“So What?”: The Most Important Question About Data
“If it moves, it’s measured!”
That was the directive from the CEO of an insurance company I worked with years ago. They were changing their business model from agents who sold solely on price. My client’s offering was commoditized, and their margins were squeezed in the unintended race to the bottom.
The client’s new business model was direct sales, and targeting an under-served ethnic group.
The client also decided to incorporate measurement to track their progress toward goals.
I cautioned against “if it moves”. The intention to measure performance was correct, however the directive for practice was not.
The client needed to capture KPI’s and metrics that were relevant to their goals: acquiring customers, growing revenue, recovering margins, etc.
The client ignored the guidance.
“If it moves” generated a mass of aimless numbers and they were quickly overwhelmed. They couldn’t tell what was important from what was not. Few of the metrics were good for anything beyond entertaining conversation.
The client didn’t know if they were acquiring customers from the targeted ethnic group. They didn’t know if inside sales performed better than agents. They didn’t know if margins improved.
And worst: they were uncertain about their future.
When generating metrics, the client didn’t ask the single, most important question: So what?
If you ask, “So what?” and the answer is “who knows?” or “because?!?” or “that’s what we always do”—stop!
Instead, follow these steps to make the most of data- and metric-driven business insights to reliably build your business:
1. State Your Goals
Determine what milestones or objectives your company needs to reach. Those goals may be company-related (increasing revenue, margins, etc.), and/or customer-related (acquiring or retaining, etc.) and/or product- or service-related (launching or increasing sales, etc.).
Complete the list, and know that it will change over time as objectives are met, or market opportunities shift.
2. Define Metrics & KPI’s
With the list of goals, assign metrics and KPI’s that will describe progress, success, and/or roadblocks.
Consider the contributors to success also. Should individual salespeople’s performance be among acquisition measurement, for example?
Remember too that some metrics will serve multiple purposes.
3. Identify the Data
Now that you have your catalog of metrics, identify what data you will use for input.
It is possible that you won’t have data for some of your metrics. That’s ok. Create a plan to collect any needed data.
Data may exist in silos. This is common since marketing data is often channel-specific. Plan to integrate data so that you fully understand customer behavior, and channel performance.
It is worth assessing the quality and completeness of source data. When basing decisions of any value on measurement, the foundation for that decision must be sound, relevant data.
4. Create Dashboards and/or Reports
Once you have metrics defined, determine how to present them.
Plan to report history over regular time periods (weekly, monthly, quarterly, annually). That perspective will prove invaluable as you understand how business has progressed, and the impact of any seasonality or events.
Also, record events such as discounts or competitors’ activity, to explain a surge or drop in performance.
Finally, define the frequency with which numbers will be generated.
5. Measure, Rinse, and Repeat
Now, begin the steady drum beat of measurement generation.
And review. And consider. And discuss.
I start my day with numbers to understand progress, and to identify and smooth any roadblocks. It allows the opportunity to identify trends and look for the unexpected.
For companies that haven’t practiced measurement, it can be uncomfortable to suddenly have numbers tell a story—which doesn’t always end happily.
Among the challenges with my “If it moves” client was that he was introducing a cultural shift. It can take time to build this muscle because managing a business based on its numbers is about more than delivery.
Most essentially, managing from measurement requires the expertise to interpret results and apply them to improve business.
6. Look to the Future
I mentioned earlier that metrics and KPI’s will change over time. Routinely review and update your goals, and the associated metrics.
Consider too what you may need to learn in the coming months and quarters. I advise that clients create a Learning Agenda so that clients have the necessary data to create intelligence when they need it.
Buzz about Data is Big. We’re supposed to think Big = Better. And that’s true in terms of the wealth of intelligence that can be created from the great variety and velocity of data available to us now.
That intelligence is only valuable if it informs the business, measures progress toward goals, supports decisions, and informs customer understanding.
That’s how to answer “So what?”
This article was originally published in editted form on www.CarolRoth.com: http://www.carolroth.com/blog/so-what-the-most-important-question-about-data/
Photo Credit: Hans-Peter Gauster