What are Metrics? Full Guide and Examples
Understand what metrics are and explore which ones are the most beneficial to track for your business.
What are metrics?
Metrics are quantitative measures that reveal important information about your business processes and their performance. Every team has specific metrics they evaluate and those used by accounting might differ from those used by your operations team.
Businesses can use metrics to assess and track performance, effectiveness, and efficiency within a specific functional area or project. Your team can use the results to make valuable changes and improvements.
A business can use a gathered group of metrics to build a dashboard that visualizes and organizes data in meaningful ways. These can be used by analysts or members of your team who can regularly review them to produce valuable performance assessments, which can be used to develop effective business strategies.
Metrics are also used to map out robust financial and operational strategies.
Benefits of tracking metrics in business
When analyzed correctly and used to make intelligent business decisions, metrics can reap many rewards for a business.
- Establish goals: Business metrics are invaluable for setting relevant and measurable goals. Once established, companies can track progress and make necessary adjustments to achieve targets.
- Performance evaluation: Metrics enable businesses to better evaluate performance, tracking progress against key performance indicators (KPIs) to gauge whether targets are met.
- Communicate insights: Communicate findings from your analysis to relevant stakeholders to align understanding and encourage collaborative work to meet key goals.
- Make decisions: Use the insights from gathered metrics to guide decision-making for more informed and effective choices.
- Identify strengths and weaknesses: Tracking business metrics helps identify areas that are doing well and those that need additional attention. Assess what needs work and refocus your efforts.
- Allocate resources: Key business metrics give a more detailed overview of where additional resources may need to be allocated, such as expanding your team.
- Reduce costs: Businesses can use metrics to identify where costs can be reduced, to increase profitability or to place budget elsewhere.
- Manage risks: Metric analysis shows a variety of key indicators, enabling businesses to be more proactive in managing and mitigating potential risks.
- Improve customer satisfaction: By using metrics to gather insights on customer feedback, companies can better understand what their customers need and make valuable improvements to increase overall satisfaction and retention.
KPIs vs. metrics: What’s the difference?
Though metrics and KPIs are related, they are distinctly different regarding purpose and scope.
The main difference between metrics and KPIs is their scope. Metrics cover a broad range of quantifiable measures used to assess specific elements of a business, including financial, customer, and operational measures. KPIs are a subset of focused metrics directly tied to strategic goals.
Regarding granularity, KPIs are more specific in their measurement. They are usually chosen because of their direct impact on a specific area of success. Metrics can be both high-level and detailed. They may not always be tied to a specific target but rather the overarching goals of a business.
Key business metrics worth tracking
Metrics is an all-encompassing word that includes various trackable areas. The key is to know which key business metrics are the most beneficial to track for your unique goals.
Business conversion rates represent how many users have taken a desired action and most commonly represent a purchase, but they can also reflect other actions like mailing list sign-ups or content shares.
Tracking conversions can indicate how successful your product or service is or the effectiveness of your marketing efforts. If conversion rates are low, you can then assess corresponding metrics that help you pinpoint the problem so you can determine and make the appropriate improvements.
Lead-to-client conversion rate
This metric measures how many leads eventually become customers. Tracking lead-to-client conversions gives you a more detailed insight into the effectiveness of your sales strategy. It can also indicate the overall quality of your potential leads.
If you have higher lead-to-client conversion rates, rest assured that you are likely effective in nurturing leads and have a robust sales strategy.
Customer acquisition refers to the amount of new customers a business gains.
Monitoring customer acquisition can provide valuable insights into the overall growth of your customer database. This enables you to dig deeper into which of your efforts are performing well and those that might not be as successful as planned. If your customer acquisition rates are low, you likely need to reassess how you market your business.
Tracking engagement involves a wide variety of customer interactions with your business. This includes the number of visits to your website, time spent on specific pages, interactions with your social media posts, and whether users have shared content, to name a few standard engagement metrics.
High engagement rates and interactions suggest your audience finds value in or is interested in your work and your brand. In tandem with engagement metrics, it’s important to track and gauge overall customer satisfaction and loyalty. Comparing engagement rates with complementary metrics like these can help you understand which of your online content is proving the most successful in driving quality leads.
In contrast to customer acquisition, customer retention metrics can help you understand customer loyalty. In other words, if your customer retention rates are low, you likely need to reassess how you keep your customers returning over time.
It’s cheaper to retain existing users than it is to acquire new ones. If your retention rates are high, it indicates good customer satisfaction and effective nurturing strategies. Keep an eye on your retention rates to assess whether you need to make changes for existing customers, such as improving product onboarding, lowering prices, or producing more helpful content.
Customer acquisition cost (CAC)
CAC is how much it costs to bring in new customers. To calculate, you need to divide your total marketing and sales expenses by the number of new customers you have gained within a specific period.
By better understanding how cost-effective your marketing efforts are, you can make insightful decisions on where changes to the strategy might be appropriate.
Net promoter score (NPS)
NPS is all about customer satisfaction. It measures how likely your customers are to recommend your product or service to others. If rates are high, your is successful enough that your current customers like it so much they’re willing to share it with their community.
Customer churn tracks the overall turnover of the customer database. It looks at how many users cancel their subscriptions without renewal or only make a singular purchase after a specific period.
Tracking churn rates shows businesses that another area needs assessment—such as pricing packages or product usability—to avoid revenue drops.
Product metrics explained
Product metrics assess the performance and continuous success of a specific product or service.
Typically, product metrics are user-centric, focusing on how users interact with the product. They help uncover vital information about how well users engage with the product and what they’re satisfied with, displaying numerical components such as time, ratio, and rate.
You can make improvements indicated by the data pulled for areas they don't respond to well.
Using product metrics also enables you to align your broader goals and strategy planning. Doing so will indicate whether the product contributes to business success or fails to meet targets.
Businesses can use product metrics to drive aspects such as pricing, messaging, interface, and feature decisions.
Marketing metrics to consider
Marketing analytics digitally track and assess the value of marketing efforts. The gathered data uncovers user behavior information and identifies a customer database's insightful patterns. Marketers can then use these metrics to optimize their strategy and increase conversions.
The data collated with marketing metrics spans a broad range of first, second, and third-party data, with the former two being the most valuable to marketing teams. First-party data is directly collected from customers of a business and has heightened value because it is specific to individual users.
Second-party data is information from a trusted partner, such as Google Ads. Though not collected directly, it’s reliable because it’s from a trustworthy source and is relevant to your business.
These metrics can empower marketing teams with the knowledge that accurate data back tactics and strategy.
Refine your metrics as they evolve
It’s unlikely your customer’s preferences will stay the same—as with most things, our wants and needs change over time. Businesses should continuously evolve in ways that keep up with their customers.
Update your core metrics as your customer’s desires change. Failing to do so could mean you miss opportunities for potential growth. The metrics you tracked during the initial startup phase should differ from what you track when entering your product lifecycle's growth and maturity phases.
A core metric you track in the startup phase is conversion rates, assessing how many users visited the site and then made a purchase. You’ll then need to focus on areas like retention and length of customer lifetime by the growth phase.
Treat your metrics like different marketing funnel stages, and you’ll find it easier to adjust with your users.
Dig into your metrics with Amplitude
Metrics are invaluable for garnering a deeper insight into your business, including your marketing and sales strategies, how your customers feel about you, and how your product or service can help them.
With Amplitude, tracking and understanding your core metrics is easy. Find out more about the above metrics and dig deeper into the details of your business.