Data vs Metrics: Selecting the Right KPIs for E-commerce Success

How many page views make a Product Landing Page a success?

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1k, 10k, 100k, or 1 million?

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Seasoned e-commerce merchandisers would respond – ”it depends”.

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And they’d be correct. It depends on the success metrics that the page views drive. And therein lies the difference between Data & Metrics.

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Data drives Metrics.

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Metrics drive all successful organizations. Metrics shape these organizations. Metrics determine what projects are funded. A successful organization can only measure so many things well. What it measures ties to its definition of success. There’s a difference between numbers and numbers that matter.

 

Keep in mind that all metrics are proxies for what ultimately matters (like ARR growth for start-ups, or championships in Basketball). Data in these situations have never changed – for start-ups, number of customers; field goal percentage in basketball. What changes is how we look at the data. And the organizations or teams that slice the data in smarter ways are able to find hidden strategies for winning.

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Metrics are what you measure. And you manage what you measure. In basketball, a critical question is, how effective is the player when s/he steps on the floor? This is measured by the innocuous sounding metric — plus/minus. A positive number indicates the player having a positive impact on the team’s score while they are playing.

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Players could have impressive individual numbers but have a negative plus/minus. Meaning, while they were great individually they did poorly in helping the team beat the opposing team. Since some teams started measuring this as a metric, individual players have started playing to contribute to winning a game, versus shining individually. Players play to the metrics their management values, even at the cost of the team.

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The same happens in digital commerce organizations. Measure page views? Your employees will strive for more and more views. Measure visits? You’ll get more of those. But if your goal is to boost sales, ensure ethical personalization, or improve gross margins – better measurements might be site conversion or product look-to-book ratio.

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In the Commerce world, we talk about vanity metrics and meaningful metrics. Vanity metrics are like dandelions – they might look pretty (or make good herbal teas), but they are using your real estate resources without doing anything to your property value. For your Commerce organization, vanity metrics could include site traffic or app downloads. But here’s the thing – if these numbers go up, do they drive up sales? If so, great – measure away. If you can’t – they don’t matter.

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Metrics are only valuable if you can manage to them. Good metrics have 3 key attributes – their data is consistent, cheap and quick to collect. A simple rule of thumb — If you can’t measure results within a week for free (or, can’t replicate the process), then you’re prioritizing the wrong ones.

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Organizations can’t control their data, but they do control what they care about. They spend their resources based on measurements taken by data on metrics that matter.