Marketing Viewpoint by Ruth Winett
Tips for Selecting Meaningful Metrics
While businesses base decisions on metrics, not all metrics, are equally valuable. A company may proudly boast of a ten-year 20% increase in its customer database. But, how many of the customers made a single small purchase ten years ago? Other metrics, such as changes in the frequency or size of purchases may be more valuable. For profit or not for profit, all organizations must base decisions on the right metrics.
For example, politicians rely on poll results, but a recent New York Times article suggests that endorsements by key political figures are more meaningful than high poll numbers, which may just measure name recognition.
Religious institutions often boast about the number of congregants. Much more meaningful are measures of congregant engagement--attendance at services, plus participation in programs.* For a fitness measuring, such as Fitbit, the percentage who are still using their devices a year after purchase may be a meaningful metric. After all, if many people buy and stop using something, the product will not survive in the long run. This is especially true of products that rely on word-of-mouth promotions.
Here are some tips for reviewing the metrics you use, followed by some pitfalls to avoid:
Select metrics that impact the business, that colleagues will find useful, and that other stakeholders can understand. When colleagues are indifferent to the metrics used, they will not help you gather the data you need when you need it, and they will not use the data.
Use metrics that are "repeatable" so that you can measure progress. The number of new customers gained in January is much less useful than data on new customers gathered for several months or years or for the past five Januaries.
Use metrics that have value and that provide information that you can act upon. Relate the metrics to goals and objectives.
Develop standard metrics, expressed in standard terms, and make sure employees know to gather, analyze, and use these metrics.
Metrics to Avoid
Periodically challenge the metrics you collect. Are they still meaningful?
What is easy to measure is not always useful. A lot of web and social media metrics, such as clicks on web links, are "too granular for higher-level decisions," reports Linda Popky, adding that it is more useful to focus on company goals and the "big picture."
For instance, if you were marketing a driverless car, requests for demonstrations would be more meaningful than clicks on a web link. Still more meaningful would be the number of people making deposits on these vehicles.
Keep it simple. Select a few meaningful metrics. We used to speak of drowning in information. Now we are drowning in numbers.
Select metrics that are meaningful to your business, not to competitors. The dynamics of each business differ. A metric that is meaningful for one company is not always meaningful to its competitors, says Popky.
Clarify, don't confuse. Metrics that leave your audience wondering, "So what?" or "What next?" are not helpful. They are worse than no metrics at all.
News publications sprinkle articles with all sorts of numbers, but many are irrelevant or lack context. Know what goals your business wants to achieve, and select metrics that have value and that will show the progress you are making towards achieving your goals. Don't use metrics because you have always used them or because they are the easiest to gather or because your competitors use them. Periodically question whether you are measuring the right things.
Business research for growing companies
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