[CDPS] G2 - (PR) Chapter9 - Metrics
Member: Sunny / Cindy / M.J / Phoebe / Ian
New Measurement Challenge
Metrics Design
- Startup phase
- Growth phase
- Maturity phase
Pipeline v.s. Platform
2011
Smart metrics design
Focus on core interaction and benefits for users on platform
Use the proper metrics at different stages
Requirements ✅
Factors of Branchout's failure
2012 Summer
Founded
2012 Autumn
Users rapidly increase 💥
Enabled users to make job-hunting connections via Facebook
Crucial metrics
Tracking successful interaction of active users:
Source of positive network effects - Critical to success
2013 Summer
Users plummeted to fewer than two millions
Ensure the core interaction can keep creating the value
New business strategy
Workplace chat 🗣
platform managers must ensure the balance of two side
➡️producer-to-consumer ratio
2013 Autumn
Not a failure , it's still alive
Changing form Facebook
The concept was questionable
OKCupid
customer : male
producer : female
Focusing and measuring on the wrong things
Calculate the value of each user type
Users rate the male
Effort to boosting membership numbers
Filter the information that male can see
But
It doesn't mean anything
The important factors
Activity
The number of satisfying interactions
Maintain positive network effect
Conclusion
Fostering market liquidity
avoid the imbalance
Platform transform every traditional things
Demand new forms of internal measurement
- Liquidity
- Matching quality
- Trust
Pipeline
Platform
Interaction failure will be minimize when achieved
The first and most important milestone
A minimum number of producers and consumers for mass successful interaction
Reasonable way
Key numbers of metrics
Gauge the efficiency of this value flow from one end of pipeline to other
Frequency of producer participation
Listings created
Outcomes achieved
Cash flow
Inventory turns
Operating income
Gross margin
Overhead
Return on investment
Monitor instances of producer fraud
Lifetime value
Repeat producers
customer
Help platform earn value , less cost
The frequency of consumption
Monitor
Tracking the percentage of listings that lead to interaction within a given time period
Rate of conversion to sale
Searches
Active usage of platform are more important than total users
Help platform manager create strategy
Ratio & Rates are more useful:
They present the differences and changes
Tracking occurrence of illiquid situations
critical metrics
The side switching rate
Unique metrics depend on different motivation
Accurate matching reduce searching cost of users
Need to convert the concept into a numerical index or meaningful metric
Intuitiveness of navigation tools offered to users
Reasonable way
Accuracy of search algorithm
Simplicity is a virtue
Be aware of vanity metrics
Ex: The number of set-up members
3 A's test
Accessible
Audiable
Actionable
Tracking sales conversion rate:
Percentage of searches that lead to interaction
keep caring about users participation and satisfaction
Compare interaction percentage of particular users with their long-term rate of activity
Especially important for the markets that risk accompanied by interactions
e.g. Platforms
A well-run platform usually curate both side of users successfully to reduce the risk involved in interaction
Can be achieved through excellent curation of participants on the platform
Formula design for metrics
considering
Type of users
Type of interactions
Nature of platform
Type of platform business
Forms of value creation and exchange
Variety of interaction performance
Create value primarily through the impact of network effects
Metrics
The factors that contribute to it
The success of the platform in foresting sustainable repetition of desirable interactions
The rate of interaction success
- Drive Innovation
- a high signal-to-noise-ratio
- facilitate resource allocation
Smart Metrics Elements
i. necessary adaptations
ii. competitive & regulatory environment changes
Microsoft Windows, Cisco
Simplicity ✅ (ODesk)
Eric
Eric Ries (Writer & Entrepreneur of" lean startup" movement)
3As' Test: Actionable, Accessible & Auditable
Most important metric
number of happy customers on every side of the network
repeatedly engaged in positive, value-creating interactions