Growth is a love triangle: understanding relations between metrics, business and customers
The analysis of service and product performance falls short when companies try to make sense of data in a one-size-fits-all manner. I believe three main points are essential for getting started with your data-driven, customer-centric business:
- Growth metrics relate to the core of your business model
Is this conversion rate good? Is this bounce rate bad? Is this click-through rate optimal? Well, unless they are in some extreme, all those are relative. The important idea is to understand how these relations work in your business model.
The relations between metrics vary according to the very nature of your business. That helps to define which are the metrics that really matter. Companies often skip this step, because it’s so easy to hop into the reports from Google Analytics. But that creates confusion, not clarity.
- Growth metrics relate to one another
If you are launching an entirely new service, for example, you must understand what is the tipping point that gets customers to sign up, or to hit the purchase button, or to stay with you — those are not seen in numbers. The job is to translate those into numbers.
You will not find any meaningful business results after simply “increasing time on site”, or “increasing page views”. The trick is to understand how to relate a measurable thing to the core experience customers are looking for. That’s when you start leveraging the customer experience in your favour.
- Growth metrics relate to the kind of customers you have
Then compare the types of customers you are attracting (a monthly subscriber, a once-a-year buyer) to the effort it takes to get more of these customers (social media ads, referral programs, word of mouth).
Finally, what action to take upon which metrics — pick the one which will generate most impact.
While measurements are nearly an exact science, the relationship between data and business models is, by nature, full of uncertainty. The job is to make the most reliable system out of it.
Read the full article on the Digitalist.Global Blog.