DEFINITION of Soft Metrics
Soft metrics is a slang term for intangible indicators used to value a company and its reach. This is often used to describe startups but can be used for larger firms but hard metrics are typically preferred. Soft metrics are often related to aspects of a firm that cannot be easily measured but still provide important information in relation to the present and future prospects of a firm. Since soft metrics are not easily measured or identified, quantifying them can be quite difficult.
BREAKING DOWN Soft Metrics
Soft metrics evaluate the things that are not apparent but may help predict a company's future. This may include whether there are heavy hitters on the board of directors. Has the management team succeeded before? In comparison to hard metrics, soft metrics can often provide an answer as to why hard metrics may be trending in a certain direction or to unexpected results. Examples of hard metrics would be contributing factors such as net profit margin and free cash flow.
How Soft Metrics Are Applied
The nature of soft metrics can make it challenging for organizations to perceive what is being indicated and how it relates to their operations. For example, soft metrics can include a noticeable increase in online traffic. There may be no definitive data on whether that uptick led to any conversions. More customers might pay a visit to a restaurant, yet the reason for the boost in visits might not be easily discerned.
Soft metrics can come into play more significantly in marketing, where organizations attempt to decipher what appeals to their intended audience and how best to target them. An example of a soft metric may be that a segment of consumers is increasing spending, but the causality behind why that spending is increasing might be unknown.
Other types of soft metrics can include audience sentiment about a brand, product, or individual. Surveys and questionnaires might be used in an effort to define how popular or unpopular a brand is. Defining the perception of a brand can be illusive even with statistics from the responses .
Another element of soft metrics could be the share of market voice that a brand enjoys. Rather than a defined gauge based on sales driven market share for example, share of voice reflects how much of the conversation with the audience relates to the brand rather than its competitors. This relates to sentiment but moreover is a discussion of how frequently the company surfaces as a point of interest with the public. That can include how often the brand is searched for online or the frequency with which it is discussed on social media platforms.