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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

‘So What?’: The Most Important Question About Data

Written By: Marina Erulkar | No Comments

“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” as the sole criterion. The intention to measure performance was correct, however the directive for practice was not.

I advised the client to capture KPIs 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 worthless 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 usefull.

The client didn’t even 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 of all, 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.)
  • Customer-related (acquiring or retaining, etc.)
  • Service-related (launching or increasing sales, etc.).

You can mix and match categories.

Create the list, and know that it will change over time as objectives are met, or market opportunities shift.

2.   Define Metrics & KPIs

With the list of goals, assign metrics and KPIs that will describe progress, success, and/or roadblocks.

Also, consider the contributors to success. Should individual salespeople’s performance be included in 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 fine. 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’ activities, 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 drumbeat 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 the business.

6.   Look to the Future

I mentioned earlier that metrics and KPIs 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.

There’s a buzz about Big Data these days. 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.

However, that intelligence is only valuable if it informs the business, measures progress toward goals, supports decisions, and informs understanding of the customer.

That’s how to answer “So what?”

Article written by
Many people talk about data-driven insight but few actually practice it. Even fewer can move from analysis to an actionable plan to solve CRM challenges. Marina Erulkar and Hampstead Solutions do just that. She brings not just years of experience and an acute analytical mind to support the needs of her clients, but also a unique set of proprietary processes. She will deploy these to identify the key points of breakdown—whether acquisition, retention, or growth—and develop the right actionable plan for a profitable future.