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What are good metrics

What are good metrics?

There are two types of metrics: points and vectors.

Points have a one value at one time. These are things like your bank account or the ammount of customers you have at a certain date.

Vectors are directions. The define the ammount of change.
The unit is usually either time or money.

Time
How many new customers per month do you get? How much does your business cost per month.

Money
How much new customers do I get per Euro spend on marketing? How much does fullfilment cost for each customer.

Many think, that if you get the points right, the vectors will align.

A (widely used but actual false) Peter Drucker quote describes it best:

 

"What gets measured gets improved"

 

The reverse is true.

What get’s improved, makes nice measurements.

If you are thinking business as an infinite game, only vectors matter.

The second thing about metrics, is:

Less is more

If you have loads of metrics, you can’t use them to steer your business. Only to observe it.

Take one point and two vectors. Then improve the vectors.

Example:

Point:

  • How many customers do you have?

Vectors:

  • How many customers do you gain each month?
  • How many customers do you loose each month?

Of course there are more metrics you could choose. And you can break them down endlessly.

But why measure, what you won’t improve anyway?

Focus is king

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