Choose Metrics for Instagram Shopping

Clarify the question

When answering any scenario or case questions, always clarify the goal of the question and ask for secondary goals or considerations.

Okay great. I understand that the goal is to grow revenue on Instagram shopping. However I want to clarify if we’re thinking about growth in the 6 month time frame or the 3 year time frame. The former would suggest smaller quick-win initiatives (eg. improving conversion rates on existing funnels or offering discounts) while the latter probably require larger strategic investments.

Another clarification question I have is how growing Instagram shopping revenue fits into Instagram’s broader strategy. Is this initiative something that fits into the bigger picture of an overall goal that Instagram or Meta has? How do we want to consider trade-offs between shopping revenue, ad revenue, user engagement, or other key metrics for Instagram? Do we want to focus on creators, merchants, or shoppers?

Here, let’s assume we are diving into short-term initiatives specific to Instagram shopping revenue growth through shopper initiatives. Most companies will try to present problems that require less business context so you can skip over business model questions and dive right into analysis.

Customer Journey Framework and Selecting Initial Metrics

Since shopping involves a pretty clear customer journey, we can use that framework to think about metrics here. Here's a helpful article if you need a quick refresher on customer journeys.

Let's assume that we propose to start with a brief customer journey map and anchor chosen metrics to that. The interviewer agrees, so we begin by diagramming the the steps that bring a customer from opening instagram to checking out a cart.

Active users

I want to start with daily active users because that’s likely our total top of funnel. As the Instagram shopping team, we probably can’t meaningfully influence our growth and acquisition immediately. However, for those who do come on site, we have the ability to nurture them through an order.

% Users interacting with merchants

I want to track % of users interacting with merchants because it shows exposure to Instagram shopping. I also feel like this is a metric we can drive by controlling the number of ads that get surfaced, improve the relevance of the merchants we surface etc.. Finally, using a ratio rather than an absolute number of users to track this step helps me account for seasonality in movements of active users. Of course, there’s seasonality in interest in shopping as well.

% Users adding at least one item to cart

I want to track % users adding at least one item to cart because it shows explicit intent to shop on Instagram. Again, this is something that we can hopefully improve by improving the way products are presented.

Choosing a North Star

Revenue = unique shoppers x average spend

Revenue is ultimately what we care about, but we definitely want to look at the breakdown between # unique shoppers and average spend. This can help us better understand whether we’re helping more people buy or if we’re increasing how much each shopper spends. Another way to break this down is # orders and average order value, but in this case I think unique shoppers is more interesting because then I can create a user-based funnel from daily active users on instagram to # shoppers on instagram.

So that’s how I would think about the customer journey. In this case, revenue will be our North Star metric, because it’s the outcome we care about.

Picking Guardrail Metrics

On the other hand, I don’t just want to drive revenue increases without ensuring that our customers are having a great experience and want to come over as well. So in addition to the customer journey, I want to include some customer health and guardrail metrics. The reason I want to track these is because I think growing the conversion funnel can be gamed. For example, if I show a lot of ads or promote followed merchants in the feed organically, it might increase % of users interacting with merchants but would in the long-term undermine the sense of community on Instagram. That’s why I want to make sure I’m tracking user satisfaction and retention over time.

Net Promoter Score (NPS)

NPS measures customer satisfaction, so this is the most direct way that customers can express to us whether they had a good experience.

Customer / Revenue Retention

Action speaks louder than words, and keeping customers on site and growing their spend on Instagram is an indication that we’re serving their needs in a sustainable way

Merchant Disables / Unfollows

As you know on Instagram you can disable certain ads or unfollow accounts. While increasing the number of promoted posts on feed increases % users interacting with merchants, for instance, it likely also increases disables if users perceive their feeds as becoming too spammy. I want to make sure that we maintain the integrity and personalization of feeds and other channels where we’re featuring products, so this is an extremely important guardrail.