How to Manage Metrics to Make Good Business Decisions

By Dmitrii B. | Metrics

Jul 17
metrics

Metrics are not tools, they're indicators

Decision-making in business is answering the question "What is the next step?". To know that, you need to first figure out where you are as a business at the moment. That's what metrics are for.
What do they indicate? Many things, but the outcome depends on how well you manage metrics and extract the data they hold.

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Check out this example.

  • We sold 7 kettlebells.
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    We sold 7 kettlebells over the last 30 days.
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    We sold 7 kettlebells over the last 30 days on a single Google Ads keyword.
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    We sold 7 kettlebells over the last 30 days on a single Google Ads keyword. Cost per Order is $10, profit -$2.  
  • We sold 7 kettlebells over the last 30 days on a single Google Ads keyword. Cost per Order is $10, profit -$2. Lifetime value is $300.

Feel the difference? Right, context matters.

So remember, there's no universal template. Businesses are unique each by themselves. They're much like living organisms, with millions of different aspects to them: from market specifics, regional and national disposition (like some fast-food chains), scale, corporate identity to staff qualification, business hours and CEO competence. Even ergonomics of a workplace can act as a metric to (for example) define the efficiency of your workforce.

LIFEHACK: for new in-house projects I often just install basic tracking codes (e.g.: Google Analytics) and wait for the first conversions to kick in. Only after that, I do in-depth planning and set up an analytics tool kit.

Analytics and decisions

Metrics and analytics are extremely complex subjects. These subjects are manageable but require time, patience, effort and experience. Analyzing and making solid business decisions is usually impossible for one specialist to handle in medium or large businesses. Decision making usually requires a pair consisting of top-level manager (or CEO) and a proficient analyst, capable of identifying, processing and properly presenting analytic data to a decision-maker. The pair can be extended to a number of more than two specialists. It all depends.

TIP: there is one (but not the only) approach to metrics I like and use to weed out metrics I do not need. I answer a series of questions about a metric. If all answers are positive, I take the metric into consideration.

  • Does this metric have any practical meaning to it?
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    Can I influence it?
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    Is it related to the business process?
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    Is it possible to predict its fluctuations?
  • Have I foreseen and considered everything there is about it?

In my experience it works fine, but, yet again — it is not the only viable approach. There are tons of articles on metrics all around the Internet. Reading almost any material on the subject will eventually pay off, as you will be gradually able to grasp the idea of metrics and data-driven decisions more and more. So, if you entertain the idea of mastering metrics yourself, and feel like a natural born handy-andy, suit yourself.
I'll just give you a brief depiction of what options you have in regard to metrics analytics.

DIY

Who: startups & some small businesses
Benefits:
  • You save money.
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    New experience.
Downsides
  • Long time frame.
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    A probability of crucial, costly mistakes.
Why bother:
  • ​You have no money.
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    You have unlimited time capacity.
  • Challenges and new frontiers excite you.
  • Analytics is actually your job.

In-house solution

Who: medium to large businesses 
Benefits:
  • Extra flexibility: customize analytics tools to your company's specifics.
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    Better data security: your company, your solution, your data, your storage.
Downsides

Why bother:
  • ​You're a really large company with lots of specifics: you want your analytics team and solution factor in things beyond regular metrics.
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    You have finances and have an in-house (preferably) development team.

Online Solutions

Who: most businesses, with few exceptions. 

Benefits:
  • Convenient ready-made solution.
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    Pricing: most online services are really affordable. 
  • Competence: services like Lean-Case provide high-quality results and various options.
  • In the long run, the service can be managed by just your single employee.
Downsides
Why bother:
  • You are smart about your finances.
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    You need not just analytics, but a business consultant (and more). 

Agency Service

Who: anyone willing to allocate some budget
Benefits:
  • Budget flexibility: most of the time you can negotiate a price by delegating only part of the task (e.g.: you conduct financial analysis and market research yourself, and the agency does competitor research).
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    Direct communication: a lot of agencies work tight with their clients and give guarantees, and provide excellent customer support.
  • ​​​​Competence: think of it as an in-house analytics team that you rent. Agencies can cover a lot of ground for you and make it cheaper than a full in-house solution.
Why bother:
  • You are smart about your finances.
  • You need a personalized approach, but you seek that sweet spot between “custom” and “affordable”.
  • MICRO CONVERSIONSSCALE ANALYTICS USER COVERAGE FROM 1% TO 100%
  • E-COMMERCE METRICS WHAT REALLY NEEDS MEASURING
  • COHORT ANALYSIS: GROWTH METRICS VS PRODUCT METRICS


To sum it up on metrics-driven decisions

Metrics-driven decisions are a crucial factor in the survival of your business. They may propel your business to the greatest of heights as well as ruin it if you do not take metrics seriously. It doesn't mean that your business won't function. It doesn't mean you can't manage your business and drive the profit up (more or less). It only means that without a proper analysis however good you are in your old-school approach, in the modern environment you are bound to be left far behind by your competition.

As a conclusion, it is fair to say the size of your business is directly proportional to the necessity of implementing metrics analysis in your business practices. So choose your options according to your results, needs, and budget.

About the Author

Founder of GRIN tech - boutique agency doing things online and claiming to do a full cycle: design, development and marketing. Apart from client projects and everyday hustle GRIN tech's team is playing around with in house projects like Avokado.today

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