PR#8 Metrics
Leaders always needed to focus on a handful of key matrics. Casers was focuse on food, fodder and firewood. Or for traditional company, revenue exceed total cost along with margin to justify the risk.
PIPELINE TO PLATFORM : NEW MEASUREMENT CHALLANGE-
The mistak of branch out to focus on measuring the wrong matrics. Incentivise member and boosting numbers. Although what mattered was activity.
While traditional focused on things like overstocking, platform business needs to foucs on network effect. “The rate of interaction success and the factor that contribute to it”, they are concerned of creating, sharing and delivering the value through out the system.
MATRICS THAT TRACK THE LIFE SYCLE OF PLATFORM.
Matric during startup phase - at this phase platform manager should foucs on the core interaction, and the benefit it creats for producer and consumers. There main metrics are
liquidity - it is the state in which there are a minimum number of producer and consumer and percentage of successful interactions are high. This is should be the first milestone.
One way to measure liquidity is percentage of listing that lead to interactions within a given time period. It is when user has recognised, used and enjoyed the value unit on the system. On the negative side, it is important to look for illiquid situation, uber app with no driver. Just sign ups are not the sign of growth. Also meaning ful matrics are usually comparitive. Ration of active users.
Matiching quality - user find what they are looking for as quickly as possible, this leads to lower search cost for the users. They need to invest less time, energy and effort. You can track this by sales conversion rebate. Which is percentage of search that leads to interaction. Like 40 percent.
Trust - the degree users are comfortable with level of risk with the platform. AirBNB vs Craigslist.
MATRIC DURING THE GROWTH STAGE: it is critical to identify at the point which transition has occurred. By seeing the size in user base over time. Producer to consumer, only active user. Ok Cupid tracks ration of female to male and adjust these ratio. Upwork do freelancer vs job posting.
On the producer side, the platform should monitor figure that includes, frequency of producer participation, listing created, outcome achieved and should also monitor interaction failure adn producer fraud.
On the consumer side, platform should monitor, frequency of consumption, seraches, and rate of conversion.
Most successful platform business have program design for loyalty. The critical factor that remain relevant from startup to growth phase is interaction conversion rate. The distance between consumer and producer is anothe unique matric. Coca-cola vs google.
MATRIC IN MATURITY PHASE.
Maturity phase should have 3 major requirements,
- drive innovation, a platform find necessary adoptions by studying the extension developer. Widow added media player. It is good idea to fold it when there are many similar extension.
- signal to noise ratio
- resource allocation.
SMART MATRICS.
Over complicated matrics can make management more ineffective. By introducing noise. Discouraging frequent analysis. And distracting from the handful data points that are most significant.
Vanity matric like sign-ups are relatively meaningless.
In the end, most imp matric is simple one, the number of happy customers on every side of the network, who repeatedly and increasingly engaged on positive, value creating intearaction.