You can only manage what you measure; an old and true cliche but it’s a little more complicated than that. In our last blogpost we focused on Advertising Value Equivalency and how your conclusions can be wrong if you focus on stand-alone measurements and fail to examine the context. Today we’re going to talk a little bit more about numbers.
It all starts with your business’ vision that describes what you want to accomplish. Your strategy subsequently defines how you plan on getting there. Now in order to asses whether the business is heading in the right direction – and how fast this is going – you need to know what to measure, how to measure it and how to interpret the numbers.
Decide on which variables you will measure
Based on your business strategy you define critical success factors and key performance indicators. Now instead of just listing them try to create a flow chart that shows cause and effect relationships. By doing so you can clearly identify how you can influence the end result; how each factor is contributing to the end result and via which steps.
It’s crucial to measure those factors that contribute to your business strategy. You may find that some crucial variables can’t be measured (yet). Or you may find that some variables can easily be measured but don’t have a relation with your business strategy. Don’t make the mistake of confusing these two categories. It’s not about measuring as much as you can, but about measuring what matters. Which variables may, upon a significant change, elicit a break through in your business? Those are the key performance indicators and some of them will live in the marketing world. This way the marketing department, or any other department, can have their own sets of measures that are directly coupled to the business strategy.
Why monitoring and reporting is not enough
Numbers may seem solid. Numbers may seem safe. But as long as you don’t view them in their context, aren’t aware of causal relationships and fail to investigate the story behind the numbers you might miss out on the most important points. You have to look at the story behind the numbers. How were they measured? What do they tell us or seem to tell us? What are they hiding? Why is it like this and how can I change it? This is what is called analyzing.
Let’s look at a few measures and see why these are not so solid illustrating why you need to examine the context too:
- Suppose you sent an e-mail to your mailing list and you want to know whether this is successful? First you have to identify success. Often the open rate is used as a representative for a successful mailing. It however only tells whether your subject line was successful in getting the e-mail opened. Because people’s inboxes are so full nowadays, mails are often deleted before they are completely read. So in order to know whether the receiver is really interested you have to monitor something else. If you measure them clicking on a link in your mailing you know they want to know more. Click through rate is therefore a better measurement for engagement which is a better way of measuring success.
- Likewise you can measure number of visitors to your website and fail to look at the measure that’s telling you that over 99% immediately hits the back button as soon as they reach your site. As in the previous example my suggestion is to look for measures that indicate engagement. It’s not about attracting more people but about attracting the right kind of people (and more of them).
- You can take a single tweet and run it through a service like Tweetreach to find how many people were reached, but you won’t find how many people have actually read that tweet. Or they have read it but didn’t click on the link in it since the message didn’t arouse their interest. Reaching more people means you have a higher chance of people actually seeing your publication but what counts is how many people click through and show interest.
Analyze and find the story behind the numbers
Reports show you numbers telling the ‘what’ and using analysis tools you can reveal the story behind them… the ‘how’ and the ‘why’ so to speak.
Let’s for a minute go back to our last article showing the Advertising Value Equivalency (AVE) for Coca Cola. Remember the AVE went up and was higher than Red Bull’s? If you look at the numbers without further analysis you might conclude Coca Cola had done a great job getting their name in the media. In BuzzTalk you can drill down and analyze to reveal the story the numbers are hiding so well. For instance, you can examine which media posted what, which keywords are mentioned, which persons keep coming up etc. This gives value to the numbers that are monitored.
Stand-alone measurements are often too limited to effectively monitor and manage the value-creating processes of an organization. Knowing how the performance indicators you are measuring are tied to your business strategy, knowing about cause and effect relations and realizing the limitations of measures – and how to handle them – enables you to analyze and create insights to help managers make better decisions.