Quantity and Quality Metrics

Something I learned from Help Scout’s former Growth Lead, Suneet Bhatt, is that for every quantity metric you should also strive to have an associated quality metric.

For example, one of the metrics we look at is the number of New Customers. We also track Initial Average New Users Per Customer. Together these help us understand not just how many new customers we’re bringing in, but how large they are.

  • Quantity Metric: New Customers
  • Quality Metric: Initial Average New Users Per Customer

New Trials is a quantity metric. A quality metric for it might be the % of trials that convert into customers. I’ve found with my own products that that it’s easy to have either the quantity or quality metric go up, but hard to have both. For example, with Preceden, my timeline maker tool, New Trials tends to plummet during the summer months when students are not in school (a lot of students use Preceden to create timelines for class projects). When this happens, the trial to paid conversion rate goes way up because without a large number of students signing up (who rarely convert into paying customers), the conversion rate for the remaining trials winds up being pretty good. Then in the Fall when school resumes, trials increase as students begin signing up again, but trial to paid conversion rates fall. If I could find a way to increase conversion rates as more students sign up, it would be huge – but way easier said than done.

  • Quantity Metric: New Trials
  • Quality Metric: Trial to Paid Conversion Rate

Another example from Help Scout: we track how many new employees we hire, but also measure what % leave within 1 year. If our hiring process works well, the % that leave within a year should be fairly low; if not, it will be high.

  • Quanity Metric: New Employees
  • Quality Metric: 1-Year New Employee Churn Rate

When you’re thinking about your own business’s metrics, try to come up with quality metrics for most quantity metrics. You’ll gain a deeper understanding of the health of the business which allows you to make better decisions about its future.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s