Playbook – KPI Trees
The following is a video transcript
Hi, my name is Matt O'Connell, and I'm one of the co-founders here at vistaly.com
In this video, we're going to take a look at KPI Trees, and we're going to discuss what they are and how you can use one to have better metric-driven conversations with your team.
We'll also look at how you can use Vistaly to model and visualize your KPI Trees. So let's get started by taking a look at the top of our tree. At the top, you will have a North star style metric – this is a metric that matters to your business, and you can set something like a revenue target or even something like this and model your monthly active users.
Now that we have this set, you can begin to have conversations with your team about improving this metric. However, any of those conversations will be extremely open-ended. One of the reasons for this is because, at this point, there are an infinite number of ways that a product team could potentially influence monthly active users. One way to make the conversations a little more tactical is to take that metric and break it down into smaller components. In this example, we take monthly active users, and brake it down into;
- acquisition – acquiring new users
- reactivation - addressing churn
- retention – supporting existing users so that they continue to return
Each one of these KPIs influences monthly active users and they're more specific to a different area of the problem. From here, we can now look at New Users and continue this process of breaking these metrics down into smaller pieces. Maybe what makes sense is to model unique website visits and compare that to a conversion rate. What this tells us (as we monitor these metrics) is – Are getting enough traffic, or does the bottleneck have to do with conversions? Are we not converting enough of that expected traffic into new accounts?
You can continue to break these metrics down as far as it makes sense and now you have a dashboard that you can look at that helps you identify and pinpoint the areas you should spend more time on and provide a higher return on that time investment.
Let's take a look at one more quick example. Say we have a retention metric, and we're supporting existing users. We want to set some metrics to measure and evaluate whether or not our users are continuing to get value out of the application. Depending on your application, these metrics can be very specific to your use case. Let's say that we have a KPI tree application, and we want to determine whether or not users are getting value from it. The first thought is to answer the question: Are users coming in and updating their metrics? If they're not updating their metrics, they're probably not going to continue to come back month over month. So let's set a metric in place to measure that. Over time you may learn that's not enough. Maybe it makes sense to track how many users across an entire account are coming back and reflecting on those changes. One person may be coming in and updating these metrics, but if no one else is looking at them, the account may still churn over time.
So let's set that metric in place and now you can see that as you learn more and evolve your KPI tree, it can provide more value to driving conversations around these specific areas of improving your North Star metrics.
This has been a quick example of how you can use a KPI tree to have better metric-driven conversations. I'll add a link to a great blog post written earlier this year by Petra Wille. She's a product coach and author of "Strong Product People". You can look through a couple more great examples in that blog post.
I'll also create a link to this KPI tree so you can explore it. If you have any questions or want to talk more about using Vistaly to model KPI trees in your business, please get in touch with us at email@example.com.