Choosing Metrics That Matter

Ryan den Rooijen
Ryan den Rooijen

When Tamagotchi launched in 1997, it ignited a global craze. Children who had never before cared about data were suddenly obsessing about their virtual pet’s hunger and the value of its “Happiness Meter”. While it is easy to poke fun at this, fifteen years later adults demonstrated similar behaviours with the release of Nike’s Fuelband. How much “NikeFuel” did you generate? Both are good examples of the adage that “you treasure what you measure.”

This is worth keeping in mind for organisations that want to be data driven. Rarely would a business already be measuring the right metrics when they set off on their data transformation journey. It is more likely that they value certain data simply because they have gone to the trouble of collecting it, if they even have metrics. Many have never given the question serious thought.

What metrics capture your organisation’s well-being? Photo by Joi Ito.

While considering what the right metrics are for an organisation might not feel that urgent — visualisation often gets more attention — it is fundamental. Metrics can shape every part of your organisation: what strategy you choose, how you assess progress against your goals, or how you reward employees. The wrong metrics can not just hamper progress, but actively disincentivise teams from pursuing the right course of action for your organisation.

A classic example is sales. If you primarily measure sales, without paying attention to the cost of acquisition of customers — whether digital ads, physical retail, brand building investment, etc — you can find yourself losing money despite increasing revenues. The same goes for customer feedback.

Focusing on the wrong metrics can also reinforce availability bias, whereby people make the wrong assumptions through an over-reliance on data that they can easily recall due to frequency, recency, or memorability. Simply put, if you obsess over a metric you will be tempted to use that to justify what you are seeing, even if it happens to be the wrong metric to use.

Numbers can provide comfort — but do they provide clarity? Photo by bradhoc.

Data is important, but paying attention to what metrics you are distilling and why, is critical. Ask yourself, are these the right metrics? Do you understand how they tie to your goals? For example, if you are a brand looking to create helpful content, is bounce rate the right metric for your website? After all, a high bounce rate combined with a non-trivial time-on-page could indicate that your visitor had their question answered perfectly and therefore left.

Given the complexity of organisations today there is nothing wrong with wanting to provide clarity by focusing on a number of core metrics, but make sure they are the right ones. Otherwise at best you will be missing an opportunity to optimise, while at worst you will be mislead by your own data.

Finding the right metrics to represent your organisation is not easy. In the words of sociologist William Bruce Cameron: “Not everything that can be counted counts, and not everything that counts can be counted.”

— Ryan

Data & Analytics

Ryan den Rooijen

Chief Strategy Officer of Appsbroker CTS, the leading Google-dedicated consultancy. Formerly Chief Ecom & Data Officer.