Why Measure Metrics?
Innovation is challenging, whether you're disrupting an industry or challenging corporate norms. In today's digital world, it's easier than ever to create and test new ideas, allowing for rapid iterations and informed decision-making. As Peter Drucker famously said, "If you can't measure it, you can't manage it." Accurate measurement and learning are essential to understanding what customers want and refining your approach to achieve success.
Metrics are the lifeblood of any business, providing crucial insights into revenue streams, cost drivers, and the effectiveness of customer acquisition strategies.
By focusing on the right metrics, businesses can gain a clear understanding of their performance, make informed decisions, and optimize strategies for growth. Metrics are essential for identifying what works, what doesn't,
and where to direct resources for maximum impact.
SMART(er) Goals and Metrics
There are many frameworks for choosing metrics, each with its own strengths and applications. One popular framework is SMART, which is designed to help set objectives and key performance indicators (KPIs) in a precise and easy-to-communicate way. First introduced by George T. Doran in 1981 and later expanded by Professor Robert S. Rubin,
| Name | Description |
|---|---|
| Specific |
Clearly defined and focused on a particular aspect of performance. When goals are too broad or vague, they're easy to miss. If they aren't clearly defined, they're harder to measure and achieve. Being vague can lead to mistakes and misunderstandings.
Example: If a company aims to "grow revenue," it can be more specific by focusing on "increasing online sales by 15% this quarter."
This allows the company to prioritize e-commerce strategies over other revenue streams, making the goal more focused and actionable.
|
| Measurable |
Quantifiable and able to be tracked over time. A measurable goal has specific criteria that allow you to track progress and assess success.
Example: If your goal is to launch a new product, you'd set a target to secure 500 pre-orders within the first month. You'd then track the number of pre-orders daily or weekly to measure your progress toward that goal.
This approach is much more effective than simply releasing the product and hoping it gains traction without specific milestones to track success.
|
| Achievable |
Set goals that are ambitious yet realistic, considering your capabilities and limitations. Focus on sustainable progress to keep yourself and your stakeholders motivated by real achievements.
Example: If a sales team sets an ambitious goal to increase sales by 50% in one month, it might quickly become overwhelming and demotivating if progress is slow. To keep the team motivated, the manager could instead set a more achievable goal, like a 10% increase, and then celebrate reaching milestones along the way. This approach helps the team feel a sense of
accomplishment and keeps them focused on realistic progress, rather than chasing an unattainable target.
|
| Relevant |
Goals should be both realistic and relevant, directly aligning with your long-term business objectives. As conditions change,
it's important to adjust short-term strategies to ensure they continue supporting your overall goals.
Example: Review your company's mission and vision statements, or keep them visible in a shared space. Then, go through recent quarterly reports, memos, or any communication about business objectives.
This ensures that you begin the goal-setting process with what's relevant and aligned with your long-term business goals at the forefront of your mind.
|
| Time-bound |
Associated with a specific timeframe for achievement. Time-bound goals have a specific deadline,
which creates urgency and keeps the focus on what needs to be done.
Example: Setting a time-bound goal, like launching a marketing campaign by the end of the quarter, ensures the team stays focused and meets critical deadlines.
Without a clear timeline, the project could drag on, leading to missed opportunities and misaligned priorities.
|
The SMART framework remains valuable because it's easy to remember and simplifies the goal-setting process.
Product case: HealthHub App
Meet Sarah. She's a product manager at a healthcare startup—let's call it HealthHub, Inc. Sarah has been given the challenge of boosting engagement with HealthHub's mobile app.
In the past, when Sarah set goals for her team, they often lost direction. The team wasn't clear on what success meant, progress tracking was inconsistent, and the goals eventually faded into the background.
This time, Sarah is determined to use SMART goals to create a focused action plan and ensure her team stays aligned and on target.
Specific
For a goal to be effective, it needs to be specific, clearly defining what needs to be accomplished and how. Sarah could formulate a specific goal along the lines of:
The goal itself is specific, as it clearly defines the objective and the method to achieve it. She has decided that she wants to improve communication on the website, thereby increasing downloads of HealthHub's mobile app.
Measurable
Setting specific goals is crucial, but ensuring they're measurable is what allows you to track progress and know when you've achieved success.
For instance, Sarah and her team at HealthHub aim to increase app downloads, but by how much? Defining a clear target,
like 10,000 new downloads, makes it easier to monitor results.
They can track these downloads through website analytics and adjust strategies as needed.
By quantifying their goal, they ensure every step is purposeful and progress is tangible, keeping the team focused and motivated.
Achievable
This is the stage where a reality check is crucial. Goals need to be realistic, not overly ambitious targets that set you up for failure. Sarah might review her goal and, after analyzing current market conditions, conversion rates, and web traffic, realize that aiming for 10,000 new downloads isn't feasible. Given these factors and her team's capacity, she adjusts her objective to a more achievable target of 2,000 downloads. This revised goal still drives growth while staying within the realm of what's realistically possible.
Relevant
Now is the time to consider the bigger picture: why is this goal important? Sarah recognizes that increasing app downloads is crucial for boosting customer engagement and loyalty. An increase in app usage directly supports HealthHub's long-term growth and profitability goals. With this context in mind, Sarah revisits her goal so that the definition aligns with the overall mission of enhancing customer retention and contributing to the company's bottom line.
Time-bound
To effectively measure success, Sarah and her team need to ensure they have a shared understanding of the timeline for their goal. It's important to establish when the new web communication strategies will be implemented and set a clear deadline for achieving the 2,000 additional app downloads. By defining these time frames, the team can stay aligned, focused, and aware of progress, ensuring everyone knows when the goal has been reached. This alignment is key to tracking success and maintaining momentum.
The Hallmarks of a Good Metric
While the SMART framework is a popular choice for setting objectives and KPIs, it's important to remember that there are many other frameworks and approaches to choosing metrics. Each framework has its own strengths and applications, and the best choice depends on the specific context and objectives of the project.
A good metric is useful when you can compare it to other data. For example, saying "we increased conversion from last month" gives more context and shows progress, unlike just saying "we have a 5% conversion rate." Comparisons help you see trends, understand changes, and make informed decisions.
A metric should be understandable so that everyone on the team can easily grasp what it means and why it matters. If a metric is too complex or unclear, it can lead to confusion, misinterpretation, and poor decision-making.
Quantitative metrics are essential for any business because they provide clear, measurable data that can be tracked over time. These metrics include things like sales numbers, website traffic, and customer ratings, which are easy to aggregate, analyze, and present in reports. They answer the questions of "what" is happening and "how much," making them ideal for setting benchmarks and assessing performance.
However, quantitative data alone doesn't always give the full picture. It tells you what's happening but not why it's happening. That's where qualitative metrics come in. These are more subjective and often gathered through interviews, surveys, or focus groups. Qualitative data digs into the "why" behind the numbers, offering insights into customer motivations, feelings, and experiences. While harder to measure, this data is crucial for understanding the underlying factors driving the quantitative results.
For a business to thrive, it's important to balance both types of data. Quantitative metrics help you track progress and performance, while qualitative metrics provide the context
and deeper understanding needed to make informed decisions. By combining these approaches, businesses can develop a more comprehensive strategy that not only measures outcomes
but also understands the reasons behind them.
Quantitative metrics are essential for any business because they provide clear, measurable data that can be tracked over time. These metrics include things like sales numbers, website traffic, and customer ratings, which are easy to aggregate, analyze, and present in reports. They answer the questions of "what" is happening and "how much," making them ideal for setting benchmarks and assessing performance.
However, quantitative data alone doesn't always give the full picture. It tells you what's happening but not why it's happening. That's where qualitative metrics come in. These are more subjective and often gathered through interviews, surveys, or focus groups. Qualitative data digs into the "why" behind the numbers, offering insights into customer motivations, feelings, and experiences. While harder to measure, this data is crucial for understanding the underlying factors driving the quantitative results.
For a business to thrive, it's important to balance both types of data. Quantitative metrics help you track progress and performance, while qualitative metrics provide the context
and deeper understanding needed to make informed decisions. By combining these approaches, businesses can develop a more comprehensive strategy that not only measures outcomes
but also understands the reasons behind them.
Vanity Metrics to Watch Out For | HealthHub Case Study
Let's consider some vanity metrics that on the surface look good, but don't tell the whole story. We will continue with the HealthHub case study to see how these metrics can be misleading.
A metric like "page views" is often considered a vanity metric because it counts the number of times a page is requested,
but it doesn't provide meaningful insight into user engagement or business value. Unless your business model relies on page views, such as in display advertising, this number doesn't tell you much about how users interact with your site or how valuable they are to your goals. Instead, you should focus on metrics that count actual users and their behaviors, which offer more actionable insights.
For a business to thrive, it's important to balance both types of data. Quantitative metrics help you track progress and performance, while qualitative metrics provide the context
and deeper understanding needed to make informed decisions. By combining these approaches, businesses can develop a more comprehensive strategy that not only measures outcomes
but also understands the reasons behind them. such
We know earlier we said Sarah should look at app downloads, but in general, downloads alone don't lead to real value. Instead, measure
activations, account creations, or something else such as the % of users that transferred from web to app.
It's crucial to understand where the money comes from. In a business where the majority of revenue comes from in-app purchases, such as free-play games,
then the number of downloads is important. However, if the business model is based on subscriptions, then the number of downloads is less important.
Quantitative metrics are essential for any business because they provide clear, measurable data that can be tracked over time. These metrics include things like sales numbers, website traffic, and customer ratings, which are easy to aggregate, analyze, and present in reports. They answer the questions of "what" is happening and "how much," making them ideal for setting benchmarks and assessing performance.
However, quantitative data alone doesn't always give the full picture. It tells you what's happening but not why it's happening. That's where qualitative metrics come in. These are more subjective and often gathered through interviews, surveys, or focus groups. Qualitative data digs into the "why" behind the numbers, offering insights into customer motivations, feelings, and experiences. While harder to measure, this data is crucial for understanding the underlying factors driving the quantitative results.
For a business to thrive, it's important to balance both types of data. Quantitative metrics help you track progress and performance, while qualitative metrics provide the context
and deeper understanding needed to make informed decisions. By combining these approaches, businesses can develop a more comprehensive strategy that not only measures outcomes
but also understands the reasons behind them.
Quantitative metrics are essential for any business because they provide clear, measurable data that can be tracked over time. These metrics include things like sales numbers, website traffic, and customer ratings, which are easy to aggregate, analyze, and present in reports. They answer the questions of "what" is happening and "how much," making them ideal for setting benchmarks and assessing performance.
However, quantitative data alone doesn't always give the full picture. It tells you what's happening but not why it's happening. That's where qualitative metrics come in. These are more subjective and often gathered through interviews, surveys, or focus groups. Qualitative data digs into the "why" behind the numbers, offering insights into customer motivations, feelings, and experiences. While harder to measure, this data is crucial for understanding the underlying factors driving the quantitative results.
For a business to thrive, it's important to balance both types of data. Quantitative metrics help you track progress and performance, while qualitative metrics provide the context
and deeper understanding needed to make informed decisions. By combining these approaches, businesses can develop a more comprehensive strategy that not only measures outcomes
but also understands the reasons behind them.
Welcome from the CEO
Welcome to SlowFashion!
We are an innovative, data-driven online marketplace where you can buy, sell, and exchange new or used items worldwide. At SlowFashion, we connect sellers looking to find new homes for their gently used items with buyers seeking unique and sustainable fashion finds.
Our platform not only facilitates these exchanges but also ensures secure transactions by charging a commission that acts as a protection fee, safeguarding your purchases and providing reimbursement if anything goes wrong.
We're thrilled to have you on our team! We've just launched an exciting new recommendation feature, and we look forward to your insights.
Aug 12, 2024 at 12:30pm
Thanks! Cannot wait to get started.
Aug 12, 2024 at 12:45pmOnboarding and Metrics
Since it's the end of the quarter, I'd love to get a clear picture of where we stand with some of our key metrics. Could you please pull together the latest data on user engagement, active user rates, and download trends for the app?
I'd like to present this data at our next monthly meeting to give everyone a clear picture of our progress. It's crucial that we understand these trends to make informed decisions about our product development and marketing strategies.
Once you've gathered this information, could you also prepare some insights? Specifically, I'd like you to consider:
- What factors might be contributing to the changes in our average session duration?
- Are there any notable patterns in our active user growth across different regions?
- How do our app download trends compare to our competitors in key markets like Spain, Netherlands, and Germany?
Your analysis will be invaluable for our strategic planning. Let's discuss your findings once you've had a chance to review the data.
Aug 13, 2024 at 09:00amWeekly Average Session Duration
Weekly Active Users
App Downloads by Country
Tasks
Task 1.1
Based on the charts above, which Country showed the most significant growth in App Downloads from May to July?
Task 1.2
Based on the chart showing Average Session Duration, what was the approximate average session duration (in minutes) for the last week shown?