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CH9 Metrics: How platform managers can measure what really matters, G1…
CH9 Metrics: How platform managers can measure what really matters
Key metrics can guide leaders
The Roman army
Food
Fodder
Firework
Companies
Inventory turns
Operating income
Cash flow
Stage 1
METRICS DURING THE STARTUP PHASE
Trust
It's achieved through excellent
curation of participants
in the platform
E.G. Airbnb
:star:Allow guests and hosts to review each other
:star:Having photographers certify the accuracy of the information
Three crucial categories of metrics
Liquidity
Matching quality
Trust
Provide the managers of startup platforms with an accurate picture of the platform’s rate of interaction success and the key factors that contribute to it.
Platform business need to be careful
The nature of the platform
the types of users
the forms of value being created and exchanged the variety of interactions performed
Focus on the degree of user commitment to the ecosystem
Start up companies (Pipelines/platforms)
Stretched resources
Money, time and talent
People doing multiple jobs far from their expertise.
:warning:Deciding categories of information is important and challenging
Metrics are different from mature businesses.
:pen: Designing to flourish in the harsh soil of extreme uncertainty (startup thrives)
:pen: Unpredictable future, growing array of alternatives/ increasing the pace of change
Standard forecast
Product milestones
Detailed business plan
Most valuable metrics for starting up platform business :question:
Focus on the core interaction and benefits it creates for both producers and consumers on the platform
:checkered_flag: Liquidity
:checkered_flag: Matching quality
:checkered_flag: Trust
Liquidity
Minimum number of producers and consumers
High percentage of successful interactions
More liquidity is achieved, interactions failure is minimized.
Achieving liquidity is the first and most important milestone.
Achieve and most valuable metric in the early months
Precise workings of platform and nature of user base will vary the formula of the metric.
Measurement of liquidity
Tracking the lists of interactions within a given period
Interactions and period depend on market category
Example: Information and entertainment
Interactions-greater engagement-present the moment
Recognized
Used
Enjoyed
Available value unit
Negative side
Acurrence of the illiquid situations where
desired transactions are not occurred
Uber users found no car availiable :red_cross:
Discourage users
:warning:User commitment & active usage is the most vital metrics
Ratio
Active user ratio : No of active users/ total users
Rate of growth of active users = No. of new active users : Total active users
Matching Quality
Accuracy of the search algorithms and intuitiveness of the negative tools in value-creating interactions
:star: Delivering value and stimulating the long-term growth/ success of the platform
Achieve from product excellence or service curation
Users want to search what they want in the short period
Precise matching
Lower search costs for users
Great job of linking = more active users
measure the percentage of searches which will lead to interactions
Measurements for good or poor matchmaking
Create rule that will measure correlating interaction percentage of users with long-term rate of activites
Example : 40% is significant cutoff point
users interactions are more than 40%, then it will lead active users to stay at least 3 months.
If the interactions are less than 40%, then it will lead to stop participating in this side
This can your working target to maintain the health of your site.
Daily interactions, trends over time, improvement of the matching systems can be developed, tested and evaluated on changes in this metric.
Stage 2:
Metrics during the growth phase
producer to consumer ratio
OK Cupid
Track the ratio of women and men
Upwork
Focus on the free lancers and job posting ratio
LTV (Lifetime Value)
Frequency of consumption and searches
Sales conversion rate
High quality photos increase rental rate
Side switching rate
Guests become the best source of hosts
New metrics
Haier Group
distance between consumers and producers
improving the fit between products and consumers need
enhance innovative capability
making their marketing less costly and more effective
FROM PIPELINE TO PLATFORM: THE NEW MEASUREMENT CHALLENGE
BranchOut
Launched
July 2010
a professional networking platform
three rounds of investment
attract $49 million
expanded from fewer than a million (33 million) between the spring and summer of 2012.
Before another four
FALL
fewer : than two million
job-hunting connections
based on an app
Why BranchOut's failure
:question:
focusing on—and measuring—the wrong things
boosting membership numbers
IF
Activity
the number of satisfying interactions that platform users experience
A successful pipeline business
produces goods and services
minimal waste of resources
deliver to customers
well-managed marketing
sales
distribution systems
DESIGNING METRICS
THAT TRACK THE LIFE
CYCLE OF THE PLATFORM
1. Startup phase
2. Growth phrase
3. Maturity phrase
user retention
innovation
enhance the business’s value proposition
measure and track the degree to which both producers and consumers are repeatedly participating in the platform and increasing their participation over time.
monetization
customer retention
the conversion of active users to paying customers
Capture & retain a fair share of the value being created on the platform without impeding the continued growth of network effects?
user groups are enjoying the greatest value from platform activities
user groups may need to be subsidized
Irrelevant to evaluate: traditional Metrics (Revenues, cash flow, profit margins)
Simple measures to guide decision-making
the development of effective tools to pull users: facilitate interactions, match producers with consumers
active producers and consumers who are participating in asuccessful interactions => the positive network effects
the creation of effective systems of curation
the design of the core interaction
decisions how open the platform for various kinds of participants.
Stage 3:
Metrics during the maturity phase
Should focus on metrics in driving innovation
Have to identify new and missing functionalities that can create more value for users
Ex: Microsoft windows
Should focus on metrics selection
A lot of metrics means not as good as
3A's test of Eric Ries
Actionable
Accessible
Auditable
Metrics dashboard must be simple and easy to use
The Key question:
Are people happy enough with the ecosystem to continue participating in it actively
G1
Jennie
Oyuka
Loren
Poe Poe
Trang
Silvia
Erika
