W1 - What are business metrics? Flashcards
What do business metrics help us?
ASK THE RIGHT QUESTIONS -> find the best answer in the time available (what decisions should we make? + What process should we change right now?) -> translate that answer into recommended action -> communicate with the “decision-makers” - stakeholders
What is the right question?
“What changes can be made RIGHT NOW?” to: Increase revenue, Maximize profitability, Reduce risk.
what is a business metric?
are numbers that WE CAN IMPACT when we change our business processes. -> Sales Tax is not a business metric. Click through rate is a business metric.
What does “right now” really mean?
- (ideal) “we have decisions in real-time.” • No more than a fraction of a second 2. Next best answer is: Just-In-Time • Individuals who interact with customers have full transaction record 3. Third best answer, which is still good: • Changes cannot happen overnight, but we will make it happen as soon as it has been tested and is known to work
latency?
The time delay in a computerized response caused by processing requirements or distance a signal must travel.
real-time?
Computer systems that provide a customized response immediately (typically in less than 1 second).
What does Business metrics consist of?
Revenue, profitability, and risk metrics.
What information we can get from the Revenue metric?
They tell us something about how well or badly the company is marketing and selling its products.
What type of business metrics does the VP of sales care about?
revenue metrics
sales funnel?
The metrics used to track the steps in the process of converting individuals or Companies with a potential interest in one’s product or service into paying customers.
the chief operating officer in vietnamese?
COO GD dieu hanh
net cash flow?
dong tien rong
churn rate?
The portion of customers who leave within a year.
how do Large established companies with relatively little room to increase revenues can often achieve significant increases in profitability?
by focusing on improving operational efficiencies.
fixed costs?
Costs that do not increase or decrease with small changes in production. An example are salaries for current full-time employees.
inventory
Finished goods on hand and not yet sold.
operational metrics
Metrics related to production, and in particular, to production eciency.
recurring-revenue customers
Customers who buy again repeatedly after a first sale.
Revenue metrics are for? profitability metrics for? , and risk metrics for?
Revenue metrics are for optimistic extroverts, profitability metrics for fastidious perfectionists, and risk metrics for informed skeptics.
2.Question 2
Which of the following business metrics is an example of a revenue metric?
0 / 1 point
- Average days inventory
- Rental prices of apartment leases by locations
- Customer satisfaction with a product
- Percent defective items from an assembly line
Rental prices of apartment leases by locations
The Video, Distinguishing Revenue, Profitability, and Risk Metrics at 0:28-2:02, defines “Revenue Metrics” as outward-facing metrics that have to do either with sales (for example, revenue and unit sales by time interval, customer, or geographic region, the “funnel” of qualified leads for enterprise sales) or marketing (for example, response rates to advertisements or email campaigns).
Which of the following business metrics is an example of a profitability metric?
1 / 1 point
- A grocery store’s tracking record of customers’ fish purchases
- Total annual costs of goods sold of an office product store
- How many fresh baked cakes have to be thrown away at the end of the day unsold
- The annual sales record of a company that makes phone apps
How many fresh baked cakes have to be thrown away at the end of the day unsold
Which of the following business metrics is an example of a risk metric?
1 / 1 point
- Days inventory of computers in an electronics store
- Monthly negative cash flow for a start-up
- Winter jacket sales during summer time
- The loss due to unsold fresh fruits each year at a grocery store
Monthly negative cash flow for a start-up
The Video, Distinguishing Revenue, Profitability, and Risk Metrics at 3:33-5:02, defines “Risk Metrics” as those relating to “potential dangers a company faces…Net cash out is always the most important [risk] metric to track. How many months can the company survive at the present burn rate?”
Identify which category the following business metric belongs to:
Units sales segmented by new and recurring customer
1 / 1 point
Revenue metric
Profitability metric
Risk metric
Revenue metric
The amount an airline spends on aviation fuel each month is what type of metric?
1 / 1 point
- Revenue metric
- Profitability metric
- Risk metric
Profitability metric
The Video, Distinguishing Revenue, Profitability, and Risk Metrics at 2:02-3:33, defines profitability metrics to include “how much is spent on variable costs [such as] raw materials and labor.” Cost of aviation fuel is at least partially under the Company’s control, as it could make changes in equipment or routes that would improve cost per passenger seat mile, or use options to guarantee future fuel prices.
