Everybody in the business world talks about metrics, data-driven decisions, and these sorts of things. In this article, I am going to explain you 3 crucial concepts from statistics that apply to you as somebody who is practicing growth hacking.
The first that comes into play is about Qualitative versus Quantitative metrics.
First, what is a Qualitative metric?
A Qualitative metric is a quality that can’t be specifically measured but, definitely, you can kind of create data based on qualitative characteristics.
Now, what is Quantitative metric?
A Quantitative metric can be specifically measured and then used to determine whether or not something is happening. For example, let’s say that you have this Book. You could ask a focus group, “To what degree does this Book you find interesting?” And then based on the responses, you could do some statistics,
But a qualitative metric would be like This is a bookstore. How many books did they sell last Thursday? That’s a qualitative metric.
The second thing that comes into play is about statistical significance and what this is just the likelihood that what you’re seeing when you do statistics and you run analysis is a fact rather than just a coincidence. Basically, as the number of observations that you collect increases, so does the confidence that you have what you’re seeing is a fact rather than a coincidence.
A good rule of thumb is that you want to have at least 1200 observations when you’re doing an analysis.
The third thing that comes into play is a KPI which is a Key Performance Indicator. When you think of a KPI, the first thing is that it’s something that your business measures repeatedly. So, that’s every week, every month etc.
You don’t want to have too many KPI’s. Keep it simple, you want to make sure that the KPI you’re measuring is relevant to the objectives of your business, right? For example, a luxury store might be concerned about the quality of their customer’s experience in the store, where a discount store is more concerned about the volume of goods that are purchased.
That’s because their margins are really thin so they need customers to purchase a lot, right? Whereas, the luxury stores only need the customers to purchase a couple of things.
Qualitative is a metric Quality that can’t be specifically measured but, you can kind of create data based on qualitative. (They are all about QUALITIES).
Quantitative can be measured and then use to determine whether or not something is happening.
Statistical Significance Fact-based rather than coincidence (Make sure your learnings are based on 1200+ observations.)
KEY PERFORMANCE INDICATOR that you measure every day. Use KPIs to track changes in an important part of your business, but keep it simple! If you try to do too much, often times your system will break down.