TOPIC 6: METRICS

Metrics

In business it is important to assess the strengths and weaknesses to help the

business to change for the better, also to manage the performance proactively and

efficiently. To measure the business effectively, businesses use metrics.

Metrics is a quantifiable measure used to track and assess the status or

performance of a specific business function. Metrics are used to measure progress

toward short and long-term goals and objectives, according to Klipfolio.

Figure 1: Metrics

Key Performance Indicator and Metrics

The difference between Key Performance Indicator and Metrics, according to

Bernardita Calzon (2023):

Key Performance Indicator (KPI) Metrics

Measure progress towards key business Measure performance of specific

goals business activities or processes

They have high- level perspective They have lower- level perspective
 They have relevant across different They have relevant for specific

departments departments or business area

Used for strategic decision- making Tend to be operational or tactical

Figure 2: The difference between Key Performance Indicator (KPI) and Metrics
Key steps in developing effective metrics, according to Indeed (2022);
Step 1: Consider your Objectives
The first step in developing metrics for your business is to consider your goals.

Having a clear objective is essential for choosing the right metrics to assess your

progress toward them. For example, as the owner of an e-commerce retail business,

your goal may be to develop a system for tracking what proportion of visitors to your

website follow through with completing a transaction. Establishing this general

objective provides a starting point for developing metrics that help you measure your

performance.

As you consider what objectives to measure using your metrics, think about

what key areas are important to measuring your business's success. Different types of

businesses may need to monitor some aspects of their business more intensely than

others. Identifying these key areas can help you choose which metrics are most

important to monitor the performance of your company

Step 2: Use SMART goals to establish objectives

Using this method helps you specify what you hope to measure using your

metrics by setting a measurable goal. It's important to make sure your goals are

achievable and relevant, meaning you can make realistic plans to achieve them and

they contribute value to your business in some significant way. When setting goals, it's

also important to define a timeframe for meeting your objectives. Setting deadlines or

creating a schedule with smaller milestones that contribute to a larger goal helps you

pace your progress and track your effectiveness at regular intervals.

For example, if your goal is to develop a metric for measuring the ratio of visitors to

your online shop and the number of visitors who complete transactions, you can

specify that goal further using the SMART goal method. An example of a SMART goal

version of this objective may state that you wish to develop a metric that measures the

proportion of visitors to your online site to the number of visitors who complete

transactions to implement in the next month. You plan to use this metric to increase

the transaction ratio by 15% over the next quarter.

Step 3: Define benchmarks for each metric

Benchmark is a standard or point of reference people can use to measure

something else.

To help you establish a specific goal for each metric you plan to track, identify

a benchmark to give you a foundation for defining a measurable and specific goal. One

way to establish a benchmark for your business is to consider a competitor's

performance data. Evaluate their business's current level of performance and their

goals as a point of comparison for defining realistic, measurable goals for your

business. If your business is just getting started and hasn't gained enough data of its

own for a benchmark, looking to a competitor's data can help you set realistic goals.

For a more established business, you can use any informal data collection

you've performed to define a benchmark. Even if you haven't established formal

metrics for your business, you can review certain types of performance data, like your

sales numbers, to determine a performance average. This information can provide you

with a baseline number for establishing your SMART goals. For example, if you plan

to use a metric to assess how much your online sales increases within a particular time

period, it's first important to know how much you earn in sales on average.
Step 4: Develop a measurement plan

Finally, after choosing what metrics to implement and your goal for

implementing them, create a plan for tracking your data. Some aspects to consider

when developing your measurement plan are how often you plan to assess each

metric, what tools you wish to use to measure your metrics, how you plan to record

your data and what methods you wish to use when analyzing your results. For

example, some metrics you may measure daily, while others you might look at on a

weekly or monthly basis.

Determine if you need to purchase specific software to track and record certain

metrics or if you can track and record your data manually or with an online analytics

tool. Also, consider who's responsible for recording data related to specific metrics,

who has access to that data and how to report performance data. For example, you

may assign the sales manager to track their daily, weekly and monthly sales metrics.

They may record this data in a formal report and submit it to the sales director each

month for assessment.

Internal and External Sources of Metrics Information

Internal Sources

Internal sources of metrics information are data that originates from inside the

business organization. These sources may come from internal systems, databases,

reports, or measurements collected directly by the organization. These data can only

be accessed by the people inside the firm. Moreover, internal sources give information

about the company’s current practices and its effectiveness, and it evaluates the

company’s products, brand, and performance of its employees.

Internal sources of metrics:

 Sales data are information from the sales process of the firm. These data help

with creating solutions and decision-making in terms of the marketing and profitability.

With sales data, the firm can analyze which social media platforms are best suitable

for reaching out to the customers. In addition, the business can also change the price

of their products or services based on the price range that the customers are willing to

spend. Through sales data, the business can assess the profit and revenue that the

company is generating.

Examples of Sales Data:

• Revenue

• Price points

• Profits

Figure 3: What is Internal Data?

Financial Data are information regarding the finance sector of the company. These

data can determine whether the company is earning or losing money, and to identify

where the money is coming from. Moreover, the financial data that are collected over

several years helps to determine the change in profit margins over time, while daily

reports help assessing the best time for sales. Financial data is used in making

decisions in terms of budgeting.

Examples of Financial Data:

• Cashflow reports
 • Expense reports

• Production reports

Human Resource Data focuses on the company’s relation to its. These data help in

making decisions regarding the company’s policies, culture, and employee training and

development. Human resource data can determine whether policies work or not, and

analyze if these certain policies are having positive effect on recruitment, retention,

efficiency, and employee satisfaction.

Examples of Human Resource Data:

• Onboarding metrics

• Employee satisfaction rates

• Exit interviews

Advantages and Disadvantages of Internal Sources

Advantages:

• Reliability- data are more accurate and credible since it comes directly from

inside the company, and it contains private information about the organization.

• Cost effective- does not require great amount of money to collect the

information

• Control- the company is the ne to decide whether to use certain data or not.

They have full control over the information.

• Better security- ensures that data are not manipulated and only accessible to

the company itself.

Disadvantages:

• Limited perspective- cannot provide data about the external factors that affect

the organization

• Data silos- information might be fragmented across different departments

 • Bias- potential for bias, making data less objective.

External Sources

External sources are metrics information that comes from outside the firm.

These data may include market research reports, customer feedback, and competitor

analysis. In addition, these data are readily available to the public. Also, external

sources provide information about different economic, social, or political trends that

may impact the business. Moreover, these data help to understand the environment in

which the firm operates, and it is beneficial when it comes to understanding the

customers, and make better strategic decisions.

Figure 4: External Environment

External sources of metrics:

Government data, the departments of government share nationwide demographics

such as age, race, socioeconomic standing, and other characteristics like employment

rates, salary, wages, and level of education. These data are collected through census

that helps provide the business with information about the market to better serve them

according to their needs and wants.

Social Media Data are information that are publicly available with the use of the

accounts in which the people interact with the business of other fellow customers
around the world. Through social media data, the business can assess the opinions of

the people and determine their level of satisfaction towards the products and services.

Thus, the company can determine the factors that influence the company’s marketing

strategies.

Examples of social media data:

• Likes, comments, mentions, hashtags, views, and impressions

Marketing Data data include the reports on market trends, customer preferences,

competition, and economic conditions such as inflations, that affects the condition of

the company. Through this, the firm can analyze the factors that affects their sales

such as the environmental conditions, availability of resources, and the views of the

buyers.

Advantages and Disadvantages of External Sources

Advantages:

• Broader perspective- gives insights to the external environment

• Objectivity- less possibility to be biased

• Opportunities- reveals new trends for innovation

Disadvantages;

• Costly- more expensive to get informations

• Relevance- informations may not be applicable to the needs of the firm

• Accuracy- data may not be up-to-date

Both internal and external sources of metrics are important when it comes to

assessing the business’s status and making decisions for the betterment of the firm.

In the end, it is just a manner of knowing which sources are better to use and which

data are applicable to the business by knowing its advantages and disadvantages.
Online Firm

Online firm or online business refers to all businesses conducted online. It

refers to the activities of buying and selling goods and services through the internet. In

this case, all transactions in the business are being done online, including the

placement of orders and payment for the products or services. Online firm includes

activities like customer relationship management, supply chain management, and

online collaborations.

Figure 5: Online Business

Differences between e-commerce and online firms:

E-commerce Online firm

All about trading of merchandise Refers to running the business using

over the internet the internet

Only includes commercial

Includes all business activities
transactions

Emphasizes efficiency in online

It is an online presence of a business
transactions

Examples are online banking, Examples are PayPal, Netflix,

online ticket booking, social Amazon, or any businesses found on

networking the internet.

Figure 6: The difference between e-commerce and online firms

Differences between online business and offline business:

Online business Offline business

Via digital platform Through physical stores

Global Limited customer reach

Less operation cost More operation cost

Available 24/7 Limited operation time

Operated from anywhere in the

Operated from store
world

Broad range of promotion Limited promotion

Difficult to retain loyal customers Easy to retain loyal customers

Visible to global customers Visible to limited audience

Less employee More employee

Figure 7: The difference between online and offline business

The Use of Metrics in Online Firm

Figure 8: Metrics

• Understand Performance

To know the overall growth of the business, the company needs to measure

its performance by looking through its sales. By analyzing the metrics likes sales over

time, total sales, and store visits, the business can determine whether its sales are
growing. It is done by analyzing the analytics dashboard. Through this, the company

can adjust their strategies based on the result of their analyzation of the metrics, and

to impose their overall performance. Tracking the performance of the business is the

key to understanding if the strategies are working.

• Improve Forecasting

Improve the overall sales forecasting by paying attention to the metrics and

know which products people are buying. The business can find out whether they need

to create more products or innovate it. The firm can determine which are the best

seasons to sell their products or services. Thus, leads to more time preparation for

sales promotion. Through this, the business can visualize what to expect in upcoming

months.

What is Dashboard Performance?

A performance dashboard is a visual reporting and management tool that many

entrepreneurs and managers use to measure the effectiveness and specific metrics of

their business, such as employee performance, customer satisfaction, or marketing

campaigns. Tracking performance helps businesses monitor critical processes and

activity. For instance, you can monitor an inbound advertising campaign and compare

it to an outbound campaign that you're implementing to see which strategy is more

effective. Dashboards are often fully customizable, which makes this tool useful for

many industries, including finance, health care, and customer service.

 Figure 9: Email marketing dashboard

An email marketing dashboard is very useful for email marketers who want to track

email marketing KPIs and metrics such as open rates, click rates, email bounce rate,

unsubscribe rate, etc. across various email campaigns and customer segments.

Easy steps to implement performance dashboards

1. Define your goals and metrics

To create an effective employee performance dashboard, you must first define

your goals and metrics. Ensure that they are aligned with your organization's strategy,

values, and culture, as well as the needs and expectations of your target a

2. Choose your data sources and tools

The second step is to identify and collect the data sources and tools that will

feed your employee performance dashboard and report. It is essential to ensure that

your data is accurate, reliable, and relevant to your goals and metrics, as well as to

consider the frequency, format, and accessibility of your data sources and tools. Then,
pick the tools you'll use to gather and analyze this data. This could be software like

Excel, Google Sheets, or specialized analytics tools.

3. Design your dashboard and;

The third step is to design the performance dashboard and report using the

data sources and tools selected. To create a clear, concise, and compelling dashboard

and report, use best practices of data visualization and storytelling. Use a consistent

color scheme, font, and layout that matches the organization's brand identity, and

appropriate charts and graphs that suit the data type.

4. Implement and share your dashboard

Once your dashboard is complete, it's time to put it into action. This includes

establishing any automatic data collection methods, updating the dashboard regularly,

and sharing it with those who require access. Make sure that everyone understands

how to access and use the dashboard properly. Additionally, choose the best channel

and format to share the dashboard, such as email, intranet, or presentation.

Importance of Metrics in Online And Retail Firm

For online firm

• Understanding Performance

• Analyzing sales data such as sales over time and total sales can assist

measure business growth. Adjusting plans based on analytics enhances the

overall outcome.

• Improving Forecasting

• Monitoring metrics help to predict sales patterns, identify popular products,

and plan promotions, resulting in better preparedness for the following months.
For retail firm

• Tracking Performance Monitoring performance indicators gives transparency

and assists in identifying areas for improvement to increase sales and

satisfaction with customers.

• Improving Forecasting

• With so much going on in a retail business, it can sometimes be hard to know

what you could be doing better. By tracking retail KPIs over time, you can see

which aspects of your business are performing well and which are not, and

spend your time and energy on improving the supply chain elements that need

it most.

• Informing Firm Decisions

Having accurate data on retail performance is crucial when it comes time to make big

business decisions. Retail metrics provide data that can inform your decision-making

and help improve your overall retail strategy.

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