Lesson: Sales Funnel Optimization with Hiten Shah

Step #7 Metrics: What metrics do you need to collect about users and customers?

The question I get all the time is people asking if they are tracking the right things, and if they know they're tracking the right things. The way I think about it, and this can happen any given time, and also when you're building dashboards or trying to do things, is if you're tracking something and you can make a decision on that data, I think it's important to track.

If you're tracking something, and there's no decision that can be made based on you tracking it, that's probably not a good thing to track. You can go deeper and say if the metric is looking good, it might not matter. But if it's looking bad, it's something you want to improve.

Now that businesses are more measurable and there's more of them, especially online businesses, which are arguably more measurable than offline businesses and they can be measured with more accuracy, there is this idea that you can track everything, so you should measure everything, which would turn into lots and lots of metrics.

There are metrics that are actionable that, I think, would be key performance indicators, KPIs as they say, that would help you identify how your business is preforming. Then there are sort of metrics that make you feel good, but don't necessarily mean anything substantial. It won't actually help you improve your business.

So if you're an e-commerce website, the number of page-views you get might make you feel good if that's going up, but if that traffic is not converting to purchases, it doesn't matter. So vanity metric would be like page-views in an e-commerce business, while an actionable metric would be like number of purchases every day or conversion rate to purchases.

One company's vanity metric could be another company's actionable metric depending on what the goals are of the business and what the goals are of your visitors. So, in a lot of cases if time on site can be considered an actionable metric, let's say on a business that's successful if people stay longer on their website.

A good example of this would be, the opposite of this would be Google search. If you search and you stay too long on the results page that means you're not getting what you want, so in that case a lower time on site is actually better because their goal is to let you type what you want, get what you want, go away and hopefully come back more often because that experience was so good, and that's the way that they would measure their business. So in that case, time on site is a thing where you want them less on the site. While a website like New York Times, the longer you stay the more pages you view and the more ad dollars they make, so they're probably going to want to optimize their site for having you stay around longer.