Startups

Ratios as a metric or KPI

eBay alpk
Jan 8

Should metric or KPI be a ratio or whole number ? Several popular books like lean analytics say a metric/kpi should be a ratio. In reality, all the top companies have whole number a KPI or metric: Facebook - MAU, eBay - GMV, Airbnb - number of bookings.

IMO ratios often involve 2 components. Ex: if denominator goes up the overall ratio will go down.

Thoughts?

comments

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  • Netflix / EngAz2H91
    Depends on what you are trying to measure. I like ratios because they usually normalize for things like seasonality or user growth.

    Eg total searches vs searches per unique user. The latter is useful to understand if user behavior is shifting to searching more (perhaps you want to measure the impact of a new search feature). It also normalizes for changes in user growth during the period you’re measuring.

    That said, I don’t know why you have to limit yourself to just one metric and one type of metric.
    Jan 81
    • Axtria DesiLaunda
      This.

      One metric doesn't mostly achieve your goal of measuring the success of a product in the market. A combination of metrics are looked at, some ratios (for reasons stated above) and some absolute numbers.
      Jan 9
  • Meggitt / Enganon10101
    Both?
    Jan 80
  • Quora iSjP52
    In an a/b test you don't want to use a ratio, it's too hard to interpret. Say you want to measure if a change makes people more likely to buy a product -- do you care about number of purchases or purchase rate? What if a change decreases purchases but increases rate? (The answer: you care about revenue, get your shit together eBay)
    Jan 100
  • Wayfair 1234abc123
    What if your company doesn't look at KPIs at all? 🥴
    Jan 90
  • Qualtrics / Ops
    qualtricdo

    QualtricsOps

    BIO
    Came from non tech to tech.
    qualtricdomore
    I like a ratio for operations, since it's easier to see if you're using your resources efficiently
    Jan 80

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