Track these key metrics to measure success

Measuring and analyzing certain activities is something we all do and are familiar with. We do it in our daily lives by tracking our weight, calories consumed and/or burned, daily water intake, hours slept last night, and a thousand other things. Not only do we track these but we also analyze them to ensure we are on track and are not digressing from our path. If we are not satisfied with the results, we also make necessary course corrections to ensure we remain focused on our goals.

We realize the importance of tracking our progress towards our personal objectives and businesses are no different. Organizations these days are not only focused on tracking metrics but also analyzing them to gain meaningful insights about their customers and business. Almost every department within an organization measures a set of metrics to understand how they are progressing towards the corporate objective(s) and/or company vision.

Based on my experience across a variety of industries, I observed that the following 5 types of metrics are most commonly used across a wide range of organizations.

1. Growth and Activation
2. Retention
3. Engagement
4. Customer Satisfaction/Happiness
5. Revenue

In the next few paragraphs I will briefly describe what these metrics are, how do we track them, and the key insights they provide. Towards the end of this article, we will use TripAdvisor’s Attractions business to come up with examples from each of these categories.

Growth and Activation Metrics

This category of metrics helps you track how your business/product is growing. Here you are not only looking for the number of visitors/prospects on your website but you would also want to know how many of these visitors were successfully converted into customers or how many of these visitors actually performed an activity on your website. If you are new in your career, it’s easy to get excited when every visitor to your website seems to be signing up for your services or starting free trial accounts. But until your new sign-ups take action to derive value from your product or service, success is far from assured. There is no better indicator of digital business performance than the rate at which visitors are “activated”.

If you are working in a SaaS organization, growth and activation metrics are generally pretty standard across the different industries. These metrics can provide valuable insights like:

• Which marketing channels provide the most growth potential
• Which ad campaigns deliver the newest users or best conversion rate
• Which campaigns deliver the best ROI

Retention Metrics

We all want our customers to become repeated users of our product or service because acquiring a new customer is much more expensive. Churn (customer attrition) is the signal that tells you that something is wrong and that is why your customers are leaving you. But tracking churn alone will not fix your problem, you need to understand how to measure key retention metrics in order to maximize your marketing efforts and align your strategy. Ways by which we calculate retention metrics are — Churn, returning users, and resurrected users (users whom you lost for a brief period but they returned because of some marketing/customer initiative).

Engagement Metrics

Engagement metrics monitor how actively involved your audience is with your content/product. Engaged customers interact with brands through likes, comments, and social sharing. The engagement rate is a metric often used in analyzing the efficacy of brand campaigns. Customer engagement is related to overall profitability, as engaged users are more likely to buy, become repeat customers, and share the product/service with other people.

Before you decide to track these metrics, it is important for you to understand your business goals/objectives. As engagement metrics are aligned with your corporate strategy, they vary across organizations. For example, Youtube counts a view only if you have watched the video for a minimum of 30 seconds. Whereas for Facebook 1 view = 3 seconds of video being played. Both organizations are tracking the number of views but their evaluation criteria are different. This could be because Youtube’s strategy is to tie an average viewership of 30 seconds to advertisement placement, and Facebook’s strategy is to rank the videos based on their popularity and views.

Customer Satisfaction/Happiness Metrics

Low customer satisfaction levels can not only harm your brand’s image but also has a direct impact on your revenue. Customer satisfaction metrics are also called CX (Customer Experience) metrics. These metrics help you understand the customer experience as the way consumers perceive how your brand interacts and treats them. NPS (Net Promoter Score), CSAT (Customer Satisfaction Score), and CES (Customer Effort Score) are the most commonly used customer satisfaction metrics.

Revenue Metrics

These metrics provide you insights into how healthy the business is in general. These metrics also help you understand

• Which products or offers generate the most revenue
• If your marketing efforts are paying off
• How you are doing as compared to your competitors

And much more. The commonly used metrics in this category are — Customer Lifetime Value (CLV), Cost of Customer Acquisition (CCA), ARR (Annual Recurring Revenue), and MRR (Monthly Recurring Revenue).

Now, let us all assume we are working for TripAdvisor’s Attractions business (website link: https://www.tripadvisor.ca/Attractions). Most of the metrics will be recorded on a monthly basis, I will explicitly mention when that is not the case.

Growth and Activation Metrics:

• Total unique visitors
• Unique visitors by campaign/source (organic, social media websites, Google/Facebook/Youtube advertisements, blogs, news, etc.)
• Conversion/Activation rate (number of unique website visitors that convert into bookings)
• Total no. of active experiences (inventory tracking)

Retention Metrics:

• Total number of returning customers
• Repeat Purchase Ratio = Number of returning customers / Number of total customers
• Monthly Churn Rate = (Number of customers at the start of the month — Number of customers at end of the month) / Number of customers at the start of Month

Engagement Metrics:

• Total reviews added by the users (important for SEO optimization)
• Total number of likes/share by the users
• Average time spent on the website by a user
• Average experiences viewed by a user

Customer Satisfaction Metrics:

• Net Promoter Score (NPS)
• Customer Satisfaction Score/ Customer Effort Score (by means of a survey conducted at the end of the purchase workflow)
• Total no. of customer complaints

Revenue Metrics:

• Revenue generated from sales
• Total number of cancelations/refunds
• Advertisement revenue
• Customer Lifetime Value
• Cost of Customer Acquisition

Final Thoughts

Once you identify the metrics, there are tools like Tableau, Looker, and several others that can help you visualize data and allow in-depth analysis. One should always align these metrics with the company objective(s). The industry you operate in might bucket growth and retention together but no matter how you categorize them, the important thing is that you are paying attention to these numbers.

It is really exciting to see what works and what doesn’t for your customer base. You can run several small experiments and very quickly discover if it makes sense for your business. You can identify patterns and be in a stronger position to understand your business and customers. Happy Tracking!

I will be interested to know what metrics do you track in your organization.