Everybody in the business world talks about metrics, data-driven decisions, and these sorts of things. In this post, we’re going to take three crucial concepts from statistics that apply to you, as somebody who is practicing growth hacking.
- Qualitative vs. quantitative metrics
A qualitative metric is a quality that can’t be specifically measured, but you can kind of create data based around qualitative characteristics, whereas a quantitative metric can be specifically measured and then used to determine whether or not something is happening.
Here’s a quick example: Let’s say that you have the logo above. You could ask a focus group, “To what degree does this logo make you feel hungry?” Then, based on their responses, you could do some statistics.
But a quantitative metric would answer the question, “This is a cupcake store. How many cupcakes did they sell last Friday?”
- Statistical significance
This is the likelihood that what you are seeing when you collect statistics and you run analyses 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 that 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 performing an analysis.
- Key Performance Indicator (KPI)
When you think of a KPI, the first thing is that it is something that your business measures repeatedly, whether it is every week, every month, etc. You don’t want to have too many KPIs. Keep it simple.
You also want to make sure that the KPI that you are measuring is relevant to the objectives of your business.
For example, a luxury store might be concerned about the quality of their customers’ experiences in the store because they need to push visitors to make a single purchase, whereas a discount store is more concerned about the volume of goods that are purchased because their margins are small, so they need customers to purchase a lot.
If you are new to data analysis, keep these three statistical concepts in mind and they’ll steer you in the right direction.
What KPIs does your company track? Tweet at us.
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