In the last few months, we’ve talked often about data over-reliance. Broadly speaking, marketers – understandably excited by the idea of Big Data telling them in real time exactly which buttons to push – are increasingly outsourcing a lot of decisions to “the data”. But this misses an important point – data, as such, can’t really tell us anything. It isn’t normative, in other words: it describes the world, but it can’t tell us how to act without some priors as to what’s important and what’s not. It’s those prior beliefs – what’s in, what’s out; what’s important for our brand, what isn’t – that can’t be outsourced to numbers alone.
That’s why this HBR piece was particularly timely. In it, two nonprofit executives talk about the difference between data and metrics. Those are two words often used interchangeably within organizations, but in fact, they’re quite different: data are just numbers relating to your business operations; metrics are numbers that, ostensibly, tie back to your core purpose as an organization. So, a piece of data might be your brand’s Facebook likes; but the real metric you’re attempting to influence with Facebook likes is brand awareness or favorability (among many potential things).
But the really important point the HBR piece makes is this: you are what you measure. What you measure is ultimately do. If you measure YouTube views, the authors say, you’ll get more of those, no question. But what you may or may not get is increased sales, higher consumer favorability, better brand awareness, or anything that resembles a meaningful business outcome.
One of my favorite MLC cases along these lines comes from Foxtrot, our pseudonym for a major North American retailer. While we see organizations using advanced data analytics for all kinds of things that may or may not make a direct impact on business results, Foxtrot’s approach is different: they decided on an outcome – higher margin purchases and bigger basket sizes – and pointed their metaphorical data gun at solving that problem. The result was not just higher revenues but, ultimately, a more valuable customer – one prepared to spend a greater percentage of their wallet with Foxtrot versus some of their more dominant competitors.
This case is absolutely worth checking out to see a principled execution of advanced analytics in practice. While the technological and mathematical wizardry is certainly cool, the coolest part is that Foxtrot’s approach ultimately influences a few of the core drivers of their business success, rather than simply providing “vanity metrics”.