How to define a metric that we can verify.
Five fields make a metric clear, and two tests show that it is worth a verification.
The five fields. A certificate prints each one.
- Definition
- What the number means and where its edges are: what counts, what does not count, and the period. It names no operation.
- Formula
- The arithmetic alone, with each variable named, so that a reader can calculate the value from the variables.
- Unit
- What the value counts or measures, such as percent, days, US dollars or customers.
- Cadence
- How often the value is measured, such as each month, each quarter or the trailing 12 months.
- Data Sources
- The type of system that holds each variable, such as a billing system or an uptime monitor.
Two tests. The catalog holds only the metrics that pass the first.
- A system records it
- A system records the data when the event happens. A value that people sample, estimate or log by hand later has no record to trace.
- It varies
- The value varies from company to company. A value that is almost always 100% or 0 tells a buyer little.
An example. Customer churn, monthly, on a certificate of Townsend Systems, which is fictional.
- Definition
- The share of paying customers who cancel in a calendar month. Trials, refunds and internal accounts do not count.
- Formula
- (Customers lost in the month ÷ customers active at its start) × 100
- Unit
- Percent
- Cadence
- Monthly
- Data Sources
- Payment processor: Customers lost in the month. Subscription list: Customers active at its start.