What is the One Metric that Matters?
The concept of the one metric that matters is a reaction to all the data that gets thrown around at many companies. With the proliferation of data and tracking, especially online, there has been a drive to quantify everything. This is largely a good thing. But as with all new tools it is challenging to know exactly how to use all this data correctly.
So the challenge becomes, with all this data how can we use it all effectively? I’ve seen companies that run in circles over and over again because they can’t get clarity and agreement on what metrics matter. It can become a sickness when there are too many metrics flying around and some are going up, others going down, and actions are paralyzed because there’s too much discussion about whether some test has illustrated an improvement or not. This is sometimes called analysis paralysis.
Many companies feel the impact of analysis paralysis, and it can be extremely painful. This concept of finding the one metric that matters is a reaction against this effect and attempts to clear away the clutter and focus the company on a single critical objective.
Here’s some great additional reading on the concept of the one metric that matters
- KISSMetrics: How to Use a Single Metric to Run a Startup
- RJMetrics: How to Grow Your Business with the One Metric that Matters
- Growth Hackers: Lean Analytics — the One Metric that Matters
Why Use the OMTM Approach?
This approach is simple quite simply because there’s only one metric. The simplicity is inherent to the approach. Now, just because it’s a single metric doesn’t mean it’s not a complex metric. In fact, the best metric may end up being a composite metric. But the key is that it’s a single simple point of focus for you and the team.
With only one metric you can focus solely on driving that number. It is so common for a product manager to spend time tracking down so many trails and looking at so many different reports and data. By having the organization agree on the one metric that everyone will care about the product manager’s goals and roadmap instantly gets incredibly focused. This is an extremely powerful thing, a product manager set at a specific goal is likely to make significant progress on towards that goal.
The subtext of the OMTM approach is that the business isn’t entirely sure how they can drive this metric. There may be a variety of ideas, but not all of them are going to work. The use of the one metric that matters approach grounds all conversations and product ideas around what will move the needle for this one metric. No HIPPO’s idea is better than an underlings, unless it moves the metric more. This fosters creative innovation and experimentation.
How Do You Choose Your One Metric that Matters?
- Purpose: When developing your OMTM you should have a conversation with your product’s stakeholders about your product’s “purpose”. The purpose is what the website or page has been built for. Maybe your product is an ecommerce website. If so, then your purpose is likely “to get lots of sales” — in which case you want to make sure that your One Metric that Matters directly assesses how your site is doing against this purpose.
- Specific: When picking a metric, the more specific the better. It’s important to stay away from aggregated totals, not just under this approach but always when you look at reports or data. Aggregate blobs of data are useless. For more information about why unsegmented non-specific aggregate data is crap head on over to one of my favorite blogs. So when you pick your metrics, make sure that they are as specific as possible. Let’s say you want to increase sales. Being specific means that your OMTM is NOT sales. Your OMTM may be sales per week for high volume customers. See how that works? You have now chosen a customer segment, a date range and together those make your metric so much more specific and targeted.
- Trackable: Following on having the metric be “specific” a metric also needs to be trackable. A trackable metric is something like sales or revenue or subscriptions or newsletter sign ups. An un-trackable metric is something like “usability”. Usability will be very hard to quantify and it makes it hard to quantify. Another example of a metric that isn’t trackable is any metric that your company literally cannot track. Maybe your site isn’t tagged or there’s some other issue, but if it’s not trackable it’s pretty obviously a poor choice.
- Business value: choosing a metric that has business value is essential. This will likely be inherent to any metric that your company agrees to and it should directly follow from the “purpose” discussion, but it’s worth it to mention because it’s so important. You need to make sure that whatever metric you land on brings direct value to the business. No “bounces”, no “clicks” and no “pageviews”.
Once you have your OMTM focus on improving it. Get your ideas and build, test, learn. Good luck!