How To Develop Metrics That Matter for Your Business

Large businesses are inherently complex. As the sheer number of customers, product lines, and teams increase, the number of goals and metrics increase as well. Our analytics and finance teams use business intelligence tools (Mode Analytics + Tableau) on top of a data warehouse (Redshift) to build and monitor metrics that give us a high-level health pulse on the business.

Showing metrics like Total Registered Users on our dashboard was our first mistake. That number will always go up. Its a vanity metric that doesnt help you day-to-day. All you can do with it is jump up and down and say, “We have tens of thousands of registered users! Yay!”

If you take away one thing from this article, let it be that. Thats the secret to dashboards. They put failure and success up in big letters on the wall. Companies are full of experiments and a failed one is nothing to cry about. Just dont do the same broken thing again tomorrow, fix it! A good dashboard with the right metrics will help you call out broken processes and fix them.

If you look again at our first three metrics, youll see they were all totals. Total users, total active users, total paid users. In the newest version of our dashboard weve changed them to rates: Signups per Week and Connection Rate. These rates tell us immediately whether were still going strong or whether growth is stalling. If theres any slowdown in growth we want to know about it ASAP.

How to develop metrics that matter
  1. Consider your objectives. The first step in developing metrics for your business is to consider your goals. …
  2. Use SMART goals to establish objectives. …
  3. Define benchmarks for each metric. …
  4. Develop a measurement plan.

Metrics That Matter – How to Build a Startup

Why are metrics important?

Metrics are important because they help you track progress toward your goals and make important business decisions. They provide you with important information about your businesss performance in key areas so you can make informed decisions about how to reach your goals. For example, you can use metrics to measure how effective your recent social media marketing campaign was in generating traffic on your companys website. Based on how well the campaign worked to meet your customer engagement goals, you may choose to continue with the same strategy, make adjustments or use a different strategy for your next campaign.

Metrics can help you communicate your goals and business strategies to key stakeholders. They provide context and inform your stakeholders of how you plan to measure certain aspects of business performance, and you can use the data collected to demonstrate your successes to clients and investors. When you can provide quantifiable evidence of your businesss successes to your stakeholders, they may be more willing to stay invested in your company. Metrics make measurement possible by defining your goals and establishing processes for collecting performance data.

What are metrics?

Metrics are methods of measuring the success of specific business processes. Theyre a way of quantifying performance so businesses can assess how effective their strategies are for reaching their goals. For example, a business can measure the productivity of its employees to determine how efficiently they work toward meeting production goals. Based on this metric, they may implement new processes to increase efficiency. They then collect additional data related to employee productivity and compare it to the initial result to assess the effectiveness of the new productivity strategy.

Business metrics can apply to almost any aspect of a business. Metrics can specifically measure aspects of marketing performance, sales, finance, software usage, social media engagement and service quality. Depending on your business and its goals, some of these metrics may be more useful than others. For example, if your business runs primarily online, you may spend more time developing metrics that measure your social media engagement than a business that doesnt have an online presence. Choosing the right metrics for your business depends on knowing what measures provide the most value for evaluating your performance successes.

How to develop metrics that matter

Here are some steps to help you choose and develop the right metrics for your business:

1. Consider your objectives

The first step in developing metrics for your business is to consider your goals. Having a clear objective is essential for choosing the right metrics to assess your progress toward them. For example, as the owner of an e-commerce retail business, your goal may be to develop a system for tracking what proportion of visitors to your website follow through with completing a transaction. Establishing this general objective provides a starting point for developing metrics that help you measure your performance.

As you consider what objectives to measure using your metrics, think about what key areas are important to measuring your businesss success. Different types of businesses may need to monitor some aspects of their business more intensely than others. Identifying these key areas can help you choose which metrics are most important to monitor the performance of your company.

2. Use SMART goals to establish objectives

After determining your objectives, narrow them down into more specific, measurable components. One way to specify your objectives is to use the SMART goals method. SMART stands for:

Using this method helps you specify what you hope to measure using your metrics by setting a measurable goal. Its important to make sure your goals are achievable and relevant, meaning you can make realistic plans to achieve them and they contribute value to your business in some significant way. When setting goals, its also important to define a timeframe for meeting your objectives. Setting deadlines or creating a schedule with smaller milestones that contribute to a larger goal helps you pace your progress and track your effectiveness at regular intervals.

For example, if your goal is to develop a metric for measuring the ratio of visitors to your online shop and the number of visitors who complete transactions, you can specify that goal further using the SMART goal method. An example of a SMART goal version of this objective may state that you wish to develop a metric that measures the proportion of visitors to your online site to the number of visitors who complete transactions to implement in the next month. You plan to use this metric to increase the transaction ratio by 15% over the next quarter.

3. Define benchmarks for each metric

To help you establish a specific goal for each metric you plan to track, identify a benchmark to give you a foundation for defining a measurable and specific goal. One way to establish a benchmark for your business is to consider a competitors performance data. Evaluate their businesss current level of performance and their goals as a point of comparison for defining realistic, measurable goals for your business. If your business is just getting started and hasnt gained enough data of its own for a benchmark, looking to a competitors data can help you set realistic goals.

For a more established business, you can use any informal data collection youve performed to define a benchmark. Even if you havent established formal metrics for your business, you can review certain types of performance data, like your sales numbers, to determine a performance average. This information can provide you with a baseline number for establishing your SMART goals. For example, if you plan to use a metric to assess how much your online sales increases within a particular time period, its first important to know how much you earn in sales on average.

4. Develop a measurement plan

Finally, after choosing what metrics to implement and your goal for implementing them, create a plan for tracking your data. Some aspects to consider when developing your measurement plan are how often you plan to assess each metric, what tools you wish to use to measure your metrics, how you plan to record your data and what methods you wish to use when analyzing your results. For example, some metrics you may measure daily, while others you might look at on a weekly or monthly basis.

Determine if you need to purchase specific software to track and record certain metrics or if you can track and record your data manually or with an online analytics tool. Also, consider whos responsible for recording data related to specific metrics, who has access to that data and how to report performance data. For example, you may assign the sales manager to track their daily, weekly and monthly sales metrics. They may record this data in a formal report and submit it to the sales director each month for assessment.

FAQ

How do you make metrics matter?

How do you get a metricsthatmatter login to register as an MCT?
  1. Go to the MCT Registration.
  2. Fill in all the required fields: First Name. …
  3. Receive login information in the email you provided. …
  4. Using the token provided to you in the email, activate your account within 24 hours.

What metrics matter the most?

8 Metrics that Matter Most in 2020
  • Cost per Acquisition (CPA) of Target Audience. Analyze your trailing 6 month ad spend to learn the market rate for engagement or for email acquisition. …
  • Cross-platform engagements. …
  • 90-Day Retention. …
  • Republican vs. …
  • Time of Day.

Do metrics matter?

Focusing on metrics that are imperfect or not meaningful can have serious impact, leading management to make poor decisions that hurt the business. Usually the root cause lies in companies sticking to historical metrics that measure what was possible to track when they were created, not what should have been measured.

Why Do metrics matter?

Metrics help transform the vague requirements that a customer gives into a series of numbers that can be used to accurately map the process for its efficiency. Metrics tell us whether a process is good enough to meet the customer’s requirements or whether it needs to be better.

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