What are metrics?

Feedback loops are a profoundly effective way of augmenting individual behavior — dynamic speed displays have fared far better at getting drivers to slow down than any previous attempts such as speeding fines and traffic cops setting up speed-traps. The difference between the two is that the former features a feedback loop that provides feedback in almost real-time and gives the user a chance to modify their behavior while the latter offers no such provision.

An attempt to provide feedback in a manner that is concise and easily understandable usually involves distilling behavior into measurable quantities and processing these measurable quantities such that they resonate emotionally with the individual currently in the feedback loop. Each of these measurable quantities form the basis for metrics; numbers that quantitatively represent user behaviour.

Why are metrics important?

The value of a product, from the perspective of the consumer, is determined by the job(s) that the product performs. The job being performed has an impact on the user’s interactions and behavior in presence of the product. Since metrics, collectively, are a proxy for user behavior, companies obsessively track metrics of their user base to better understand the jobs that customers use their product for and thereby ascertain their value.

From the closely intertwined relationship between metrics and the value of the product, it follows that the goals for product managers are defined in the form of metrics. Product managers are expected to deliver changes in some metrics while being given free rein to determine the means of achieving this change.

How do you pick metrics?

It is useful to keep the analogy of feedback loops in mind while thinking about metrics. While developing the dynamic speedometer, the designers identified the speed as the core metric that finally had to be changed in order to make the roads in the vicinity safer. In addition they hypothesized that a flashing indication of their speed, updated in real-time, alongside the speed limit was enough to emotionally resonate with most speeding drivers. The effect turned out to be so popular that it worked in spite of the absence of any punitive consequences.

Similarly, it is up to you to craft user stories of consumer behavior, map those out in the form of metrics, and then use track those metrics to inform your decisions about future decisions regarding the direction of your product.

Real life examples

• Facebook realized that getting a new user to 10 friends in 7 days was critical to move the needle on their retention and did all they could to remove frictions between a user signing up on the platform and becoming friends with ten people they know who are already on the platform.
• For a two sided marketplace like Uber, the key metric they want to measure is number of trips completed — this entails increasing both the drivers on the supply side, and riders on the demand side. Also remember, your key metrics will change over time — again, in Uber’s early days, it was to eliminate what they called “zeros” — when a rider opens the app, but there are zero free drivers nearby. This required bringing as many existing cab drivers onboard the Uber app, many of which were done manually by company’s employees.
• Medium, a platform for writing and reading thoughtful pieces, closely tracks “Total Time Spent Reading” on their platform. This requires not only an increase in the number of readers, but also increase in the quality of content being surfaced to these readers by the platform.
• Monthly Recurring Revenue (MRR) is a good key metric for businesses that sell services to other businesses (B2B SaaS businesses)