The Right Way to Set Growth Metrics
For all the reasons we walked through above, focusing on one north star metric to grow your business is a dangerous proposition.
Here’s what to do instead:
1. Select a constellation of metrics
Select a constellation of a few key output metrics that capture the full dimensions and core value of the business. Make sure they account for retention, engagement, and monetization, and then monitor the full scoreboard.
2. Break your output metrics into their input metrics
Once you’ve identified your key output metrics, build out the constellation by breaking those outputs down into their input metrics. Drill down until you’ve got a set of actionable input metrics that you can impact directly, and then build your experiments to move those.
Although input metrics are actionable, they don’t always drive improvements in output metrics. You need to be willing to discard them quickly if after some experimentation you find moving them doesn’t improve the output metric. The inputs that successfully improve the output metric are the leading indicators that you need to identify as quickly as possible.
3. Understand and monitor your tradeoff metrics
The next step is to look at the full constellation of metrics, figure out the relationships between them, and identify tradeoff metrics. Because many metrics are interdependent, for every metric you try to improve, determine where in your business you are likely to see a counter-reaction. Then, work to find a healthy balance between your opposing metrics.
Once you’ve worked through this 3-step process and built out your constellation of metrics, get ready to adapt your growth model. As the business grows and changes, you may need to focus on different areas, which may require new input and output metrics.
At the end of the day, this constellation of metrics reflects the health of your business, whether you track it or not. It’s good to simplify and focus as much as you can, but remember you’re never going to find a silver bullet metric, so be sure to zoom in as you experiment, and zoom out as you take a step back to look at your whole ecosystem of metrics.
If you’d like to learn more about how to choose the right metrics to track for your business and build a systematic approach to growth, consider applying for our Growth Series or the Retention + Engagement Series.