Metric decomposition is the process of breaking a high-level metric into its component parts. Learn how decomposition creates KPI trees.
Metric decomposition is the analytical process of breaking a complex, high-level metric into simpler, more actionable component metrics using mathematical relationships. The three decomposition types are additive (Revenue = Segment A + Segment B), multiplicative (Revenue = Users × ARPU), and ratio-based (Margin = Profit ÷ Revenue). Systematic decomposition produces a KPI tree, where each level adds clarity about what drives the metric above it.