What are Business Metrics?
Business metrics are measurements that quantify the performance of a business or organisation. In product and service design, business metrics are used to evaluate the success of the design and its impact on the business.
Some common business metrics used in product and service design include:
- Sales Revenue: This metric measures the amount of revenue generated by the product or service. It is an important metric because it directly affects the profitability of the business.
- Customer Acquisition Cost (CAC): This metric measures the cost of acquiring a new customer. It is important because it helps businesses understand the cost-effectiveness of their marketing and sales efforts.
- Customer Lifetime Value (CLTV): This metric measures the total amount of revenue a customer is expected to generate over the lifetime of their relationship with the business. It is important because it helps businesses understand the long-term value of acquiring and retaining customers.
- Net Promoter Score (NPS): This metric measures customer loyalty and satisfaction. It is important because it helps businesses understand how likely their customers are to recommend their product or service to others.
- Conversion Rate: This metric measures the percentage of website visitors or potential customers who take a desired action, such as making a purchase or filling out a form. It is important because it helps businesses understand the effectiveness of their website and marketing efforts.
- Churn Rate: This metric measures the percentage of customers who stop using a product or service over a given period of time. It is important because it helps businesses understand the reasons why customers are leaving and how to improve retention.
By tracking these metrics and others, businesses can better understand the success of their product and service design efforts and make data-driven decisions to improve performance.