| name | analytics-metrics-kpi |
| description | Master metrics definition, KPI tracking, dashboarding, A/B testing, and data-driven decision making. Use data to guide product decisions. |
Analytics & Metrics Skill
Become data-driven. Define meaningful metrics, build dashboards, run experiments, and make decisions based on data, not intuition.
Metrics Framework (Acquisition → Revenue)
North Star Metric
Definition: One metric that best captures the value your product delivers.
Characteristics:
- Directly tied to business success
- Driven by product improvements
- Leading indicator of revenue
- Understandable to whole company
Examples:
- Slack: Daily Active Users (DAU)
- Airbnb: Booked Nights
- YouTube: Watch Time
- Uber: Rides Completed
- Stripe: Payment Volume Processed
Funnel Metrics (Acquisition)
Total Visitors: 100,000/month
↓ 20% conversion
Free Signups: 20,000
↓ 10% free-to-paid
Paid Customers: 2,000
CAC: $50 (marketing + sales spend / customers acquired)
LTCAC: $100 (all customer acquisition costs)
Metrics to Track:
- Traffic - Total visitors to website/app
- Signup Rate - % who sign up (target: 10-15%)
- Free-to-Paid Conversion - % free users who pay (target: 2-5%)
- CAC - Cost per acquired customer
- CAC Payback - Months to recover CAC from revenue (target: < 12 months)
Activation Metrics
Goal: New users become active users
Free Signups: 2,000
↓ 30% onboard successfully
Activated: 600
↓ 60% remain active Day 7
Day 7 Active: 360
Metrics to Track:
- Onboarding Completion Rate - % who complete setup (target: 50-80%)
- Time to First Value - Hours to first successful use
- Feature Adoption - % who try key features
- Day 1/7/30 Retention - % active those days (target: 40/25/15)
Engagement Metrics
Goal: Users regularly use product
Daily/Monthly Metrics:
- DAU/MAU - Daily/Monthly Active Users
- DAU/MAU Ratio - Stickiness (target: 20-30%)
- Feature Usage - % using key features
- Session Length - Minutes per session
- Session Frequency - Times per week
Cohort Analysis Example:
Jan Cohort (1,000 signups):
- Day 1: 600 active (60%)
- Day 7: 360 active (36%)
- Day 30: 180 active (18%)
- Month 3: 90 active (9%)
Feb Cohort (1,500 signups):
- Day 1: 1050 active (70%) ← Improving!
- Day 7: 630 active (42%)
- Day 30: 300 active (20%)
Retention Metrics
Goal: Users stay and continue paying
Month 1: 1,000 customers
Month 2: 900 active (90% retained)
Month 3: 810 active (90% of month 2)
Month 12: 314 active (31% annual retention)
Churn Rate: % lost each period
- Monthly churn: (Customers Lost / Month Start) × 100
- Annual churn: 1 - (Ending / Starting)
- Target for SaaS: < 5% monthly churn
NPS (Net Promoter Score)
- Question: "How likely to recommend (0-10)?"
- Score = % Promoters (9-10) - % Detractors (0-6)
- Range: -100 to +100
- Target: 50+ (world-class)
Revenue Metrics
Monthly Recurring Revenue (MRR)
MRR = (Total paid customers) × (average subscription price)
Growth MRR = New MRR + Expansion MRR - Churn MRR
Annual Run Rate (ARR)
ARR = MRR × 12
Average Revenue Per User (ARPU)
ARPU = MRR / Total Users
Customer Lifetime Value (LTV)
LTV = (ARPU × Gross Margin %) / Monthly Churn %
Example:
ARPU: $100
Gross Margin: 80%
Monthly Churn: 5%
LTV = ($100 × 80%) / 5% = $1,600
If CAC = $400: LTV/CAC = 4x ✓ (target: 3x+)
Dashboard Architecture
Executive Dashboard (C-Level)
Weekly Updates:
- MRR / ARR (vs target, vs month ago)
- New customers (weekly, monthly)
- Churn rate (%)
- NPS score
- Engagement (DAU, MAU)
- Key initiatives status
Frequency: Weekly
Product Dashboard (Product Team)
Daily/Weekly:
- Funnel metrics (signup → paid)
- Feature adoption
- Engagement metrics
- User feedback score
- A/B test results
- Support ticket volume
Frequency: Daily updates
Financial Dashboard (Finance/Operations)
Monthly:
- MRR / ARR
- Customer acquisition cost
- Customer lifetime value
- Gross margin
- CAC payback period
- Revenue by segment
- Churn by cohort
Frequency: Monthly
Health Dashboard (Operations)
Realtime:
- System uptime (%)
- Error rate (%)
- Response time (p95)
- Database performance
- Support ticket response time
- Support backlog
Frequency: Realtime/hourly
A/B Testing (Experimentation)
Test Planning
Hypothesis:
"If we change X, then Y will improve, because Z"
Example:
"If we move signup button above the fold, then conversion will improve 15%, because users won't scroll."
Test Structure
Experiment Design:
- Control: Keep current version
- Treatment: New version
- Sample size: Enough users to be statistical
- Duration: 2-4 weeks minimum
- Metric: Clear success metric
Statistical Significance
Confidence Level: 95% (industry standard)
- Means 5% chance of false positive
- Need enough samples (typically 1000-10K per variant)
- Use calculator for exact sample size
P-Value: Probability result is random chance
- P < 0.05: Statistically significant
- P > 0.05: Not significant, inconclusive
Example A/B Test
Hypothesis: Moving signup button above fold increases conversion 15%
Setup:
- Control: Current design
- Treatment: Button moved above fold
- Success metric: Conversion rate (signup / visit)
- Sample size: 10,000 users per variant
- Duration: 2 weeks
- Confidence: 95%
Results:
- Control: 2.0% conversion (200 signups from 10K visitors)
- Treatment: 2.8% conversion (280 signups from 10K visitors)
- Improvement: 40% increase (0.8% / 2% = 40%)
- P-value: 0.02 (statistically significant!)
- Decision: SHIP IT - Roll out to 100%
Test Ideas by Priority
High Priority (Start Here):
- Signup flow optimization (biggest funnel)
- Onboarding experience
- Pricing page clarity
- Feature discoverability
Medium Priority:
- UI copy optimization
- CTA button colors
- Email subject lines
- Notification triggers
Low Priority:
- Micro-copy tweaks
- Animation effects
- Color scheme changes
Metric Pitfalls to Avoid
Vanity Metrics
❌ "We have 1M page views!"
✓ "We have 50K daily active users, growing 10% monthly"
Actionable vs Non-Actionable
❌ "User satisfaction increased" (what changed?)
✓ "Onboarding completion rate 65% → 78% (↑20%)" (clear action)
Correlation vs Causation
❌ "Ice cream sales correlate with drownings"
✓ Understand actual causation, not just correlation
Look-Alike Metrics
❌ Track MRR but not Customer LTV (can grow MRR by spending more on acquisition)
✓ Track both acquisition efficiency AND retention
Metrics Review Cadence
Daily:
- System uptime
- Error rates
- Support response time
Weekly:
- Funnel metrics
- Feature adoption
- Key engagement metrics
- Test results
Monthly:
- Revenue metrics
- Cohort analysis
- Churn breakdown
- LTV/CAC trends
Quarterly:
- Strategic metric review
- Long-term trend analysis
- Metric changes needed
Master data-driven decision making and grow faster!
