What are your actionable metrics?

person reviewing actionable metrics report
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For a report to be actionable, it must demonstrate clear cause and effect”. Eric Ries made this argument in his bestselling book “The Lean Startup”. He is right to stress on the importance of monitoring actionable metrics.

Quite often we get into the trap of vanity metrics. Either these vanity metrics look good or the data is easily available. However, as the name suggests, these do not lead to any action as cause and effect are not established. Have you identified actionable metrics for your business? What metrics do you monitor?

Let us discuss a couple of examples.

Example 1: Cost per Click. Is CPC an actionable metric?

If you have planned or reviewed a digital marketing strategy, you would be familiar with cost per click (CPC). It is the cost you pay for each click on your digital ad or link. If you spend $1000 on a campaign and 100 people click on the ad, the CPC is $10. If 150 people would have clicked on the ad for the same spend, the CPC would be $6.67.

I have quite often come across CPC trends as a separate slide during sales and marketing reviews. It may look something like this for a weekly campaign budget of $1000.

Weekly Cost per Click report. Is CPC an actionable metric?
Chart 1: Weekly visitor count and cost per click (CPC)

For the same budget of $1000, we could see a constant reduction in the CPC after the 4th week. The trend is positive. The CPC is reducing and hence there are more visitors coming to the website for the same marketing budget.

However, is this information adequate to take a decision? Does this report establish cause and effect?

In the present form, this report is not actionable. You need to deep dive into the visitor behavior for actionable insights.

Let us dive into the behavior of the visitors to the website. Let us assume that registration was the goal of the marketing campaign. How many filled up the lead form? How many registered as a paid subscriber?

Weekly trend of visitors, leads and registrations
Chart 2: Weekly trend of visitors, leads and registrations

Once we observe the number of lead submissions and registrations from the marketing campaign, weeks 5 and 6 had the best results. Although the number of hits to the website increased continuously after the 5th week, we received lower percentage of visitor registrations. So, what went wrong? This chart will help establish cause and effect. The report is now actionable. You could now question the effectiveness of the marketing campaign by reviewing what changed beyond week 5. Was it the customer targeting, changes to the landing page design or something else.

The same data can be visualized by reporting cost per lead (CPL) and cost per acquisition (CPA) along with the CPC. This is how the report would look for the same example:

Weekly trend of CPC, CPL and CPA to illustrate actionable metrics
Chart 3: Weekly trend of CPC, CPL and CPA

Example 2 for actionable metric: Demos booked for a new software product

This is another common approach for a progress report. This is an example of a company providing CRM and ERP solutions to businesses. They have launched a new cloud based solution. Their 5 member sales team has been tasked to contact customers from a database and convince them to attend online demo of the software. Number of confirmations for the software demo is the KPI for the team.

Given below is the progress report presented at the end of the month:

Cumulative number of calls made and demos booked are vanity metrics
Chart 4: Cumulative number of calls made and demos booked

The team was able to call 4685 prospects in the 22 working days. They were able to schedule 212 demos for the new product. The progress looks good. However, what actionable insights could you derive from this report? Cumulative progress reports and averages are often misleading.

Let us look at the same performance as per the report given below:

Daily calls and booked demos trend
Chart 5: Number of daily calls, connects, relevant contacts and demos

This chart presents a different picture. The conversion rate since the product launch is almost flat. Look at the yellow curve. The team needs to analyze reasons for low connects to call ratio (40%). 63% of all contacted prospects were marked as relevant contacts. What database is being used for calling? Are contact details obsolete? If the database is generated from a lead generation campaign, are they targeting the right customers? They further need to analyze connect ratios for different days of the week and time intervals during the day.

These were two examples to illustrate the importance of monitoring actionable metrics. Vanity metrics may look good on progress reports and PowerPoint slides. However, they fail to establish cause and effect to give you an improvement plan.

By Nitesh Verma

Founder - Business Management Blog. I am an independent business strategy consultant, helping companies take data driven business decisions. My mission is to find and implement simple solutions for complex business problems.


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