The goal of this blog post is to provide four tenets for effective metrics design.

What is a tenet?
Tenet is a principle honored by a group of a people.
Why is effective metrics design important?
Metrics help with business decision-making. Picking the right metric increases the odds of decision making through data vs gut/intuition which can be a difference between success & failure.
Four Tenets for effective metrics design:
- We will prioritize quality over quantity of metrics: Prioritizing quality over quantity is important because if there are multiple metrics that teams are tracking then it’s hard for decision-makers to swarm on areas that are most important. Also having multiple metrics decreases the odds of each metric meeting the bar for quality. Now if you have few metrics that are well thought out and meets the other tenets that are listed in the post, it will increase the odds of having a solid data driven culture. I am not being prescriptive with what’s a good number of metrics you should have but you should definitely experiment and figure that out — however, I can give you a range: Anything less than 3 key metrics might be too less and more than 15 is a sign that need to trim down the list.
- We will design metrics that are behavior changing (aka actionable): A litmus test for this that ask your business decision-markers to articulate what they will do if the metric 1) goes up N% (let’s say 5%) 2) stays flat 3) goes down N% — they should have a clear answer for at least two out of three scenario’s above and if they can’t map a behavior change or action then this metric is not as important as you think. This is a sign that you can cut this metric from your “must-have” metrics list. This doesn’t mean that you don’t track it but it gives you a framework to prioritize other metrics over this or iterate your metric design till you can define this metric such that it is behavior changing.
- We will design metrics that are easy to understand: If your metrics are hard to understand then it’s harder to take actions from it and so it’s a pre-requisite for making your metrics that are behavior changing. Also, other than increasing your odd for the metrics being actionable, you are also making the metric appeal to a wider audience in your teams instead of just focusing on key business decision makers. Having a wide group of people understand your metrics is key to having a solid data driven culture.
- We will design metrics that are easy to compare: Metrics that are easy to compare across time-periods, customer segments & other business constructs help make it easy to understand and actionable. For e.g. If I tell you that we have 1000 paying customer last week and this week, that doesn’t give you enough signal whether it’s good or bad. But if I share that last week our conversion rate was 2.3% and this week our conversion rate is 2.1% then you know that something needs to be fixed on your conversion funnel given a 20 bps drop. Note that the ratios/rate are so easy to compare so one tactical tip that I have for you is that to make your metrics easy to compare, see if a ratio/rate makes sense in your case. Also, if your metrics are easy to compare then that increases the odds of it being behavior changing just like what i showed you through the example.
Conclusion:
In this blog post, you learned about effective metric design.
What are your tips for picking good metrics? Would love to hear your thoughts!