Metrics shape behaviour. Well-chosen ones focus effort; poorly chosen ones reward the wrong things.
Start From Goals
Work backwards from what the organisation is trying to achieve. A metric should move when the goal is genuinely being achieved — and not otherwise.
Qualities of a Good Metric
- Relevant: tied to an outcome that matters.
- Precisely defined: exact numerator, denominator, filters, time window and data source.
- Actionable: teams can influence it.
- Timely: available soon enough to act on.
- Understandable by the people using it.
Vanity Metrics
Total sign-ups, page views and downloads often rise regardless of success. Prefer rates and outcomes: activation rate, retention, revenue per customer.
Balance Metrics
Pair a primary metric with counter-metrics to prevent gaming: calls handled per hour alongside customer satisfaction; revenue alongside refund rate.
Leading and Lagging Indicators
Lagging indicators (annual revenue, churn) show results late. Leading indicators (trial activation, weekly usage) predict them and allow earlier action.
Write a Metric Definition
For each KPI, document the formula, source tables, owner, refresh frequency and known caveats. Many disagreements in meetings are really about different definitions.
Goodhart's Law
"When a measure becomes a target, it ceases to be a good measure." Review metrics periodically and watch for behaviour that improves the number without improving the outcome.