New tools to improve performance
on February 8, 2023 (last modified on January 23, 2023) • 5 minute read
Benyamin Elias, VP of Marketing at Podia, shares how to have a well-informed marketing gut and how to use KPIs to inform the growth of your business.
Goodhart’s law says, “when a measure becomes a target, it ceases to be a good measure.”
Benyamin believes the same is true with KPIs. When companies stop using KPIs as indicators, and start using them to set goals, they get into all kinds of trouble.
Here’s how many companies think about growth: they take a KPI, pick a number to aim at for it, and take steps to hit that number. Benyamin cites a few problems with this:
But the biggest problem with using KPIs as goals is that it’s simply an incomplete picture of your company’s health. Even a singular focus on the metric of “revenue” might lead you to make decisions for short-term growth, rather than longer-term investments.
Let’s dive into a few examples.
Benyamin cited a story from the early days of Amazon where they chose an input metric of “new product details pages”. Essentially, this is a proxy for their inventory: how many products they have already and can add in the future. Before too long, they find loads of new product pages being added.
Great! Listed products are growing, right? But what they didn’t anticipate, is that the individual managers start putting up products that are not in high demand – because they’re naturally incentivized to. These low-demand products take up time and storage space, which could’ve gone to high-demand products.
Before Elon took over, Twitter focused on growing mDAUs (Monetizable Daily Active Users). Sounds logical. Your business makes money via ad revenue, so more mDAUs = more ad revenue. To help grow that metric, they installed a popup that forced readers to log in or create an account to read tweets.
It probably drove some signups, but if you’re just trying to browse and aren’t bought into Twitter’s value, you see it as a sort of “paywall” and just leave. Compare that experience to TikTok, which lets you browse the web version indefinitely without an account. As a result, visitors can experience the value of TikTok and over time, are likely to create an account so they can engage with posts and curate their feed.
These examples highlight the problem that can come with focusing on improving 1 metric. In the end, it’s still a singular metric and doesn’t represent the entire health of the company, or take a holistic approach toward growth.
To be clear, Benyamin values data very highly. He believes every business leader should be as informed by data as possible. He also thinks companies should measure almost everything they can, but be fully aware of the unavoidable flaws.
So what’s the alternative? As with all things marketing, there’s no perfect answer (sorry to disappoint). But here is how Benyamin uses data and KPIs to drive holistic growth across the company.
First, marketers need to understand how the company actually grows:
To learn this, they need a blend of qualitative and quantitative data. The quantitative data comes from 1st party data you own (how customers purchase, onboard, retain/churn, etc.). The qualitative comes from your customer research (why they bought, how they use the product/service, etc.).
After you collect this, you can establish true KPIs: indicators of the holistic health of your company. These indicators and data points should paint a full picture of your company’s performance. Keep in mind, they’re indicators, not goals.
Finally, you take a “what’s best next” approach to growth. Pick a project, experiment, or initiative you think will drive necessary, meaningful, long-term growth. Rather than picking 1 metric and trying to manipulate it, you’re picking a project you think will meaningfully improve the company. The idea is that if you’re driving true growth, you should see multiple indicators improve as a result.
Here’s a final example:
Maybe Podia finds that the longest-retaining customers happen to create 1 course in their first few weeks of use. Many companies would extrapolate that as a metric for retention, and set a goal for “new course creation”.
But Benyamin would combine qualitative (customer research) and quantitative insights to get a broader picture. He might find that the situation is a bit more nuanced than the initial observation. Maybe Creators who did that also had 2+ years of teaching and selling experience on other platforms before coming to Podia. So pushing new Creators who didn’t have that experience to create a course too early could result in higher churn. So instead, the initiative becomes a sort of education hub for Creators, to help new makers learn everything they need to feel comfortable shipping their first project.
In the end, true company growth is driven by a “well-informed gut”. Data does not tell you what to do. It tells you how things are going, but you need the strategy and creativity to know what to do with it.
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