Digging through bits and bytes to find information that can be used to grow your business, improve service, or reduce costs is not for the weak of heart. Contradictory opinions about the importance and how to use data are everywhere. Navigating from raw data to useable information is a minefield that can derail the best laid plans.
I’ve been playing with numbers all of my adult life. It is one of those things that engineers do for fun. Numbers can be manipulated to explain anything. They can also be used to confuse and mislead. Data manipulation used to be an internal company issue. Presenting departmental information in best possible light is not unusual. It is almost expected.
Things have changed. Data manipulation is a global issue today. Companies are dependent on third party sources for information that will be used to identify problems and opportunities. Access to raw data to double check the conclusions is limited. The inability to confirm accuracy forces management to navigate a highly competitive marketplace on wings and a prayer.
There are only three types of metrics to be found in analytics. Identifying them improves the odds of making the right management decisions. They are:
As a rule of thumb, actionable metrics are results oriented. They measure the data that directly affects the bottom line. If in doubt about the validity of the effect, start with profitability and work backwards to verify that the selected metrics influenced the results. If verification is not possible, move the metrics from actionable to interesting until the numbers can be tested. After all, do you really want to make management decisions using unverified data?
Statistics are also interesting. People have discovered that they can ask a few questions, manipulate the answers into some form of statistics, and “Voila!” they have a press release that presents them as an expert. The data isn’t empirically sound and the conclusions serve the creator instead of the recipient. Statistics are only useful if they apply to your business and can be used to make it better.
NSFW metrics may make good cocktail conversation if you are in the company of people easily influenced by appearances. The rest of the world will find the references laughable. Ideally, no one in your organization will invest resources in information that doesn’t improve the business.
While some information has to be exact, there are metrics where close enough provides benefits. They can be monitored for trends to identify problems and opportunities. In a world where access to raw data is routinely denied, managers have to find ways to work around the challenge. Monitoring trends is one way. Using social media to acquire contact information is another because it provides actionable information. To insure your analytics investment isn’t wasted, identify the type and what you are going to do with it before spending the money.