The Significance of Metrics in Business

He delivered perfect metrics. She fumbled through a messy slide deck. He got fired. She got promoted. Because she spoke in dollars. Board meeting. Twelve minutes in. Director of Customer Success presents glowing NPS scores. Zero questions from the executives. Next slide: Engineering shows server uptime at 99.97%. Polite nods around the table. Then Marketing presents one number: Customer acquisition cost dropped 23% to just $3,000. Suddenly everyone's awake. Questions for thirty minutes straight. Additional budget approved on the spot. Here's what I learned watching from the back of that room: Numbers without dollar signs are just statistics. Numbers with dollar signs are how businesses make decisions. Last quarter, somewhere out there in the corporate world, a Head of Support rewrote her quarterly review. Version 1 (what she originally wrote): "Response times improved 15% this quarter. Customer satisfaction jumped to 4.8 stars. Team morale is at an all-time high." Version 2 (what got her promoted): "Faster response times retained $890K in at-risk accounts. Higher satisfaction converted $1.1M in expansion opportunities. Improved team retention saved $200K in recruiting, hiring, and training costs." Same achievements. Completely different reception. Her original presentation got polite applause. Her rewrite received accolades. Operational metrics → Financial impact Team performance → Business outcomes Customer feelings → Revenue protection "We reduced bugs by 60%" becomes "Prevented $400K in churn from technical issues." "Users love the new interface" becomes "UI improvements drove $153k in expansion” "Training improved team skills" becomes "Skills development cut support costs $150K annually." Every metric in your company connects to money. Your job is drawing those lines clearly. Because executives don't fund good feelings. They fund good business.

One of the most common mistakes that companies make is to focus too narrowly on a small set of metrics while overlooking the broader ecosystem of inputs that drive results. At Amazon, we rejected the conventional wisdom that Executives should focus on just a few high-level metrics. Instead, we spent years developing mechanisms to measure, analyze, and improve thousands of input metrics (actions) based on the impact they have on output metrics (business results). The key lessons from this approach are: 1. Do not limit the number of metrics you monitor – Track a broad set of metrics, add, delete, and edit them over time based on observed results. 2. Review both controllable inputs (leading indicators) and output metrics (results) – They must be reviewed in tandem to understand cause-and-effect relationships. 3. Regularly review, analyze, and adjust metrics – The metrics that Amazon tracks are continuously improved to more accurately represent the speed, quality, and cost of every customer-facing process. 4. Implement new product and process improvements designed to deliver improvements for your input metrics. If you have selected the right inputs, then improvements to your outputs will follow. 5. Control your processes by continuously reviewing all relevant input metrics to ensure they stay within desired tolerances as internal and external factors change over time. Following these steps uses the Six Sigma technique known as DMAIC - Define, Measure, Analyze, Improve, and Control. The typical approach is to focus deeply on metrics like sales and gross margin while spending little or no time measuring or managing elements of the customer experience. At Amazon, this focus is reversed.

83% of leaders demand ROI above all else. Yet most track metrics that destroy growth. I met with a prospect last week who was celebrating 20,000 website visitors. Problem: Not a single one converted to a lead. Most marketing leaders are dangerously attached to metrics that look impressive but drive zero leads or revenue. They're not measuring what matters. They're measuring what's easy. The cost isn't just wasted budget. It's lost revenue growth. Each stage serves a purpose: 1. Traffic Metrics 🌊 → Shows movement, not money → Clicks and sessions → Website traffic trends → CTR and bounce rates 2. Awareness KPIs 👀 → Measures mindshare growth → Social engagement depth → Brand mention velocity → Content consumption time 3. Lead Metrics 💸 → Actually drives business → Qualified leads generated → Pipeline contribution → Customer acquisition cost The framework for success is more than just a KPI it's how it connects to the end goals: Revenue Connection 🎯 → Cost per qualified opportunity → Pipeline velocity by channel → Marketing-influenced revenue Executive Clarity 👔 → Clear metrics your CEO understands → Example: "Marketing sourced 42% of Q2 pipeline" → Impact: Secured additional budget mid-year by channel Attribution Accuracy 📊 → Captures true customer journey → Maps touchpoints to conversion → Shows what actually drives sales Leading Indicators ⚡ → Predicts future revenue → Flags opportunities early → Guides resource allocation 💥 Actionable takeaways: 1. Audit your dashboards: Sort KPIs by funnel stage 2. Stop mixing metrics: Traffic ≠ Awareness ≠ Revenue 3. Align team goals: Everyone needs to know which metrics matter when What KPIs do you measure for success? 👇 ___ ♻️ Share this with a marketing leader drowning in meaningless metrics ➕ Follow Jennelle McGrath for more frameworks that drive real results

I lost $2.3M because I was drowning in metrics. Most entrepreneurs (including my former self) fall into one of two dangerous traps when it comes to measuring business performance. Let me share what I discovered after the expensive way... Trap #1: The "Gut-Feel" Brigade These are the entrepreneurs running their entire operation on intuition. "I know my business," they say. "I can feel when things are working," they insist. I get it. But here's the truth: You can't improve what you don't measure. Trap #2: The "Data Hoarders" Then there's the opposite extreme (this was me): • 47 different KPIs • Multiple dashboards • Daily metric reviews • Endless spreadsheets What did I get? → Analysis paralysis → Decision freezes → Constant strategy shifts → Bleeding cash like a hemophiliac in a tub of razors Here's what changed everything for me: The One Metric That Matters (OMTM) Framework Instead of tracking everything or nothing, identify the ONE metric that's currently blocking your growth. Examples from my consulting work: • E-commerce client stuck at $2M/year OMTM: Cart abandonment rate Result: Added $3M in profit • Services business launching in new geo OMTM: New meetings booked Result: $1M in new business in 8 months The magic happens because: 1. Clear focus 2. Aligned teams 3. Faster decisions 4. Better results How to Find Your OMTM: 1. Identify your current #1 business goal 2. List all metrics that influence it 3. Ask: "If I could only improve ONE of these, which would have the biggest impact?" That's your OMTM. But remember: It's not static. Your OMTM will change.  Focus on your One Metric That Matters. Everything else is just noise. P.S. - if you want to know how to scale without voodoo and gurus, I write and make videos about using the scientific method in business.

I wish someone taught me this in my first year as a PM. It would’ve saved years of chasing the wrong goals and wasting my team's time: "Choosing the right metric is more important than choosing the right feature." Here are 4 metrics mistakes even billion-dollar companies have made and what to do instead with Ron Kohavi: 1. Vanity Metrics They look good. Until they don’t. A social platform he worked with kept showing rising page views… While revenue quietly declined. The dashboard looked great. The business? Not so much. Always track active usage tied to user value, not surface-level vanity. 2. Insensitive Metrics They move too slowly to be useful. At Microsoft, Ronny Kohavi’s team tried using LTV in experiments. but saw zero significant movement for over 9 months. The problem is you can’t build momentum on data that’s stuck in the future. So, use proxy metrics that respond faster but still reflect long-term value. 3. Lagging Indicators They confirm success after it’s too late to act. At a subscription company, churn finally spiked… but by then, 30% of impacted users were already gone. Great for storytelling but let's be honest, it's useless for decision-making. You can solve it by pairing lagging indicators with predictive signals. (Things you can act on now.) 4. Misaligned Incentives They push teams in the wrong direction. One media outlet optimized for clicks and everything was looking good until it wasn't. They watched their trust drop as clickbait headlines took over. The metric had worked. They might had "more MRR". But the product suffered in the long run. It's cliche but use metrics that align user value with business success. Because Here's The Real Cost of Bad Metrics - 80% of team energy wasted optimizing what doesn’t matter - Companies with mature metrics see 3–4× stronger alignment between experiments and outcomes - High-performing teams run more tests but measure fewer, better things Before you trust any metric, ask: - Can it detect meaningful change in faster? - Does it map to real user or business value? - Is it sensitive enough for experimentation? - Can my team interpret and act on it? - Does it balance short-term momentum and long-term goals? If the answer is no, it’s not a metric worth using. — If you liked this, you’ll love the deep dive: https://lnkd.in/ea8sWSsS

99% of dashboards are useless Dashboards that just show some metrics (however important they may seem) are the most useless dashboards in the world. What good is it if you know what your conversion rate, ROI, average order value, or sales trends are? What's the point? You won't be able to link them to business goals, you won't understand how much a decrease in the average check is critical for you and how much you will lose/earn on its fluctuations. Multichannel attribution? Okay, it can save you $200/month. The only useful dashboards are the ones that show you achieving your goals. Here's a goal you set for yourself - “sell $11 million dollars in 2025.” Then you need to define target values for more localized metrics: - number of orders -> number of orders placed -> order-to-payment conversion - average order value -> average price per item -> average number of items in a receipt And so on. In any case, you will have limit values of some metrics, within the range of which you will work. For example, it is impossible to quickly increase the average check by 100%. So, you need to not just track metrics, but understand: 1) How close you are to the required values by cumulative metrics 2) How well your processes are performing against the planned standards An even steeper level is when you track not only the planned metrics, but also those that directly affect them, which are precursors to possible deviations. If you've built your analytics in this order: Business Goals -> Primary Metrics -> Related Metrics -> Dashboards ...then dashboards become an always up-to-date source of information for you as far as your pace goes. And if there are difficulties... - here's what they are related to - how much you are losing on them - here's what you can do. In this way, checking dashboards is much more meaningful. (!) You are focused on specific metrics and their impact on the bottom line (!) You can evaluate the decrease or increase of some metric in the criteria of impact on your bottom line. Otherwise, what's the point of panicking if the average cost of a basket toss has gone up if it doesn't affect the outcome (yet)? (!) Achieving the outcome becomes more understandable because it is calculated using an understandable formula with predefined variables. Share your thoughts in comments

Track the Right Numbers; Not Just the Loudest Ones 🚨 Stop Chasing Vanity, Start Scaling with Clarity Most business owners fall into the same trap, tracking the loudest numbers instead of the right ones. They obsess over follower counts, web traffic, or gross revenue, but completely ignore what actually drives scalable growth. Let me be blunt: Scaling your business isn’t about what looks good. It’s about what works. 💡 Early in my retail business career, I learned this lesson the hard way. We were tracking the wrong KPIs, foot traffic, sales per square foot, NPS, even daily cash in the till, without ever tying those numbers to margins, lifetime customer value, or conversion rates. Don't get me wrong, those aren't unimportant metrics, per se, but when you are trying to turn a profit, those aren't the most critical KPIs. We grew... but not at a significantly profitable rate. 📊 Here’s what changed everything: We shifted our tracking from noise to impact metrics. That meant focusing on: ✅ Customer Acquisition Cost (CAC) ✅ Lifetime Customer Value (LCV) ✅ Conversion Rate by Source ✅ Sales Velocity per Rep ✅ Retention and Churn Rates ✅ Net Profit Margins ✅ Forecast Accuracy vs Actuals And guess what? That clarity gave us control. 📈 According to a study by Harvard Business Review, companies that implement data-informed decision making grow 15-20% faster than their competitors. It’s not about tracking everything. It’s about tracking the right things. 🔥 Don’t just watch numbers. Let them tell you a story; one that fuels momentum, forecasts growth, and uncovers blind spots before they become breakdowns. If your current dashboard isn’t giving you confidence in your next move, it’s time to evolve your metrics. Because if you don’t know the scoreboard, how can you win the game? #MyBizCoaches #BusinessConsulting #FractionalExecutives #KnowYourNumbers #SmartScaling

STOP! Don’t Change Your Metrics Until You Read This This post is in response to the many questions I got after the video I shared with Dr. Eli Goldratt sharing his insights on how to align financial and operational measurements with a company’s goal. The question I got ... How can we evaluate whether we have good or bad measurements? Here’s my 3 Criteria framework to evaluate any measurement or measurement system — and a recommended metric that meets all 3 criteria. The Three Criteria of a Good Measurement System 1. Accurately Measures System STATUS (Ok/Not?) and TREND (Improving/Not?) Does your metrics accurately show whether the current status/trend is “OK” or “Not” . With accurate status and trend, you know WHEN to act…and WHEN NOT. Mistakes: • Type 1: Reporting system status is “OK” when its NOT • Type 2: Reporting system status is “Not OK” when it is OK. 2. Accurately Predicts Likely CAUSE(S) Does your Metrics accurately diagnose the “why” behind the status? With accurate CAUSE, you know WHAT TO CHANGE … and WHAT NOT. Mistakes: • Type 1: Reporting or Misidentifying a non-issue as a major cause.  • Type 2: Not Reporting or Overlooking a major cause 3. Drives Desired / Discourages Undesired Behaviors  Does your metrics positively influence behavior – to ensures parts do what is best, not for the part, but for the system? Good metrics guide each part on HOW to act…and HOW NOT to act. Mistakes: • Type 1: Incentivizing actions that harm overall performance (local optima). • Type 2: Failing to encourage beneficial behaviors. Example of a Good Measurement: The Cumulative Flow Diagram (CFD) A CFD plots cumulative orders received (demand) against cumulative shipments made (supply) over time. It offers a simple, powerful visual to assess balance vs. imbalance: Criteria 1: Accurate Status & Trend  • Parallel lines indicate a balanced system (“OK”) • Diverging or converging lines signal an imbalanced system (“NOT OK”) Criteria 2: Accurate Cause of Status & Trend  • Diverging Lines: Demand exceeds supply → Supply constraint • Converging Lines: Supply exceeds Demand  → Demand constraint Criteria 3: Incentivize Desired Behavior of Parts Its visual clarity makes it easy to understand and it can to be tied to incentives: • When lines diverge, focus on identifying and reducing excessive demand, and increasing capacity through better constraint exploitation or elevation. • When lines converge, shift your focus to securing more demand, and reducing capacity without compromising service time or quality. The CFD metric can be applied across the organization—from the company level to department level and even down to specific products or services, using either monetary value or unit counts for vertical axis. Remember FEWER measurements is BETTER! What measurements do you use that meet ALL 3 CRITERIA? or More fun… What is the worst measurement in your company that compromise 2 or all 3 criteria? Comments/Questions #goldratt #measurement

The Two Types of Metrics Every Business Needs 📊 Every founder I work with eventually hits the same wall. They're drowning in data but starving for insights. Spreadsheets full of numbers that don't connect to any clear action plan. The problem isn't tracking the wrong things, it's mixing up two completely different purposes for metrics. While many of these metrics overlap (because good business metrics are good business metrics), I've organized them by their PRIMARY focus during fundraising vs daily operations. Think of it as two different lenses for viewing the same business. ➡️ VENTURE CAPITAL METRICS These tell a story of scale, momentum, and market opportunity. ARR and MRR show recurring revenue strength that investors love because it means predictable income streams. Growth rate demonstrates month over month momentum and shows investors you're accelerating, not just maintaining. Burn rate and runway answer the critical investor question: "How long will my money last?" CAC and LTV prove your unit economics work at scale and show whether more marketing spend will generate returns. Revenue multiples help investors benchmark your valuation against comparable companies. Churn rate reveals retention risk and tells investors whether you have a leaky bucket problem. Market size using TAM, SAM, and SOM shows this is a billion dollar opportunity, not just a nice business. Logo count provides social proof that other smart people believe in your solution enough to pay for it. ➡️ OPERATING METRICS These power decisions, accountability, and optimization. Active users, DAUs, and MAUs reveal real product usage patterns and tell you if people find value in what you've built. Conversion rates expose exactly where prospects drop off so you know where to focus optimization efforts. Sales pipeline health compares forecasted deals against closed deals, helping you predict revenue and spot problems early. Gross margin shows profitability of your core product after direct costs. Headcount and hiring plans manage your biggest expense category since most companies spend 60-70% on people. Support tickets and NPS scores measure customer satisfaction and predict churn before it happens. Product engagement reveals which features customers actually use, helping you prioritize development resources. Unit economics breaks down real cost vs return per customer segment for optimized marketing spend. === The best founders track both sets religiously. Use your operating metrics to build compelling investor stories, and let investor feedback guide your operational focus. What metrics are you tracking that I missed?

Years ago, I was sitting in a quarterly business review. The VP of Sales shared we missed the revenue goal. 5 minutes later, the CMO shared that we hit our “lead goal” the past 3 quarters. The CEO asked, “What happened?” Real talk: what happened is that metrics became goals, and the team focused on hitting those “goals” without keeping the ACTUAL goal in mind A goal is a desired outcome you’re looking to achieve A metric is an indicator that determines your progress toward a goal Metrics inform if you’re on track to achieving a goal and should not be set as goals themselves When you make a metric a “goal”, you shift the focus from the original goal to the “metric goal”. As a result, the likelihood of missing the original increases as how you optimize towards the metric, not the goal. Most company annual planning includes setting goals for certain things: new revenue, revenue retention, net promoter score, etc. Each of those goals are then given a figure. Let’s pull the new revenue thread since that’s the one most of us are working towards. In this fictitious scenario, a company determines they need to drive $100 million in new revenue for the upcoming year. This is the goal. So the CEO passes this goal down to the marketing leader, who then wants to make this goal relevant to their team. And this is where the mistake happens - the marketing leader breaks the revenue goal down into the metrics that help drive the desired result (i.e. leads, pipeline, etc.) and sets goals for each of those metrics. This happens with leads all the time in marketing. You look at your funnel and start working backwards to understand what you need to produce moving forward. You see that you have a 25% win rate from stage 2 opportunities. You see that you have a 33% conversion rate from lead to stage 2 opportunity. So you did the math. For every 1 won deal, we need 4 stage 2 opportunities. For every stage 2 opportunity, we need 3 leads. So we multiply 4 by 3 and proclaim, “We need 12 leads to drive 1 won deal” So that metric of 12 leads is passed down to the team, but as a goal. Nobody wants to miss a goal, so we think of new or creative ways to drive more leads. And this is where lead gen forms, webinar sign ups, ebook downloads, and more were jumped upon as “lead sources”. Marketing teams started blowing their lead “goals” out of the water by 150-300%. Meanwhile, conversion rates from lead to stage 2 opportunities and win rates from those opportunities were dropping quarter over quarter. All because metrics became goals.