Making impactful decisions in your business means asking the right questions and focusing on the metrics that truly matter. While big-picture metrics like total sales and annual recurring revenue (ARR) give you an overview, they don't provide the practical insights needed for real change. In this blog, we'll dive into the power of behavioral and operational metrics and explore how they can make a difference in your business.
Types of Metrics
Let's start by understanding the metrics commonly used by teams to optimize their business.
- Top Line Metrics
Examples: Annual Recurring Revenue (ARR) and Total Sales.
These metrics provide an understanding of the overall health of your company. However, they lack focus on specific operational details or optimizations, making them challenging to influence directly. To drive meaningful change, it's essential to shift your attention to metrics at the user level.
- Operational + Behavioral Indicators
Examples: Time to Resolve Support Tickets and Trial Conversion Rate.
Operational indicators focus on efficiency, helping you streamline processes and save costs. Behavioral indicators analyze how your customers interact with your business, guiding you to create experiences they love. These metrics, measured at the user or unit level, allow you to make targeted changes that have a significant impact on your overall results.
Which ones can help you move the needle? Operational and Behavioral Indicators!
Operational and behavior metrics are the secret weapons that drive improvements and bring about change in your business. By diving into the nitty-gritty details, measuring per customer or per unit of time, they can uncover small adjustments that yield a huge impact. Global metrics like total sales and ARR are difficult to influence, but unit metrics offer more actionability. Small changes at the unit level can lead to significant changes when viewed collectively.
Potential Hurdles to Measurement
The benefits of operational and behavioral metrics are clear, but not everyone utilizes them for day-to-day decisions due to data-related challenges. Here are some of the hurdles to look out for:
1. It Can Be Difficult to Stitch Together Behavior Across Multiple Systems
Tracking customer behavior across multiple systems can be tricky. Bridging these systems and accurately measuring behavior requires robust approaches to identity resolution (activity schema) or foreign keys (star schema).
2. Traditional Data Models Aren't Built for Nuanced Analysis Questions
Nuanced questions about customer behavior often go beyond the capabilities of standard data models. For instance, you might want to analyze the retention rate for users who liked two items in their first session or three items in their first week. Answering such questions demands a more flexible data model.
The Role of an Activity Schema
To answer impactful questions and seamlessly bridge systems, an activity schema data model is essential. With the right tools, such as Narrator, the process of bridging systems becomes more manageable. Moreover, this model is specifically designed to address nuanced behavioral questions, enabling you to analyze customer behavior and swiftly iterate with follow-up questions, regardless of their complexity.
The Value of Behavioral Insights
Despite their challenges, behavioral and operational metrics offer the most valuable insights for your business. Uber, for instance, discovered that consistently high-rated drivers led to customer loyalty. By leveraging this insight, Uber focused on enhancing the driver experience, resulting in increased customer satisfaction and retention. Strategic moves based on a deep understanding of user behavior can have a transformative impact.
To drive real change in your business, pay attention to behavioral metrics. Top-line metrics provide an overview, but they won't help shape customer behavior or achieve your goals. By focusing on behavioral metrics, bridging systems, and using an activity schema data model, you unlock valuable insights, make informed decisions, and truly move the needle in your business. It's time to rethink your metrics and start making a difference today!