Data Analytics: Foundations to Practice · Business Metrics and KPIs
What Makes a Good Metric
Not every number a business can measure is actually worth tracking as a key metric, and the criteria that separate a genuinely useful metric from a distracting one are more specific than 'is it interesting.'
A genuinely good metric is actionable: moving it requires and reflects a specific, identifiable action a team can actually take, rather than being a number that fluctuates for reasons entirely outside anyone's practical ability to meaningfully influence; a metric that can't realistically be moved by any deliberate action gives a team nothing genuinely useful to actually do differently in response to watching it.
Key Takeaways
- A good metric is actionable: moving it reflects a specific action a team can actually take, not fluctuation outside anyone's practical control.
- A good metric aligns with real business value; a metric that can be inflated through a hollow tactic without genuine improvement is a poor one.
- Vanity metrics look impressive and only trend favorably by default (like cumulative signups); actionable metrics can genuinely move either direction based on real performance.
- A good metric resists gaming, since an easily gamed metric distorts behavior toward optimizing the number rather than the real outcome it was meant to represent.