The customer funnel. We know what this is, right? It’s the progression of people through stages of your marketing, from (for example) searching on an ad, clicking on the ad, visiting your site, and signing up for or buying your wonderful product. All of those stages produce opportunities for tracking. Any one-horse ad product is going to give you impressions, clicks, that kind of thing. And the most basic GA implementation will give you site visits. And because those numbers are easy to get and also large and easily juice-able… well, you’d be surprised at how many people consider those to be very important metrics.
Well, no less an authority than Mark Andreessen has a message for you: your metrics are bullshit.
Eric Ries, author of Lean Startup, is more genteel, so he calls them vanity metrics. If you pay attention only to things at the top of the funnel– ad clicks, site traffic, page views– you can feel like you are making progress when in truth your growth is stalled or worse.
Instead, smart organizations look deep into the funnel to find the one KPI, the key performance indicator, that really shows the health of their business. What is it? Well, it’s going to be different for different organizations. The way I like to approach it with different clients is to ask them: what pays your bills? If there is revenue coming into the organization, what is its main source? Is it subscriptions? Product sales? Donations? Then that’s the KPI. Even if the company is pre-revenue you are likely to still have a business plan in place for how money will come in eventually; is it by acquiring active users? Is it by showing ads to a big user base?
The exciting thing about identifying this core metric is that it gives everyone in the organization the same focus. Once you’ve agreed what the single most important number is for your organization, everyone should be adjusting their performance to making that KPI grow. You won’t have your marketing people off looking at ad clicks and while your product people are looking at user engagement. If your organization has agreed that Daily Active Users is your KPI, then that’s what everyone should be trying to produce. Your product people will be tuning the site to increase this number, and your marketing people will judge their projects solely on the number of daily active users they generate. Your customer service people might have targets for how quickly they handle tickets and amount of positive feedback from customers, but the overall goal of their group will be helping to maintain daily active users. Everyone in the organization will be rowing the same direction.
Is it easy to track deep into the funnel? Generally no, and that’s why so many companies don’t bother. But is it worth it? Absolutely. Having a real understanding of what’s going on in your organization will lead to smarter, more confident decisions.
Once you’ve identified your KPI you’ll want to turn it into a goal; that’s the topic of my next couple of slides.