What to Look for in Core Metrics
How does your business deal with measuring and managing metrics?
Many companies struggle to find effective core metrics that make sense for them. Sometimes they even end up measuring a whole lot of unnecessary things. It’s little wonder that many end up with an inconsistent approach!
It’s a frustrating position: when your metrics aren’t well-chosen, it’s difficult to move the needle when it comes to your results.
Good metrics for your business are purposeful and actionable. However, they are not always easy to determine. If you’re looking for effective metrics, here are key principles:
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Make them easy to understand
As a general rule, look for metrics that are self-explanatory. There are metrics that are commonly misunderstood. Sometimes that’s because the company tries to conflate too many data points together which should be captured separately. Sometimes they’re using metrics which really don’t make sense for them.
For example, some companies look at how many leads they got per channel, while simultaneously grouping funnel metrics, up to the point a lead becomes a customer, which can be confusing. It makes more sense to look at everything individually first. You’ll want to be able to answer questions like; “how many of our customers actually originated from Facebook?”
“The simpler, the better” is a rule to keep in mind. Effective metrics display only a few variables and are relatively simple to read. You don’t want to get so caught up in how to read them correctly, that you forget what they actually mean!
Metrics which are easy to understand provoke questions about how to act on the data, rather than how to understand the data. One suggestion is to take the metrics you’re tracking and show them to a company outsider. If they don’t immediately understand what you’re trying to do, then your metrics are probably too complex.
Metrics which are easy to understand provoke questions about how to act on the data, rather than how to understand the data.
Tie them directly to business goals
“Analytics is the measurement of movement towards your business goals.” - Ben Yoskovitz
With the above definition in mind, it makes sense that every metric you choose should be directly tied to your business goals. If you’re creating a metric, but can’t clearly say why it is important as a contributor to a business goal, then there’s a good chance it’s a pointless or distracting metric to be measuring.
When you’re considering metrics, goals are the best starting point. These could be overall organizational goals, or goals for teams or departments. It makes sense that you would have metrics for some teams that are not the same as others, as long as those metrics contribute to a team goal.
Effective metrics contribute directly to the achievement of business goals
The idea behind keeping metrics tied to your goals is that this should keep you on-course, toward where you want to be. A metric that is not goal-related can soon push you away from your overall intentions.
“Analytics isn't about reporting for the sake of reporting, it's about tracking progress. And not just aimless progress, but progress towards something you're trying to accomplish.” - Ben Yoskovitz
Ensure they answer specific questions
Any time you’re analyzing numbers, it can be very easy to get caught up in the weeds. If too much time is spent ruminating over what certain analytics mean, then the chances are you’re not spending that time on activities that grow your business.
The metrics you choose should answer important questions about company performance, and those questions should be specific, and easy to formulate.
This is one important factor behind the creation of Apptics. Not only should you be able to ask a simple question, but the answer should be easy to find. Metrics should always help you to learn something important, while being as straightforward as possible.
If your metric doesn’t answer a very specific question? Well, you need to look very closely at whether you really need it.
Tie them to actions or behaviors
An effective metric inspires action, whether it’s to keep going on the path you’re on, or to effect some changes to ensure you stay on the right track. In any case, someone should be taking ownership of each and every metric you have so that they’re not simply data on a report.
Assigning ownership is a key thing to think about when you’re devising your metrics strategy. Whose responsibility will it be to pay attention and trigger any action as a result of the metric? It needs to be owned by someone who has the necessary empowerment to make changes.
If you look at a metric and really can’t say what action or behavior you’d put in place to impact it, then it might not be a priority for tracking. The job of analytics is to get you to your business goals - if you can’t take action, how useful is the metric, really? There are probably better metrics you could be focusing on.
Ensure you can make comparisons
The most effective metrics allow you to make comparisons. How will you know that you’re improving if you don’t have anything to compare to?
Comparisons may be made over time, between different customer segments or even against competitors. This helps you to gather data that is meaningful and actionable.
The ability to segment channels or audiences is especially important, so that you can drill down on the metric. For example, what if your overall sales experienced a dip, however within that data, sales via Facebook reached a high? This helps pinpoint where any problems might lie.
Beware of “vanity” metrics
Vanity metrics are the sorts of numbers that you look at to feel good, but mean little in terms of achieving your business goals. You might say “woah, look at that impressive number,” but you can’t tell anything about your business by looking at it.
The danger of vanity metrics is that they can lead you into thinking you’re getting results, even though the numbers are actually meaningless. These sorts of metrics tend to go against the principles outlined above in this article.
To make a further distinction, some metrics can be useful as a small part of a bigger picture, but taken on their own, they become vanity metrics. For example, number of website visitors per month might fall into this category. It’s a useful measure if you’re using it alongside looking at the number of conversions (to get a conversion rate), but website visitors as a metric on its own is pointless. You’re not making money from visitor numbers!
You could look at metrics as either vanity or actionable. Actionable means that the metric links directly to business success (conversion rates, for example), whereas a vanity metric does not. Actionable metrics tend to align closely with your revenue or costs. For example, looking at your growth rate last week might help you to discern whether a new marketing campaign is effective.
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Sometimes, especially if you’re a smaller business, finding and managing the right metrics can seem to take a lot of time that you don’t really have. However, it’s important to be tracking and measuring, so that you can take appropriate action to meet your goals.
For these reasons, effective metrics tend to be simple. They’re easy to understand and they’re directly tied to what you need your business to be achieving. They also tend to answer simple questions.
Those metrics are also actionable and comparable. When you look at them, you understand the types of actions you should be taking to improve them. You can waste a lot of time on meaningless metrics, so take a look at yours - do they meet the principles we’ve outlined?
Try out Apptics for the simplest way to bring your key metrics together. Check us out here.