Teams are inundated with metrics. In ecommerce there are so many you can follow, it’s easy to literally get lost. In SaaS it isn’t much different. No one is short on data.
At Searchspring we have one north star metric: Monthly Recurring Revenue. In ecommerce you should have one north star, and I always used revenue when I ran an ecommerce company.
There are inputs and ancillary measures, but are your teams aligned to be pointing in the same direction? For instance, if a Fraud Prevention team solely focused on fraud prevention, you would have no sales and you could rename that team the Sales Prevention team. This permeates throughout teams and how they support the company and growth.
Obviously one can point out that if all sales are fraud, you are in trouble. Most definitely. But the point is that conflicting KPIs can cause a lot of confusion and teams pushing against each other.
The way to break this down is to go one level down. In ecommerce, you want revenue, but to get that you need to drive traffic, increase conversion, increase AOV, and reduce returns. That is the superfecta. From here every project and team should be able to point to which of these sub metrics they are supporting with their projects and how they can measure that project and the impact on the submetric.
There are ancillary measures that are necessary, like profitability, but those can vary by the business model and the goal of the company in general, so I am going to ignore them for now.
Where I have seen mistakes happen first starts with what and how a team chooses a particular measure. Teams often pick measures after the fact and are just using confirmation biases. The question is what could we be doing, not validating what we are doing.
The second is that goals are poorly defined. There is where The KISS (Keep It Simple Stupid) principle and SMART (Specific, Measureable, Attainable, Relevant, Timebound) goals are needed. Following these principles at the project level allows each project to know the clear goal it is driving for and that goal is mapped to the sub level company goal and ultimately drives the north star goal.
So ask yourself, are you working on something today that you can clearly link to the company goal?
