Measurement:  Focusing on What Matters

 

By Amy C. Anderson, October 5, 2021

“Measurement is the first thing that leads to control and eventually improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.” H. James Harrington

AMULTITUDE OF METRICS

It is interesting is how Wall Street and most corporations rely heavily on financial metrics to determine success. We need to look at these metrics as they are the outcomes of a company’s strategic initiatives. However, they can be misleading, especially when a company is in a state of decline. Warren Buffet sums this paradigm up nicely: “In the business world, the rearview mirror is always clearer than the windshield.”. 

There are many other metrics that help us understand what ultimately impacts the financials.  Customer behavior metrics like frequency, average order size and retention help us understand how customers are interacting with our brand. There are also digital metrics, such as app downloads, site visits and site conversion rates which are increasingly evident as people have migrated to online channels. Consumer research and feedback measures like awareness, customer satisfaction, loyalty and NPS (Net Promoter Score) are often viewed in silos but are critical to monitor while you are working on stabilization, as they can be early indicators of trouble or turn around. As you can see, there are so many measures that it can become overwhelming, time consuming and disruptive if you don’t know what to look at to understand how different initiatives are performing and ultimately contributing to financial results.

MEASUREMENT FRAMEWORKS

Measurement frameworks are helpful to organize and define which metrics should be used to accurately assess company performance. They do not need to be complicated, in fact they will be more manageable and have wider adoption with a reasonable number of metrics. There are many different types of frameworks depending on the type and needs of the business. A balanced scorecard is a type of measurement framework that includes non-financial forward-looking measures (customers, operations, and people) designed to monitor and manage a company’s overall performance. 

The key is to design a framework that is representative of your department initiatives and make sure it ladders up to your company’s strategic framework (if one exists) which will ensure acceptance and adoption. It is also critical to have established objectives and goals before determining which metrics are used to measure outcomes. This may seem like a no-brainer but is often forgotten in the process.

DEFININGSUCCESS

What does success look like? How should it be defined? Does success look different today than it did before the pandemic? Defining success is an important part ofthe measurement framework. Peter Druker has many wonderful quotes and oneI have often used is: “You can’t manage what you can’t measure.” In orderto move forward, you need to first define success and then measure and track it.

I’ve worked at companies that are determined to have growth goals even though they have been declining for years. It is human nature to want to go from a decline back to growing overnight, but that is not always realistic. In some cases, slowing the rate of decline and getting to flat may be a goodnear-term goal. Realistic goals need to be set, or you risk frustration and unnecessary defeat.

DASHBOARDS

After identifying which metrics need to be monitored and determining measures of success, a dashboard can be designed to visually display the information and provide

Abalanced score card is a great tool, but it is only as useful as the metrics included in its reporting. Discerning measures that are important from those that are white noise is where Analytics comes in. Predictive models need to be built to ascertain which metrics are drivers of performance outcomes. These models will determine statistical significance as well as prioritization and weight of each measure’s impact on the outcomes. This is an important step as it takes the subjectivity out of the selection process which helps the organization agree on which measures to include in their balanced scorecard. These models have an added benefit as they may be calculated (scored) to predict future outcomes and will help with scenario planning as business priorities shift. 

Different departments may choose to develop their own measurement frameworks to help manage and keep track of their individual objectives, goals, and outcomes. 

The key is to design a framework that is representative of your department initiatives and make sure it ladders up to your company’s strategic framework (if one exists) which will ensure acceptance and adoption. It is also critical to have established objectives and goals before determining which metrics are used to measure outcomes. This may seem like a no-brainer but is often forgotten in the process.

DEFININGSUCCESS

What does success look like? How should it be defined? Does success look different today than it did before the pandemic? Defining success is an important part of the measurement framework. Peter Druker has many wonderful quotes and oneI have often used is: “You can’t manage what you can’t measure.” In orderto move forward, you need to first define success and then measure and track it.

I’ve worked at companies that are determined to have growth goals even though they have been declining for years. It is human nature to want to go from a decline back to growing overnight, but that is not always realistic. Insome cases, slowing the rate of decline and getting to flat may be a goodnear-term goal. Realistic goals need to be set, or you risk frustration and unnecessary defeat.

DASHBOARDS

After identifying which metrics need to be monitored and determining measures of success, a dashboard can be designed to visually display the information and provide users with the ability to “slice and dice” the data to uncover insights.The most effective dashboards are those that are easy to use, highly visual and allow for real-time analysis.  An example of a good dashboard is one that Intuizi has developed that allows users to view and analyze their mobile device data (example below).

This dashboard is part of a platform that also allows the user to create mobile device audiences with criteria gleaned from the analysis.  The user can then activate the marketing campaigns through integrations with more than forty-five platforms (e.g.,DSP’s, CRM tools, Cloud environments).

INCLOSING

As youcan see, measurement is a broad, complicated, and important practice — one that should not be taken lightly.  That said,it can be defined and managed through the identification of the appropriate metrics, a measurement framework, defined measures of success and ultimately a user-friendly dashboard.

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