March Beyond “Can’t Manage What You Don’t Measure”

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To my embarrassment, the first time I heard the old management adage “You can’t manage what you don’t measure”, I heard it from a competitor of mine at Unica in the web analytics space. Namely, I heard it from Webtrends’ former CEO Greg Drew.

Brilliant, I thought back then. A very good fit not just for management in general, but especially for online marketers who have to manage the process of:

  • attracting visitors to their web sites,
  • engaging them with the right content,
  • and enticing them to convert to leads, customers, loyal customers, and high value customers, over time.

How could you make that process more successful over time if you didn’t measure where you stand now? How could you know whether a change you make to your site or marketing campaigns improved things or worsened them?

But then I came across another eye opener. It came when I finally read the 2007 book, Competing on Analytics.

Much of the book is a long overdue overview of all the kinds of analytics that companies (and even sports teams) are running across the enterprise. But one central idea forms the basis of this book.

Namely: The potential role of analytics is much more than just tactical optimization of processes for increasing ROI incrementally. Rather, analytics can and have formed the basis of competitive differentiation for successful companies. The authors cite for example:

  • Historical cases such as Capital One who started as a “nobody” but revolutionized the credit card industry by targeting credit card offers more intelligently. Namely, as it has become common for banks since then, the idea is to use customer analytics to target credit card offers not to wealthier demographics but to more promising prospects, e.g. those most likely to carry a balance.
  • Recent cases such as Netflix who are going to battle it out with Blockbuster in the coming years on the basis of providing customers with more intelligent (i.e. relevant) movie recommendations.

In both cases, analytics are far from being a management tool. They are a leadership tool.

And that is why I am saying: Move beyond the old management adage, this Memorial Day! The old adage falls far too short!

Whether you are in a leadership role or are in an analytics role, at least ponder what analytics could do for you besides just yielding incremental cost savings, time savings, and margin improvements. Ponder what kinds of analytics could help you change the rules of competition in your industry.

It is OK if you draw a blank. But at least ponder!

Take an example. Say, you are the web analyst for Unica.com, a software vendor for enterprise marketing management solutions (and my employer). Can you change the rules of competing with SAS. Aprimo, Omniture, etc. given that you are just in a peon role tasked with analyzing web site usage???

Tough call, I must admit. Making the web site as easy to use as possible is very important, yet tactical. Hardly, the strategic basis of competition! But come to think of it, all of Unica’s software products have a web browser based user interface. So as the web analyst, why not walk over to the CTO and suggest building web analytics into all of Unica’s products. Customers who opt in would have their usage of the product be measured across all users in their enterprise, and down to the feature level. Product management can then learn:

  • What features are being used, which others are not?
  • If we provide customers with proactive training do they then adopt the other features which we know will be to their benefit?
  • How does that help with creating loyal customers and cross-sales opportunities for other products over time?
  • How long does it take to adopt certain advanced capabilities?

Should a participating customer’s use of a Unica product become less frequent, their account manager could be alerted that the customer may benefit from help, advice, training, encouragement, you name it. Classical relationship marketing applied to the software business!

And needless to say, all of this information can flow to product management for deciding future features.

By the way, this vision is already in place at many software companies. It is especially easy to realize for On Demand products (i.e. SaaS / ASP). It is harder to realize for on-premise software customers where the tools are installed at client sites. The analytics data has to be permitted to leave their firewall and come to the software vendor.

Bottom-line: with some creative thinking even a peon can advance to become a Sergeant in the competition with analytics. Let’s grill our burgers on that thought, this weekend.

Happy Memorial Day to us all!

6 COMMENTS

  1. Akin, a thought-provoking post. I certainly agree with you that analytics can help companies compete better and ultimately differentiate themselves. Tesco in the UK/Europe, and Best Buy in the USA are great illustrations that customer insight gained through analytics can help retailers run better campaigns, stock more of the right items at each store, etc.

    Analytics can be a leadership tool to engage better with customers, but based on my current research on customer-centric business practices, I’m skeptical that many companies actually do so. Instead, they collect ever increasing amounts of information, but don’t gain the right insights or don’t apply insight to the right problems.

    Maybe it’s time to update that old adage: “You can’t manage what you don’t measure.” I see plenty of management going on with limited measurement or faulty data. Managers will manage with what they have, or know how to use, even if it’s just seat-of-the-pants intuition.

    Instead, the adage should read: “You can’t succeed unless you measure the right things and do something about what you learn.” That seems to be a differentiating factor for industry leaders.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  2. Well said Bob! Thank you for that refined thought.

    Let me try to take the idea for a spin by translating it for some of the areas of marketing that I am involved with:

    1. Web analysts would totally understand that perspective because their best practice is to start by picking the right key performance indicators for their web sites. Then they are to measure and do something about the results, namely experiment with changes to site/ads and keep the winners.

    Pick too many KPIs and you drown in data. Don’t act … and you never go anywhere.

    2. Direct marketers would also agree. Among the many analytics they run they would for example mesure response to their campaigns. A key technique is called “matchback” for instance. Here you match up transactions coming from the POS vs. the marketing contact history. If Akin bought blue shoes and Akin had received an email or catalog on blue shoes a week earlier then the campaign probably deserves some credit.

    Though, what if Akin was going to buy shoes anyway? If you measure matchback without control groups where you don’t send the email/catalog you are still measuring the wrong thing: You cannot separate cause from mere correlation and will likely make bad marketing decisions.

    Fine, but the authors Davenport and Harris would still criticize this comment. They would likely say that these thoughts are fine on a channel-specific, tactical, ROI improvement basis. But they are hardly the basis of competing on analytics. Instead, web analyst and direct marketer ought to pick things to measure that support the overall business’s goals, e.g. to become the #1 in market share for product category XYZ. They would say: You are not going to become #1 in that category unless you measure progress and work towards it.

  3. Akin

    Congratulations on one of the best posts in ages. It really makes you stop and think. In a Gaussian world of business writing, your piece stands out head and shoulders above the rest.

    CRM and its recent offspring seem to be stuck in a fluffy, utopian vision of motivated staff, of functioning CRM technology, of delighted customers, and of record-breaking satisfaction, loyalty and profits. Some business writers make it all sound so easy, I wonder whether I am going to be an unemployed CRM consultant next year! But the dystopian reality is so starkly different that we seem almost to be in denial; as if not thinking about the real problems we face everyday making CRM work will make them go away, so we can return to sipping gin in customer nirvana.

    For many of us on the shopfloor of CRM, reality is a shortage of customer-facing staff that we would wish to empower, of CRM systems that don’t have all the information required and that don’t support staff in how they want to work, of unreasonably difficult customers who don’t deserve any service at all and of a stuggle to deliver a customer experience that turns a profit, let alone one that develops a competitive advantage.

    Why the big difference? There are many causes, but a large part of the blame falls on the unanlaytical approach taken to CRM by the majority of managers, consultants and business writers. Managers do the projects that make political sense to their career progression, safe in the knowledge that their successors will have to pick up the pieces. Consultants sell CRM technology with the promise that it will be delivering satisfied, profitable customers in 90 days, safe in the knowledge that old organisations plus new technology create expensive old organisations that will need further ‘consultancy support’ to make things right. And business writers peddle the same old ‘customer is king’ fables about CRM that make perfect sense on paper, safe in the knowledge that they will never ever have to make them work on the ground.

    ‘A little bit of knowledge is a dangerous thing’ as the old saying goes. How true. The inadequate emphasis on analytically-driven CRM has destroyed countless value for shareholders, customers and other stakeholders. It is time for a change. It is time to really compete on analytics.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  4. Thank you Graham! That kind of feedback and insight from the shopfloor level is much too rarely heard. All kudos for these inspiring thoughts go to Davenport and Harris though, the authors of the book.

    Jim Sterne (the godfather of web analytics and an author on this forum) recently invited Davenport to deliver the keynote for his emetrics conference for online marketing optimization. I very much wish I had heard what Davenport had to say to that audience. After all, the biggest difficulty remains to elevate the use of analytics beyond tactical ideas to really strategic ones. I’d like to see a sequel to their work there.

    It is obvious that you have much more frontlines experiences to share than what would fit in a blog post. Hope to catch a presentation of yours at an industry conference one day soon.
    Akin

  5. March Beyond “Can’t Manage What You Don’t Measure”
    Akin.
    We always learn daily. I thank you for the forward march the way you describe. That may be the way the PepsiCo advertises, “Dare”.
    I thank you
    Firozali A. Mulla MBA PhD
    P.O.Box 6044
    Dar-Es-Salaam
    Tanzania
    East Africa

  6. Does “can’t manage what you don’t measure” really matter?

    Bob says it right, instead of proving whether the adage is still valid, it is more important to know how and what to measure and manage right.

    Daryl Choy
    Make Little Things Count
    wisdomboom.blogspot.com

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