How to define metrics that matter most to your business

Ever feel like you're swimming in a sea of numbers without a compass? Business metrics are here to guide you! They're more than just figures—they're the story of your business's journey toward its goals.

In this blog, we'll explore why these metrics matter, how to align them with your objectives, and best practices for tracking them. So, let's dive in and unlock the power of business metrics together!

Understanding the significance of business metrics

Business metrics are quantifiable measures that help you track success and performance. They bridge the gap between your team's efforts and your company's overarching goals, making it easier to prioritize and focus.

By providing insights into how effective your strategies are, metrics facilitate data-driven decision making. They act as benchmarks for performance, showing your progress from start to finish. This means you can compare where you were before implementing a strategy to where you are after, making informed decisions based on real data.

But it's not just about tracking progress. Monitoring various metrics helps you spot underperforming areas in your strategies. It's essential to define metrics that align with your specific business objectives, keeping them relevant and actionable. After all, too much data can cloud your judgment—so focus on what matters most.

When you explicitly link metrics to well-articulated goals, you ensure clarity and relevance. This connection challenges the significance of your metrics and helps everyone understand their intent. Plus, looking at trends over absolute numbers gives you a better grasp of progress and influences, allowing you to tweak strategies and targets as needed.

The metrics you choose can significantly influence your team's actions, aligning efforts toward common objectives. For example, when Walgreens shifted its focus from profit per store to profit per customer visit, it encouraged behaviors that enhanced customer convenience and ultimately increased profitability. This shows the power of choosing the right metric.

Aligning metrics with your business goals

Picking the right metrics is key to hitting your strategic objectives. When you explicitly link metrics to goals, you ensure they're relevant and clear. Metrics should encourage the behaviors you want—just like in the Walgreens example.

Think about the four key metrics outlined in "Building Infrastructure Platforms":

• Delivery Lead Time: Time from code commitment to successful production deployment.

• Deployment Frequency: Smaller changesets lead to safer deployments and easier testing.

• Change Failure Rate: How often deployments fail and need a rollback or quick fix.

• Mean Time to Recovery: How quickly you can recover after a deployment failure.

Remember, metrics should be adaptive. If they stop being relevant to your evolving goals, don't hesitate to discard or replace them. As discussed in "An Appropriate Use of Metrics", it's important to keep your metrics aligned with where you're headed now.

At Statsig, we believe in focusing on metrics that matter most for your growth strategies. This might include revenue, user engagement, or customer satisfaction—whatever drives your business forward.

Identifying the right metrics for your business

Choosing the right metrics to track is crucial for making informed decisions. Revenue metrics like Customer Acquisition Cost (CAC) and Monthly Recurring Revenue (MRR) help you assess financial health. Meanwhile, user engagement metrics such as Product Engagement Score (PES) and Feature Usage Rate show how customers interact with your product. Then there's customer satisfaction metrics like Net Promoter Score (NPS) and Customer Satisfaction Score (CSAT) that reflect how happy your customers are.

When defining metrics for your business, think about your specific business model and where you are in your growth journey. Startups might prioritize growth-driving metrics, while established companies focus on sustainability and profitability. High-growth tech companies could benefit from complex metrics like the Enterprise Value/Sales/Growth (EV/S/G) ratio, while others may stick to simpler metrics that align with their specific goals.

Adopting a "North Star" metric can guide your overall strategy. This primary metric should capture your company's core value and align with your long-term goals. For example, Monthly Active Users (MAU) for social media platforms or Gross Merchandise Value (GMV) for e-commerce businesses.

Don't forget about operational metrics, which are vital for monitoring internal processes and efficiency. Metrics like Delivery Lead Time, Deployment Frequency, Change Failure Rate, and Mean Time to Recovery help evaluate your development team's performance. By tracking these metrics, you can spot areas for improvement and optimize your processes.

At Statsig, we're all about helping you identify and track the metrics that matter most to your business. Our tools are designed to give you the insights you need to drive growth and success.

Best practices for tracking and adapting metrics

Tracking trends over time gives you deeper insights than just looking at absolute numbers. By monitoring trends in shorter periods, you can better understand how different factors influence your metrics. This approach lets you adjust your strategies and goals more effectively.

It's important to regularly review and adjust your metrics to keep them aligned with your evolving objectives. As your business grows and changes, so should the metrics you track. Changing metrics when they stop driving change ensures you're always measuring what matters most.

When defining metrics, be mindful of potential unintended behaviors that can come from improper use. Metrics should support and inform your decisions—they shouldn't replace thoughtful management. By explicitly linking metrics to well-articulated goals, you keep them relevant and clear, minimizing misuse.

Choosing the right metrics is key to encouraging the behaviors and outcomes you want. Remember how Walgreens shifted focus from profit per store to profit per customer visit? That change drove meaningful growth. When defining metrics for your team, consider how they'll influence actions and align everyone towards common goals.

Closing thoughts

Understanding and leveraging the right business metrics can make all the difference in achieving your goals. By aligning metrics with your objectives, regularly reviewing them, and being willing to adapt, you set your business up for success. Remember, it's not just about the numbers—it's about what they represent and how they can guide your decisions.

If you're looking to dive deeper, check out Statsig's resources on metrics that matter most for growth strategies. We're here to help you navigate the world of business metrics. Hope you found this helpful!