The role that KPIs, Metrics, and Analytics play in growth

Introduction

It’s hard not to daydream blue and think of waves in the middle of August. So, where can this inspiration take you?

Planning another trip!

But before you start packing your bags, do you just head out without a plan? I doubt it. You probably check your budget (first things first), research destinations, book flights, arrange accommodations, plan your itinerary, organize transportation… and plan every detail in between all of this. 

Do you always have the budget for your trips? Probably not. Even if you do have the budget, you might not always have the time off. So you might need to set realistic targets and balance your goals with the resources and time you have. 

Now, can we apply that same planning to your business? Because, trust me, your company needs a way more detailed strategy to succeed! At the heart of this strategy (if you ask me) are metrics, analytics, and KPIs! 

And do not worry, in this blog, you won’t see a meme with the Olympics dude shooting pistols that took over LinkedIn (and everything else) nowadays. 😀

Measuring what matters means putting business priorities first

“What isn’t measured isn’t managed” — Peter Drucker

True that!

At Solveo, we review a lot of startup pitch decks, and it’s always amusing to see just how wildly unrealistic their forecasts can be. Even the best ideas and teams can look like they’re living in fantasy land when their projections are filled with outrageous numbers.

Setting realistic targets for key performance indicators (KPIs) is crucial—because, believe it or not, aiming for the stars might not be the best approach if you’re still figuring out how to launch the rocket. Founders and product managers often wrestle with metrics like monthly active users (MAU), daily active users (DAU), and retention rates. Getting these targets right can be the difference between looking like a visionary or just another dreamer.

Understanding the difference between Metrics & KPIs

At a fundamental level, metrics and Key Performance Indicators (KPIs) both involve measuring performance, but they serve different purposes.

Metrics are simply numerical data points that track specific actions or events. For instance, if someone clicks the “Leave a Message” button on your site, that click is a metric. Metrics provide raw data without context—how you interpret this data depends on your objectives and analysis.

KPIs, on the other hand, go beyond basic metrics. They include insights that help you understand how well your business is performing in relation to specific goals. KPIs are typically benchmarks with defined values that allow you to gauge success by comparing actual results to industry standards or historical performance. For example, industry-specific email open rates serve as benchmarks to help you set realistic targets for your campaigns.

The classic mistake – Vanity Metrics

Before we get serious about this, let’s talk about vanity metrics first. Ever heard of it? These are the numbers that look impressive on paper but don’t actually reveal much about your business’s success. Metrics like likes, followers, and shares can be fun to track, but they don’t tell the full story of how well your business is performing. For instance, having 10,000 website visits sounds great, but if only a handful of those visitors sign up for your service or become paying customers, that large number of visits loses its value, right? They might make you feel good, but they don’t necessarily indicate whether your marketing strategies are working or if your business is growing. And that way, these numbers can be misleading and don’t help you make smart decisions.

The outcome?  Focusing on metrics that reveal how well your strategies are working and guide you toward effective improvements is important, rather than just celebrating big numbers that don’t lead to real results.

And what leads to real results? 

Actionable Metrics 

Or the numbers that help you understand how your specific actions impact your business’s results. They provide clear information that you can use to make better decisions and are tied to aspects of your business that you can actively influence and control. 

Tracking key metrics for SaaS 

Performance tracking is where the real work is done. Here’s a rundown of the key points to watch, platform by platform:

Data Analytics: What Is It? 

Simple definition? Detective work, but in the corporate world! 

Data analytics is the process of turning unprocessed data into knowledge that can be used. 

How can you improve your work, no matter the industry?

• A retailer can use data to look at past purchases and create special offers for customers.
• A restaurant might check customer reviews to update their menu and service.
• A school can track student performance to adjust learning plans and help students do better.
• An e-commerce store can study website visits to improve product recommendations.
• A financial advisor might look at investment trends to offer better advice.
• A gym can use data to see attendance patterns and improve their programs.
• A real estate agent can analyze market trends to help find better property deals.
• A travel agency might check booking patterns to offer better travel options.
• A logistics company can look at shipment data to improve delivery routes.
• An entertainment company can study viewing habits to create more popular content.

And the list can go on and go on … Got the point?

But, big companies aren’t the only ones who can use data analytics. Small businesses can use it to understand local buying trends, adjust inventory to match demand, and be smarter about marketing and sales. Startups as well. With analytics, they can quickly identify what works and what doesn’t, improve their strategy, and avoid costly mistakes by studying customer data and market trends. 

And to track these analytics, of course, you need …

Analytics Tools 

Oh, what are they?

Analytics tools are software programs or online platforms that allow users to deal with data better.  Remember how you’re the detective here? With the tools, you will be able to investigate and analyze raw data to discover patterns and patterns of behavior. Next step? Extract all the useful insights for better decision-making. 

Simple like that. 🙂 When you search for the best analytics tools for success in 2024, you’ll find a lot of options. These are our top picks:

• Google Analytics
• Features: Tracks website traffic, user behavior, audience insights, and conversions.
• Price: Free
• Semrush
• Features: Keyword research, SEO analytics, site audits, competitor analysis.
• Price: Starts at $139.95/month
• Adobe Analytics
• Features: Data collection, customer journey analysis, real-time reporting, advanced segmentation.
• Price: Pricing available on request
• Tableau
• Features: Interactive dashboards, data-backed insights, scalable, integrates with multiple data sources.
• Price: Starts at $35/month
• Microsoft Power BI
• Features: AI-powered insights, user-friendly reporting, interactive dashboards, integrates with Microsoft products.
• Price: Starts at $10/month; free version available

Or check out these 10 Analytics Tools to Analyze and Improve Business Performance from Semrush.

Understanding industry averages

Taking care of business is not an easy thing, especially at the beginning. The key is to measure the right things to truly understand how well you’re meeting your goal.

Goals often address the question, What are we trying to reach?

This leads to the next question, How will we know if we’ve reached it?

Then…What if we need to measure something we’ve never done before and are unsure how to compare the results?

That’s why you gotta do some research before setting KPIs (just like your vacation plan). Start by looking into industry averages to see what others are achieving, understand what works and what doesn’t (strategies and tactics), make sure you’re clear on what you want to achieve, and pick KPIs that match those goals.  The most important part? Set clear, realistic goals based on this information. 

Also, consider the timing of your efforts and the tools you’ll need. Understand how much time it will take to see results and how it fits into your overall strategy. And yes, it does matter—getting this right can make a big difference in your success!

• The average click-through rate (CTR) in Google Ads across all industries is 3.17% for search and 0.46% for display. Both of these averages are higher than they were a couple of years ago: Good news for Ads advertisers and agencies!

• The average cost per click (CPC) in Google Ads across all industries is $2.69 for search and $0.63 for display. The news here is good too: These Google Ads costs have increased very little over the figures we found a couple of years ago (when the averages were $2.32 and $0.58 respectively).

• The average conversion rate (CVR)  in Google Ads across all industries is 3.75% for search and 0.77% for display. Since the last time we compiled this data, search conversion rates have risen slightly, but display conversion rates have fallen slightly, perhaps a sign that display advertisers need to pay more attention to placements and audience optimization.

• The average CPA in Google Ads across all industries is $48.96 for search and $75.51 for display.

What does it all mean? If your numbers are on the lower side, there’s room to improve. Remember that these are averages. Depending on your field and market, the numbers could be higher or lower. The idea is to identify where you stand compared to these benchmarks and then modify your approach accordingly.

Want to explore more? See the full report!

Okay, you know what KPIs are. You’ve met Metrics, you’ve met Analytics. Now let’s see how they help you grow. 

How metrics and analytics make a perfect match for continuous improvement

Words can, but numbers don’t lie. They can be misleading if you don’t know how to interpret them. So, go deep into your data (imagine it’s an ocean), ask the right questions, and let the findings lead your decision-making. Trust the process, A/B test it, because, ultimately, transforming those metrics into results that benefit your company is more important than simply focusing on the numbers.

One of the most important aspects of tracking performance is understanding that it’s a continuous process. Back to planning a vacation. You start by picking your destination (that’s setting your KPIs), booking your flights and accommodations (tracking your metrics), and adjusting your itinerary based on how things are going (analyzing and improving).

If you hit a bump in the road (and you will), don’t freak out. Figure out what went wrong, adjust your plans, and keep moving forward. Success isn’t about having the perfect trip every time; it’s about consistently making improvements and learning from your experiences.

If you’re in the early stage of growth and want to learn more about KPIs, Metrics, Analytics, etc. check out our comprehensive Launch with AI Program created by growth experts with a proven track record of working with 500+ startups.