How to match Growth Levers to Key Metrics?
Mapping and matching growth levers to key metrics is a strategic process where specific actions or initiatives (growth levers) are aligned with key performance indicators (KPIs) to predict and measure their impact.
The core of this process is understanding the cause-and-effect relationship between what the business can control (levers) and the desired outcomes (metrics).
Example:
For an ed-tech company, for example, the ultimate output metric might be revenue and cost.
For revenue as output metric, retention is one of the input metric. And for retention as output metric, course completion rate is identified as an actionable input metric or leading indicator.
To improve course completion rate, let's say, the app introduces an interactive forum (growth lever) for students to discuss course materials. By doing so, they aim to enhance student engagement, hoping it will lead to higher course completion rates.
The effectiveness of this lever can be quantitatively measured; for instance, if the introduction of the forum leads to a 20% increase in course completion rates, it confirms the positive impact of this specific lever on the targeted metric.
Identifying Potential Growth Levers:
So far, we have explored the link between output metrics, input metrics, and levers. But where do ideas from growth levers come from?
Let's look at 3 key potential sources for growth lever ideas:
- ☞ Domain Expertise: Historical data and past performance can reveal effective strategies, such as the success seen from personalized emails increasing conversions.
- ☞ Customer Behavior Insights: Analyzing customer interactions and feedback might suggest improvements like adding multilingual support.
- ☞ Market Trends: Observing competitive actions and industry shifts can help identify necessary adjustments, like adopting new payment technologies to remain competitive.
By systematically evaluating these sources, companies can craft strategies that not only align with their business objectives but are also grounded in real-world data and trends.