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Measure and Understand Your Business With These 5 Metrics
July 2017 • SuiLin Yap
Product and behavioral analytics tools can be an incredibly powerful way to measure your business’s performance, and understand how people are interacting with your website, app, Facebook Page, and other channels.
But with all of this valuable data at your fingertips, it can be challenging to figure out where to start, and what metrics you should be keeping an eye on regularly. While you should absolutely spend time exploring your data and looking for answers to all of your questions, it’s helpful to start with these five metrics to get a clear understanding of your business’s performance and customer behavior.
Measuring active users, retention and more across channels
Before jumping into your metrics, check to make sure you’ve correctly set up your analytics to log the events (actions customers take) that are important to your business and aligned with your goals.
Make sure you’re logging the events that correspond with your business goals.
For example, if you’re a retail business, you’ll want to log events related to your purchase flow such as “View Item”, “Add to Cart”, or “Purchase”. Or if you’re a gaming app, you might want to log events like “In-app Purchase”. It’s also helpful to add additional details about the event, such as dollar amount or item SKU, by including parameters.
Once your analytics tool is set up with the right events, it’s time to dive into these key metrics — active users, conversion, engagement, retention, and revenue.
Active users is the total number of people that engage with your product or business on a given day or month. Many businesses measure how their daily active users (DAU) and monthly active users (MAU) grow and change over time as they tweak their product and launch marketing initiatives. Since active users is a measure of both growth and retention, it provides a great way to measure the overall success of your business.
To get the most accurate count of active users, make sure your analytics measures across channels. For example, if someone visits your website on their laptop, and then uses your app on their mobile phone, you want to count this as one active user, not two. With traditional analytics tools that measure channels and devices in silos, this would count as two different active users — one on your website, and one your app. That’s why omni-channel analytics is so important for getting an accurate understanding of how your business is performing.
Most businesses have a desired path or flow that they want people to follow. Whether it’s signing up for their product, making a purchase, or getting to the next level, funnels are a powerful way to measure how effectively you’re able to move people through your desired journey.
Creating ad-hoc funnels that span across devices and channels is incredibly valuable for understanding how people move across different touch points, so you can better optimize conversion at every stage. Funnels, when combined with omni-channel measurement, allow you to answer critical questions such as, “how many people who took this action on this channel went on to take this other action on this other channel”.
For example, you can easily create an omni-channel funnel to measure how many people open your mobile app, view an item on your desktop website, sign up for an account, and then go on to make a purchase in your store. Understanding the drop off between these steps and channels can highlight key opportunities for improving conversion.
Measuring engagement allows you to understand how many times people are taking a specific action with your business, like making a purchase or viewing a webpage, as well as how much time they’re spending in your product.
Engagement is important to measure and understand because it impacts your ability to drive people to your desired outcome and turn them into loyal users or customers. Similar to active users and conversion, engagement is a metric that needs to be measured across devices and channels.
For example, let’s say a news publisher has an app, a mobile site, a desktop site, and a Facebook Page where they regularly publish content and engage with their readers. Now imagine that the engagement event they care most about is someone reading five news article on any one of these channels, because this indicates high engagement, and thus a high potential for converting to a paying subscriber.
With traditional analytics tools, it would be very difficult to know when the same person has viewed an article on each of these channels. Only if they’re a registered reader or subscriber would you be able to identify that it’s the same person viewing each article. However, with omni-channel analytics tools, the news publisher would have a unified view of behavior across these channels, allowing them to create a segment of people who have viewed an article five times. With this information, the news publisher can create a strategy for re-engaging their audience and encouraging them to subscribe.
As you gain more users or customers, you’ll want to make sure you’re keeping them around. After all, it doesn’t make sense to spend money and resources on acquiring more people only to lose them right away. According to one report, studies have found that it can cost you four to ten times more to attract a new customer than to keep an existing customer. Additionally, research done by Bain & Company found that in financial services, increasing customer retention rates by 5% increases profits by 25%.
Retention reports allow you to keep an eye on the long term health of your business by measuring the percentage of people that come back to your product or business after a specific time period. This helps you understand if people are getting value from your product or business, which segments of people are sticking around, and more.
You can also measure retention for specific features using cohorts. Cohorts let you measure the percentage of people who take an initial action, who then go on to take another action. For example, you can measure how many people come back to read a news article each day after reading their first article, and how that number changes over time as you introduce new product features or marketing campaigns.
To measure retention accurately, take advantage of omni-channel analytics capabilities to understand what percentage of people are truly churning and not coming back, versus those who might have just come back to use your product on a different channel.
If you’re focused on monetization, make sure you’re measuring revenue by logging purchase events. By including revenue alongside your product and behavioral analytics, you’ll be able to identify who your most valuable customers are, how valuable they are, and the revenue impact of changes you make to your product and customer experience.
For example, you can use cohorts to measure customer lifetime value (LTV), and then segment your customers to understand how LTV differs across demographics or referral sources, and even how it differs across specific actions people take on one of your channels, such as liking a post on your Facebook Page.
Getting started with omni-channel analytics
Active users, conversion, engagement, retention, and revenue are just a few of the important metrics to keep in mind when using analytics to understand, optimize, and grow your business. As you dive into your data, remember to measure and analyze your metrics across channels and devices, so can get the complete picture of your customer journey.
Over the next few months, we’ll go into detail on each of these metrics and cover additional tools such as segments, behavioral cohorts, and more. Ready to dive into your analytics and get started with omni-channel measurement? Visit Facebook Analytics to learn more, or check out our quickstart guides to get started.
“Don’t get screwed: Focus on customer retention over acquisition” by The Next Web, Aug 2014.
“The Value of Keeping the Right Customers” by Harvard Business Review, October 2014.
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