, then track completed purchases.
Tools:
Use Google Analytics goals, Hotjar funnels, or Firebase Analytics to track where users convert and where they drop off.
How to improve:
Optimize your landing page message by making the benefit clear.
Test different CTAs (calls to action) through A/B testing.
Reduce steps in your sign-up or payment process.
3. Customer Acquisition Cost (CAC)
CAC tells you how much you spend to get one paying user. It’s a direct reflection of your marketing efficiency.
How to measure:
CAC = Total marketing and sales spend ÷ Number of new customers acquired
For example, if you spend ₹10,000 on ads and get 50 customers, your CAC = ₹200.
Tools:
Use ad platform data (Meta, Google Ads), CRM systems, or analytics dashboards that combine campaign costs with conversion data.
High CAC might be fine at the start, but your goal is to reduce it as you find better marketing channels or organic traction.
How to improve:
Rely more on organic traffic through SEO or word-of-mouth.
Target smaller, well-defined audiences instead of broad campaigns.
Improve your onboarding flow so visitors convert faster.
4. Retention Rate and Churn Rate
Retention Rate is the percentage of users who continue using your product after a certain period, and Churn Rate is the percentage of users who stop using it.
These two go hand in hand because if retention is strong, churn is naturally low.
How to measure:
Retention Rate = (Users at end of period ÷ Users at start of period) × 100
Churn Rate = 100 − Retention Rate
You can calculate retention by time-based cohorts (e.g., of users who signed up in Week 1, how many are still active in Week 4?).
Tools:
Use Mixpanel, Cohort Analysis in Google Analytics, or Amplitude retention charts.
Retention is one of the clearest signs of product-market fit. If people stick around, your MVP delivers real value.
How to improve:
Gather feedback from churned users by asking why they left.
Simplify first-use experience; users drop when they don’t find value fast.
Use in-app guides or check-ins to encourage continued use.
5. Average Revenue Per User (ARPU) / Lifetime Value (LTV)
These metrics help you understand the earning potential of each customer. ARPU tells how much revenue one user generates in a specific period. LTV estimates how much total revenue a user will bring over their entire relationship with your product.
How to measure:
ARPU = Total revenue in period ÷ Number of active users
LTV = ARPU × Average customer lifespan
Tools:
Use Stripe dashboards, subscription analytics (Baremetrics, ChartMogul), or your own revenue tracking system.
Knowing your LTV helps you decide how much you can afford to spend on acquisition. If LTV > CAC, your model is sustainable.
How to improve:
Add upsells or premium tiers to increase ARPU.
Improve retention because longer relationships increase LTV.
Introduce referral programs to bring in more users without extra cost.
Quick Recap
Metric | Measures | Tools | Main Insight |
DAU / MAU | Engagement & stickiness | Mixpanel, GA4 | Are users coming back? |
Conversion Rate | Activation or purchase intent | Hotjar, GA Goals | Is onboarding clear? |
CAC | Acquisition efficiency | Ad data, CRM | Are marketing costs sustainable? |
Retention / Churn | Long-term value | Amplitude, Mixpanel | Do users find ongoing value? |
ARPU / LTV | Revenue potential | Stripe, ChartMogul | Is the model profitable? |
Final Thoughts
The right metrics don’t just prove your MVP works. They guide what to do next. Engagement tells you if your idea sparks interest, retention confirms it adds value, and conversions show it’s worth paying for.
Don’t wait for perfect numbers. Track, learn, and adjust continuously. Every data point is feedback, every insight is a step forward.
That’s how successful startups grow from measured progress.
If you want to focus on building the product while we handle the validation side, we can help.
At Grey Feathers Studio, we build MVPs that are easy to test, track, and improve—so every number moves in the right direction.