Fixating on short-term goals can have unintended consequences. For example, you might be able to lose a few pounds quickly by not eating, but that approach could leave you nutrient-deficient. Taping over a leak in the roof certainly won’t prevent long-term water damage, and taking a high-paying, high-stress job could very well lead you to burnout.
We have to consider short-term versus long-term benefits in our day-to-day lives, and ecommerce businesses are no different. Luckily, business owners can put guardrail metrics in place to keep tabs on the bigger picture and prevent small downsides from spiraling into huge consequences.
What are guardrail metrics?
Guardrail metrics are designed to protect your business from unintentional harm while your team experiments with improvements. These performance indicators are attached to critical business objectives such as customer retention, employee well-being, and product quality. Keeping track of guardrail metrics, also known as counter metrics, ensures that the essential elements of your business are safeguarded while your team pursues short-term goals.
Success metrics vs. guardrail metrics
Success metrics, or key performance indicators (KPIs), measure progress toward the goals of teams or the overall business. Common success metrics include increasing sales and profit, gaining market share, and boosting website traffic. Guardrail metrics, on the other hand, are meant to protect your long-term business objectives during experiments that use new or different techniques to achieve certain goals.
For example, imagine you own a boutique cat apparel business and you want to increase your average order value. To do this, the product team adds an upsell opportunity to the checkout flow; when a customer adds a silk vest to their cart, a pop-up message suggests purchasing a bow tie collar as well. To set up a guardrail metric, you may choose to monitor cart abandonment rates in addition to the average order value. Keeping track of this key metric will help your team understand whether the new feature encourages bigger purchases or irritates your customers and has an overall negative impact on the user experience.
Benefits of guardrail metrics
Guardrail metrics provide employees with a framework to help guide their decision-making processes. Some of the benefits associated with using guardrail metrics include:
- Preventing unintended consequences. Guardrail metrics function as an early warning system, helping your team spot problems before they hurt your business.
- Protecting long-term growth. Establishing comprehensive guardrail metrics can help ensure that product quality and customer experience standards are maintained at all times, safeguarding your brand reputation.
- Supporting experimentation. Guardrail metrics establish an acceptable level of risk. Employees may feel more comfortable experimenting with new marketing or product strategies if they understand your company’s approach to risk tolerance.
- Promoting accountability. Implementing guardrail metrics compels teams to consider broad organizational health in addition to their individual goals, encouraging employees to focus on holistic, sustainable growth.
- Improving decision-making. Tracking guardrail metrics can help teams make informed decisions, since access to robust performance data lets employees evaluate potential risks and benefits when considering new initiatives.
Tips for choosing and implementing guardrail metrics
- Make the metrics measurable
- Anticipate risk
- Communicate values and priorities
- Balance multiple goals
Establishing the right guardrail metrics helps employees balance short-term goals with overall business success. Consider the following elements to design an effective guardrail strategy:
1. Make the metrics measurable
As with KPIs, effective guardrail metrics are measurable and actionable. Attaching data points and clear thresholds to your strategic priority metrics will make them easy to interpret and act on.
For example, a business experimenting with a new landing page design could implement a guardrail metric stipulating that they need to change course if the user bounce rate rises above 40%. If employees see the average bounce rate rise to 41% after implementing the design changes, they will understand it’s time to unwind the experiment or take another corrective action.
2. Anticipate risk
Companies often pair guardrail metrics with new initiatives. To develop relevant guardrails, think about the potential risks associated with the initiative’s primary metric. For example, imagine your marketing team wants to develop an email series to promote a flash sale. You might anticipate that sending multiple promotional messages could result in subscriber loss. To set a relevant guardrail metric, you’ll need to evaluate the relative importance of generating immediate revenue versus maintaining your subscriber base and set benchmarks to account for both priorities.
Risks vary depending on business goals and promotion strategies. For each new initiative, consider how the project might negatively impact areas like product quality, customer experience, and public image. Then, use guardrail thresholds to define the maximum acceptable impact on these business metrics. Aim to strike a balance between short-term wins and long-term growth. The company in the example above may determine it’s willing to accept a 1% loss of subscribers. If any email in the series triggers an unsubscribe rate above that, the team will reevaluate and adjust the cadence or drop the program.
3. Communicate values and priorities
Consider your long-term business goals and what it will take to achieve them. Focus on developing guardrail metrics that support these key business objectives and give employees clear guidance on how to interpret them. For example, framing a guardrail metric as a threshold (i.e., pass X% and pivot to do Y) gives employees a clear directive to take action when necessary.
When you have goal metrics that reflect the larger organization’s values—like maintaining product quality and supporting customer satisfaction—it’s easier for employees to keep their eyes on the big picture.
4. Balance multiple goals
In some cases, one team’s improvements can hurt another team’s KPIs. For example, an ecommerce marketing team might collect customers’ demographic information by adding trackers to the company website. Implementing these tools could support a more robust segmentation strategy, but it could also slow website load speed—a critical metric for the product team.
Consider partnering with team leaders from different departments to understand how your changes could affect the broader organization. Aim to develop guardrail metrics that consider each team’s needs. In the example above, establishing a guardrail metric for maximum acceptable load time would help these two teams navigate their different goals.
Examples of guardrail metrics
Guardrail metrics help companies accomplish their goals without jeopardizing the customer experience or product quality. Consider these hypothetical examples to learn how different types of ecommerce companies might use guardrails to balance short-term and long-term growth:
Handmade craft marketplace
Primary metric: Increase total website transactions
Guardrail metric: Track seller performance statistics
To ensure that an experiment to increase order volume does not compromise the customer experience, the handmade craft marketplace could monitor customer reviews. If sellers on the marketplace see a dip in ratings without a significant increase in transaction numbers, it could trigger the experiment to end.
Beauty supply retailer
Primary metric: Increase loyalty program enrollment
Guardrail metric: Monitor customer engagement and satisfaction
By tracking customer satisfaction, the beauty retailer can make sure that its loyalty program still offers value to its members. If customers enrolled in the program but unsubscribed from email lists or stopped making purchases, it could indicate that the program didn’t meet their expectations.
Resale marketplace
Primary metric: Increase product listings
Guardrail metric: Maintain high engagement rates
Tracking customer engagement rates could help an online resale marketplace maintain a balance between buyer and seller communications. If customer engagement rates fall as listings increase, it could signal that the marketing team has focused too much on attracting new sellers.
Guardrail metrics FAQ
What is the difference between guardrail and counter metrics?
The terms are interchangeable. Companies implement guardrail metrics to protect critical business metrics during product and marketing experiments and A/B tests.
How do you set guardrail metrics?
To set guardrail metrics, start by defining the primary goal of your initiative. Evaluate the risks associated with your experiment and consider how they might affect important business objectives. Develop clear and actionable metrics to protect your company’s performance and reputation.
What are success metrics and guardrail metrics?
Success metrics measure the effectiveness of specific initiatives. Guardrail metrics are protective measures designed to safeguard critical business objectives while you’re pursuing short-term goals.
