Metric Component Analysis: Sum Metrics

This is part 2 of a 9 part series on Metric Component Analysis.

The Case of the Missing Revenue

Before you can jump in and determine the drivers of any given metric, you need to understand how that metric is calculated. Why, you ask? Because how a metric is calculated determines what kinds of changes will cause it to change in different ways. We’ll cover a few examples of calculated metrics in the coming days, starting today with a sum metric via The Case of the Missing Revenue!

Total Revenue is a sum metric, calculated by adding up all the revenue you earn from your business. Our case begins with the following evidence: Something happened on January 18 that lead to a drop in Total Revenue! We need to get to the bottom of this problem, but where do we start?

Sum metrics are the simplest form of metric, as they are simply a summation of components. We can take any dimension and the sum of revenue for those dimensions will equal Total Revenue. For example, if we add the revenue from each country we will get the Total Revenue. Similarly, if we add the revenue for each product we will get the same Total Revenue. This means that any change in the total metric is simply a result of the value change of any of its components (along a given dimension).

If we chart Total Revenue by country in a stacked area chart, we can check if there are any obvious changes: Using this view, we can tell that the drop in Total Revenue on January 18 was caused by a drop in revenue in the United States (orange). This stacked chart also helps us understand how the various components combine to create the top level metric, represented by the top of the area (the top of France’s green area).

Case solved! Okay, I admit this was a really easy case but sum metrics are very simple . Tomorrow we’ll get more advanced when we examine mean metrics in The Case of the Lower Conversions!

 Assuming you know which dimensions to look at. We’ll cover that next week!

Quote of the Day: You are the sum total of everything you’ve ever seen, heard, eaten, smelled, been told, forgot – it’s all there.” – Maya Angelou

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