What are actionable metrics?
Actionable metrics are those measures or indicators which lead to action. It is the exclusion of all metrics which do not drive a specific activity, change or improvement.
Put another way, it’s the difference between measuring how long it takes to clean the floors or were the floors clean?
The only metrics that entrepeneurs or business leaders should be using is actionable metrics. Unfortunately most commercially available packages provide a whole host of metrics which do not lead to action an serve only to flatter the user.
For example, website visitors. Whilst most people record the number of visitors (or hits) they recieved in a month, they may have no idea what actions they took when they visited the site.
In a large organisation, different departments may claim credit for the increase in traffic. Maybe it’s the site design. Maybe it’s some article that was written. Maybe it’s a new product announcement or launch, or maybe it’s some change to the checkout/shopping cart that removes a process step.
Whatever the change is, chances are the metrics you collect will have no bearing on the traffic hitting your site.
What metrics are actionable?
I recently stayed in a hotel and the night before checkout we had a copy of our bill and a questionnaire attached to it.
My wife started to fill in the tri-fold questionnaire before we went out for dinner and very quickly got bored of ticking the boxes. There must have been at least 50 questions on a 1-5 scale covering all aspects of the hotel – from arrival, cleanliness of the room all the way to water sports, food in the restaurant etc. You get the idea.
Just say that there were 200 questionnaires completed for that week – and 180 rated the restaurant food as excellent or very good and say 20 rated it as poor or very poor. What does that tell you? Does it tell you that 20 questionaires were completed by guests who were vegetarian and they felt that there was insufficient choice on the menu?
Or, take for example the feedback on the watersport training. Say the stats overall rate the training as very good. It doesn’t tell you that one particular trainer is poor.
I suspect that the hotel or tour operator would state in it’s marketing that 90% of all guests rated the food as excellent or very good. Wouldn’t it be better to say that the restaurant is rated very highly and offers a wide choice of food including meat, vegetarian and sea food dishes.
Any metrics which do not create an action, can only be described as vanity metrics.
If I were running the hotel (which was all inclusive) I’d want to know how much additional spend per guest I was generating. eg. Taking the total guest bills for extra’s and dividing that by the number guests. Clearly I’d want to be increasing that spend per customer. So, I’d look at what was actually being spent, or rather where it was being spent. Was it being spent in the restaurant, the spa or boutique, then look at what it was spent on.
I’d limit the number of actionable metrics to no more than 5. Any more than that that and you’d be struggling to manage them on a daily basis.
Link Actionable Metrics to goals
The old Mckinsey mantra of what get’s ‘measured, get’s done’ is what you should be thinking here. For instance if you goal is to increase sales by 50% over prior year, then the metrics that you use need to relate directly to that goal. Simply measuring sales over last year is a vanity metric. The structure should be to break down your sales into measurable components (eg product) and then measure the impact of offers or promotions one group at at time.
New Economy Actionable Metrics
Use of a split test (eg A/B experiments) produce the most actionable of all metrics, because they explicitly confirm or deny specific theory. A split test is where a user is presented with two versions of a screen – eg. 50% of users recieve the old screen and 50% recieve the new screen. Consequently you can measure which screen achieves the biggest goal ie. signing up to a newsletter or purchasing a product.
You can use split tests to get feedback on anything from small changes to major site overhauls. But the real value of split tests comes when you integrate them into your decision making: trying something, seeing what happens, and then learning for your next ideas. The tests that create the most knowledge are the ones to focus on. If you don’t already have an a/b split tester then Google Website Optimiser could be a good starting point.
2. Per customer metrics.
Vanity metrics tend to distract by focusing attention on abstract groups and concepts. Instead, take a look at data that is happening on a per customer basis. For example, instead of looking at the total number of page views in a given month, consider looking at the number of page views per new and returning customer. This should be relatively constant on an ongoing basis unless a new type of customer/visitor is being attracted.
3. Keyword (SEM/SEO) metrics.
SEM ( Search Engine Marketing) and SEO ( Search Engine Optimization) are great methods for attracting new visitors, but they also can reveal important and actionable insights about visitors, if we treat visitors who were acquired with a given Ad-words keyword as a segment we can then track their metrics over time.
1. Measure what matters. Don’t measure how long it takes to clean the floor, when how clean it is, is what matters. It’s tempting to think that, because some metrics are good, more metrics are better. The key to actionable metrics is having as few as possible. Actionable metrics help identify a problem and provide starting point to solving it.
2. Actionable Metrics, don’t replace asking questions. No idea what the data’s telling you? Get the customers on the phone and ask them.
3. Don’t sweat the small stuff. Don’t worry about how many hits you’re getting on your site, worry about what they do when they get there.
4. Presenting the data. For more information on presenting information, please see the post when good information goes bad.