December 7, 2020

Setting Business Goals for Better Analytics

Firstly it's important to start where you, the reader, are likely starting from.

You might be used to using tools like Google Analytics to measure how many users (or website visitors) that you're getting week over week.

You might be happy with seeing how many times a particular page was viewed.

If you're a marketer you're likely checking on how many people convert... or how many see specific pages and from what campaign they're coming from.

A satisfactory situation

These numbers are great to have when otherwise you wouldn't have any at all. Web analytics started here many years ago. It's evolved since then... but it's also gotten more and more complex. With so many different options and methodologies out there it may be comforting to have a consistent form of analytics that is always there. Every company needs a source of truth and tools like Google Analytics are, most of the time, effortless to implement.

Separating Wheat from Chaff

Real value comes when you can 'optimize' things. Optimization could mean getting more out of every dollar spent on marketing. It could also mean getting the most out of every new user or new customer... think 'retention'. This is only possible if you know what to optimize for... and what your current 'baseline' is. Setting up your Key Metrics and getting a baseline is the first baby step towards optimization. By looking at 'macro-level' metrics of New Users, Page Views, and Purchases you're really only looking at hollow metrics. Yes, these numbers may give you a faint idea of trends... but on their own they won't help you optimize nor will they sustain your company into the future.

To the drawing board

With our customers, clients, friends, or however you'd like to define the people that we work with, we always start with a Measurement Plan. In this Measurement Plan we define Business Goals (example: increase retention by 7% in 6 months), Key Metrics (what needs to be measured in order to track progress on said Business Goals), then lastly we provide the Implementation Spec (a list of Events, Parameters and Triggers for the necessary analytics to be installed). Let me help you by providing a few examples below...

Business Goals

  • Increase annual customer retention by 12% (reduction in subscriber churn)
  • Increase in mobile device purchases for existing customers by 22% in 6 months
  • Increase mobile app users from 30% of customer base to 55% of customer base in 4 months
  • Increase average purchase volume by 25% in 4 months
  • Reduce time between first purchase to second purchase by 50% in 6 months
  • Increase purchases from referrals by 72% in 12 months
  • Increase new user activation rate by 47% in 8 months (reduce new sign-up churn)
  • Increase free-plan to paid-plan upgrade rates by 25% in 4 months
  • Increase user activity in the platform by 65% in 6 months (increase usage) 

It's no hidden mystery that all these goals have something to do with revenue. It may be odd to hear this, but this step tends to be the easiest out of the three. Involving senior management and cross-functional teams in this step will not only make these goals more realistic... it will also help your workforce become more engaged in what they're doing.

Imagine being able to track real progress with your teams. Those who both directly and indirectly impact companywide goals will be able to see, quantitatively, how much value they are generating.

On the other hand, companies may hesitate on doing this due to fear. Fear is no good reason not to define these goals and to strive to achieve them. More times than not they will help your workforce grow... not shrink. I say this because some people may start feeling like they're putting too much pressure on their teams if they do this. They may think that their office will some how turn into the Hunger Games if they start setting up goals and measuring results more clearly. My short answer to this sentiment is to have trust in the truth... numbers don't lie. Your team will know how to make better decisions and thus keep their job while having a sense of achievement.

Enough philosophy and pseudo-management consulting - let's see some example Key Metrics.

Key Metrics

  • 12-month active subscriber retention
  • # mobile device purchases from active subscribers
  • # total mobile app users / # total active subscribers
  • Average purchase volume
  • Medium time to convert between Purchase #1 and Purchase #2
  • # of purchases from referrals
  • # of users who perform activity ABC / # total new users
  • # of users who upgrade to paid plan / # total new users
  • # of times activity XYZ was done / Weekly Active Users (WAU)

Now imagine trying to define the Key Metrics above without first defining the Business Goals. The Key Metrics directly follow from the Business Goals. That way instead of asking 'What could we measure?' you're asking the much much much easier question 'What do we need to measure in order to measure this Business Goal?'

Implementation Spec

This is a fairly technical document which takes the form of a fancy spreadsheet. This spreadsheet lists out all of the events and their respective parameters - this is the 'tracking code' that will be installed by your engineers in your website or app. Below is a screenshot of one for an online news media publisher.

Implementation Spec for a News Media Publisher

Back to square one

What I've outlined above could be called the 'pre-requisites' of enabling Product Analytics in your company. If you're left asking yourself 'What's the value of this and why should I consider it?' then I'd direct your attention to the Business Goals mentioned above. They aren't made in vain.

By defining real business goals that are tied to generating revenue you can start using analytics to increase revenues.

If you'd like to see more about this we'd be happy to have you join one of our live group demos where we walk through this concept and show it in action on Mixpanel.

James is currently a Digital Director at Master Concept where he directs a team dedicated to providing digital analytics solutions and training for enterprises across Asia. He believes the most significant impact on the success of a business is the amount of quality information that they have access to and are able to act on in their daily operations. Previously, James launched and ran his own startup company, Yumr, which specialized in restaurant discovery based on diets and specific dishes. He also held operational roles in innovation labs in Hong Kong and Germany. In his spare time James enjoys studying ancient history and accidentally getting sunburnt. Recent favourite quote: “Science is the belief in the ignorance of experts.” - Richard Feynman

Our latest articles.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolores.