Metrics in business, Key Performance Indicator (KPI)

• User Churn Rate/Retention Rate
  • User Churn Rate = the percentage of customers or users who stop using a product or service over a given period.
  • Retention Rate = the percentage of customers or users who continue to use the product or service over time.
• Conversion rate
  • = the percentage of users or visitors who take a desired action or complete a specific goal, such as making a purchase, signing up for a newsletter, or filling out a form
• Customer Growth Rate
  • = the percentage increase in the number of customers over a specific period
• Customer lifetime value
  • = the total value a customer is expected to generate for a business over the entire duration of their relationship
• Revenue: Monthly recurring revenue
  • = predictable and recurring revenue generated by a business in a given month. It typically includes subscription fees or other regular payments made by customers.
• Profitability

Types of metrics

• Success Metrics (goal metrics, true north metric)

  • to measure the success or health of a product
  • e.g. daily/monthly active users, bookings/purchases, revenue

• Guardrail metrics

  • measure core quantities that should not degrade in pursuit of a new product or feature
  • e.g. Rate: cancellation/unsubscription rate, latency, etc. Success metrics of other products

Metrics frameworks

General Funnel Metric Frameworks

=  a family of metrics that tracks the “user journey” through various parts of a product
Examples

• AARRR growth metrics framework
  • Acquisition: Getting customers to sign up for a website or product.
  • Activation: Getting customers to gain basic familiarity with the product.
  • Retention: Getting customers to come back to the product on a regular basis; a customer that exhibits no (or minimal) activity over some predetermined time period is known as churned.
  • Referral: Getting customers to share the product with others.
  • Revenue: Getting customers to adopt one or more paid features that generate revenue for the company.
• -Conversion funnel
  • Number of visitors to webpage;
  • Number of logged in users;
  • Number of users who purchase.

Input-Output Metrics Frameworks

These frameworks revolve around two key concepts:

• Input/driver metrics: Metrics that track the activities/resources used to work towards an outcome;
• Output metrics: Metrics that demonstrate the outcome of an initiative.

More industries

• Supply chain management
  • things to consider: demand of a product, logistics and transportation involved, life expectancy of products; inventory space management

Examples

• anomaly detection
  • detect fraud behavior (e.g. banking)
• pattern recognition
  • recognizing the purchasing pattern
• predictive modeling
  • predict user churn rate
  • predict market trends
• Classification and categorization
• recommendation engines and personalization systems
  • customer segmentation
  • recommender system
• sentiment and behavioral analysis