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“If you don’t measure it, you cannot improve it”. You’re doing great with sales and leads, congratulations! But what next? What kind of user metrics should you be keeping track to improve your performance (apart from direct revenue metrics)? The most important e-commerce businesses make decisions based on metrics. Data doesn’t lie. Yes, there are ways to interpret the data but if according to data, only 1 out of 100 users end up purchasing, there is a reason to worry! Or if users leave your site within 5 seconds, you need to worry.

How will you know which part of the conversion funnel you need to work on? How will you know if users are landing on your page or bouncing off or not purchasing or not returning? User metrics not only paint a clear picture of what’s happening on your site/product but also define your success. For example, metrics can be tracked by new users/total users, daily active/monthly active users, etc. Say, if you have video content, you might want to track the number of video views/user, average viewing time/user, amount of videos watched (to indicate quality), etc. Facebook might have similar growth metrics – clicks/user, messages sent, time spent on site, the average number of likes/user, etc.

Let’s have a look at some of the metrics we can measure in our businesses. We’d like to segregate them the following way:

Marketing Conversion funnel
Marketing Conversion funnel

Growth & Acquisition Metrics

Growth and acquisition metrics measure your company’s and product’s growth, e.g., total new users, new users by source, active users, etc. These user metrics help you measure discovery, consideration and purchase section of the conversion funnel. You’d want to segregate them further into – product discovery, consideration, and acquisition phase.

In the discovery stage, your marketing efforts are focussed on generating awareness among people – getting your name out there. In other words, you want to track brand awareness, impressions, and touchpoints. An example of this would be impressions of your product on search, ad impressions, search queries, cost per thousand impressions over various channels, etc.

You can also measure clicks via Google and other ad networks, click through rate and average position in organic search.

Engagement Metrics

How much time does a user spend on your website or platform? Or how much does a user interact with your social media handles? Engagement metrics let you analyze specific user behavior.

Consideration phase is when you convince a potential user to engage with your brand with the end goal of turning them into a customer. For example, Youtube considers a video when more than or equal to 30 seconds of a video is watched whereas Facebook has a 2-second and 3-second video view as well. On-site metrics to measure in consideration stage are – number of sessions, average duration per session, bounce rate, pages per session, new user, user acquisition by source, etc. E-mail opt-ins, open rate, and unsubscribers also give an understanding of the consideration phase. In addition, you’d also want to measure social media metrics such as post likes, clicks, comments, and shares.

User Happiness Metrics

User Happiness is one of the most difficult to measure. Essentially, it shows how “happy” a user is on using your product. A few ways to quantify the user’s happiness is Net Promoter Score (NPS), ratings and reviews, etc.

However, analytically, your churn rate and the amount of effort the user has to put in to use your product (you would want to keep it to a minimum) will also give you an idea about how happily a user uses your product. Surveys are also an effective way to measure customer satisfaction. User happiness is not just an interesting piece of data, it is actionable. Read into this, identify problem areas and solve them to make your customers happy.

Retention Metrics

You’d also want to find out who’s returning to your product. A returning user shows your product’s likeability. It is the same as a physical store. Imagine you run a physical retail store. Several new customers visit you every day. But how satisfying you would be if an old customer returned because of your service or product? You’d feel like you’re doing something right.

Similarly, for an online business, customer retention shows you how willing customers are to use your product again. Repeat customers would not only promote your product but also start to identify you on social media and interacting with you. This would further strengthen your brand image.

Revenue Metrics

Well, all said and done, what about revenue? Of course, what are we in business for! You already track direct sales or average revenue but how further can you go there? Metrics like the lifetime value of a customer (LTV), customer acquisition cost (CAC), monthly recurring revenue, etc also paint a better picture in terms of revenue.

Along with this, consider indirect and micro-conversions as well. Fundamentally, there are a number of steps a customer takes before an actual sale. Identify the predetermined steps that occur prior to every sale. Your marketing team should also be tracking their trends. Whether you collect emails or get the user to download your free ebook, take into account all of these micro-conversions. You can set up conversion goals for every event in Google Analytics to measure both micro and macro conversion.

Furthermore, you should be aware of sales channel-wise, category wise, and campaign wise. Also, calculate impressions to conversions ratio. If 1000 come to your product page, how many of them check out? How many users abandon their carts? What is your average order/ticket size? How often does a user purchase? You’d be able to identify the problem areas and work on them.

Overview of Marketing Activities
Overview of Marketing Activities

What makes a good metric?

So how do you decide which metric to track? Or how do you even call it a “good metric”? For example, we spoke about how session duration is important. Imagine if I told you I want to do the same for your physical store, i.e., follow around each customer to see how much time they spend in your store! You’d obviously tell me I’m out of my mind. Technically speaking, it is not impossible to do it, but well, what is the outcome? It is obviously, not worth it!

Similarly, a bad measurement will not only eat away your time but might also hamper your business. So, what makes a good metric?

  • Metrics should be understandable and relatively simple.
  • A metric should be a rate or ratio.
  • Consider correlated metrics carefully – don’t look at correlated metrics and assume something which is not true, for example, if I told you the sale of a summer dress is correlated to the number of people dying of heat strokes, it wouldn’t make sense. You could argue that both occur in summers but you have no measure to quantify or control them.
  • A metric should be changeable – it should change according to changes in your product, audience, etc.

HEART metrics framework

We love acronyms, don’t you? The HEART metric framework is a popular framework which helps you identify the correct business metrics. As a business, you don’t necessarily have to stick to a particular framework but choose the ones relevant to your business. The framework is just a guideline for you to refer to check if you’ve covered all aspects.

The HEART framework stands for

Happiness – How happy is your user?
Engagement – How engaged is your user in the short term?
Adoption – How many interested users have actually tried your product?
Retention – How many users come back to you in the long term?
Task Success – How successful are you at allowing users to perform the primary use cases?

AARRR metrics framework

AARRR is another framework we love. Some people also call it the “pirate metric”! This framework is mainly popular with small businesses.

Acquisition – Users who have visited your website or downloaded your product.
Activation – How active are your acquired customers, e.g., did the user you acquired sign up or subscribe to your newsletter?
Retention – How many users come back to use your product?
Referral – Are your users happy enough to refer it to friends and family?
Revenue – How much revenue are you generating per user?

Whether you are a small, medium or large scale enterprise, measuring these metrics is an effective data-driven way of running a business. You will, at a glimpse be able to know quantify your marketing efforts and know which areas need your attention. The only way to achieve your goals is to measure the impact of each and every step you take.

Different metrics apply to every business, situation, and goal. What user metrics do you think are important to your business? Comment below or reach out to us on the following channels.

If you’d like to contribute or want us to help your business, write to us at [email protected]

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4 Replies to “The Survival Guide to Understanding User Metrics

  1. Thank you for this. It ‘s good to learn about HEART and AARRR metrics. It is always important to track user metrics. But as you said, it is highly necessary to understand which metrics are being tracked. If you have an app the number of downloads won’t matter. But how frequently your users are using that app, every day will matter in the long run.

    1. Correct. While each app has a different metric which dominates the performance, in most cases, ARPPU, LTV and retention rate are something you’d want to keep in mind!

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