5 Rules for Successful Success Metrics

Mar 1

Here’s an analytics truism: everyone wants a dashboard (a.k.a. key performance indicators (a.k.a KPIs), success metrics, scorecards). Managers want a barometer of performance, a hammer to use on their subordinates, and a straightforward quantification of their business. Below are a few of the guidelines we use when we take on this task:

1. Actionable metrics

Ask yourself: what would I do if the metric is out of line? Do I have the levers that can impact it? Measures that track final outcomes like revenue or total customers don’t give you much time to react or guidance about what to do next.

2. Less than five.

When I first started at AOL, a friend of mine pointed to the dozens of reports flying around the organization and remarked (I paraphrase): "This many ’important’ metrics just indicates that nobody really understands this business." If you struggle to boil down, you should spend more time defining success and understanding the factors that drive performance.

3. Simplicity over comprehensiveness

We don’t agree with Thomas Davenport’s call for more proprietary metrics:

You know you compete on analytics when...You not only are expert at number crunching but also invent proprietary metrics for use in key business processes.

In our experience, you’re better off if you choose metrics that can be understood outside your corner of the world. One common trap we’ve seen is a desire to create a single comprehensive metric; this metric is often an index that combines a number of factors into an overall measure of performance. The result: numbers that are meaningless without a lot of context and difficulty in interpreting deltas.

4. Presentation matters

Your dashboard should be easy to understand and provide enough data to give your audience context. I’ve seen many dashboards that stubbornly show only the current state of a metric and the change from the previous week. Why so stingy with historical data? At Juice, we always show trending and try to give users a means to "cut" the data - by business line, customer type, month, etc.

5. Evolve to goals.

Metrics without goals can be a waste. Unfortunately, getting people to agree to specific targets can be painful. After all, goals start us down a slippery slope toward clear accountability. Here’s what I’ve found works: start by focusing your energy on getting people to buy-in to the success metrics. Get clarity on definitions, show trending, and incorporate them into the organization’s vernacular. Be patient: one day someone will raise their hand in a meeting and ask if there are targets for the metrics. Pretend to act surprised by the cleverness of this suggestion.

Zach Gemignani