Fatih Koca, an analytics expert with Mixpanel, says he’s often asked, “what are the right success metrics to measure?” Well, without understanding which to measure, IT managers might as well not be collecting anything, he says in a recent article on The Next Web.
But fret not, your analytics could be far more pointed and purposeful if you follow a measurement framework Koca says he and his team developed to provide guidance on data-informed growth.
“The idea is simple,” he says in the Next Web article. “Pick one focus metric that are tied to the business goals and then pick one metric that matters for each phase of the customer journey, from acquisition to retention. Make sure to closely monitor these metrics, understand the why behind the trends and take necessary actions to improve them.”
“The more granular metrics that teams and individuals spend their time on, growing in specificity, are what I call Level 1 and Level 2 metrics.”
Level 1 metrics are all about the things which complement the “focus” success metrics: product reach, percentage of users that achieve a desired outcome, engagement wiht a product/service, and customer retention.
“For example, if your focus metric was the weekly active users of a product, a good level 1 metric would be to measure the 7-day retention of a user, to make sure you’re not spending marketing on a particular thing to keep users around for only a few days,” he says.
Business-specific success metrics
Each of your business-specific success metrics should be owned by a specific department in the company, meaning that analytics should be a critical part of the company culture.
Koca says “level 2” metrics are both exciting and dangerous – with too few, you won’t understand your product, and with too many, you’ll have too much on your plate to improve.
Here’s an example of all of this:
Koca gives the example of a subscription-based video streaming product.
Focus metric: weekly active subscribers; the ability to attract the right audience and convert them to paying subscribers and keep them watching streams.
“A weekly active subscriber means that they’ve watched at least one video in a 7-day period, and this metric critically measures whether a user is actually getting value out of the product.”
Level 1 metrics: number of paid subscribers (reach); percentage of users that become a subscriber within the first seven days of their visit; minutes viewed in a week divided by the platform’s weekly active subscriber number; 1-week retention of weekly active subscribers; average revenue per subscriber (a business specific metric).
Level 2: Overall retention of subscribers; reactivated subscribers; new subscribers. The amount of video starts divided by weekly active subscribers. How sticky is the content you’re serving to users?
Koca says the ultimate goal of these success metrics isn’t to drown in data, but to help truly understand how customers interact with your product or service.
“The key advice I can give you is to be analytical both about the data you collect and the way you parse it – try and think of things to creatively measure, and how you can divine said measurement into an actual conclusion. In short – focus brings understanding, and that understanding then drives toward the right action to take,” he says in the article.