Using actionable metrics to grow your e-commerce

Unlike vanity metrics, an actionable metric tells you what needs to be done so you can attain your goals. Actionable metrics provide a scientific way of determining what exactly to change to get a better result.

One of the best examples of this would be the results of an AB test. In an AB test, you use a specific variable to compare how two different alternatives improve your results. Let us say you have a landing page and are not sure what call to action to use on the button under the product. You could settle on two alternatives, Buy Now, or Buy here. The variable here is the call to action. You can use a metric such as clicks on the button for either alternative. You can decide instead to measure actual sales from each.

The click-through rate is an actionable metric because from measuring it, you can decide which Call to Action works best.

You don’t necessarily have to be comparing two alternatives but these metrics must be relevant to your goals. You can never go wrong with measuring changes in sales or conversion rate because ultimately, sales are why your business exists. Return on Investment, Churn, customer value are examples of other actionable metrics. You can also measure steps in the customer purchase process from the time customers are aware of you to the time they make a purchase.

There are a number of things that make it easy to spot actionable metrics:

  1. Focus on the ‘macro’ metrics. Ideally, your metrics should move you closer to business goals. These goals should be directly related to your business. Let us say you are measuring button clicks. If more customers click on one button more than the other but no one actually buys anything, then the experiment is a waste. A good Macro metric would be sales.
  2. Create simple reports. Fancy multicoloured graphs, spreadsheet and presentations are overrated. Keep reports simple enough that any user can look at it once and see what is needed. There are a number of useful ways to do this. Funnel reports summarize data according to your customer lifecycle. Any drop-offs are immediately apparent. Cohort analysis will help you compare different groups of users over the long term. AB test results are great for showing effects of short-term changes to specific variables
  3. Talk to people. Ultimately, metrics only get you are far as the actions of your consumers. Their motivations and reasoning are something else entirely. Actionable metrics should preferably be traceable to the people who generated them. If your funnel report shows that 100 out of 300 people signed up but did not make a purchase, you should be able to generate a list and get in touch. This is especially important for startups when qualitative information is important in improving the product.

There is a learning curve to this but it is absolutely necessary for getting value from your data. Once you get started, you will also get a better idea of what tools to use to get the right information from your data. Don’t get caught in the vanity metrics trap this 2019.

Article by

Glenn Ogolah.

Avoid the vanity metric trap this 2019

Not all data is born equal. With all the graphs and analytical tools available, one might be forgiven for getting carried away.

You’ve probably heard that data in the new oil. The whole world seems to be going nuts over it. Marketers want to understand their consumers. Customer service wants to get a handle on user experience. Finance needs to track efficiency. Logistics managers want to cut back on delivery time and cost. Every department is at least trying to use data to get better. More than ever, it is possible to collect and process massive amounts of data.

However, not all data is born equal. With all the graphs and analytical tools available, one might be forgiven for getting carried away. Vanity metrics are statistics that look good on paper but are in reality meaningless. More scientifically put, they are measures that show improvement but are unrelated to your business goals and mission.

A great example of a vanity metric would be web traffic. Let us say you are running a display ads campaign driving people to your website. Your website will definitely receive higher traffic. The campaign is a success, right?

Well, not really.

If your website is selling something, the traffic is not very relevant if your sales don’t change. If you are showing content, the number of repeat visits might be more relevant unless you plan to run search campaigns perpetually. Maybe you need more subscribers to grow the website audience?

How to tell if your metrics are vain

The most important thing to keep in mind here is context. Whether a metric is a vanity metric or not entirely depends on what success is for the business. In this situation, does measuring website traffic help you measure the effectiveness of your campaign? If your goal was simply awareness, then perhaps. If you are comparing different types of ads the metric could be useful. But for goals like sales, conversions, subscribers or actual web audience, you need to dig deeper.

There are multiple other examples of metrics that might be considered vain. The number of visits to a shop, likes on your Facebook page, visitors to your stand even number of customers. There is a simple rule to avoiding vanity metrics in your data. Ask yourself, will this information help me make better decisions in meeting my business goal? If the answer is no, then your just being vain. If the answer is yes, then you are on the right track with actionable metrics.

Article by Glenn Ogolah.