Since “Big Data” made its debut, businesses have been trying to gain an advantage by using data to make better strategic decisions. I think it’s great that “Big Data” has been able to successfully establish the importance of using data to make business decisions. However, businesses don’t need to be intimidated by how much or how little data they have. They just need to focus on what they want to measure and how changes in the measured data affect the bottom line.
Companies that unsuccessfully attempt to measure online performance typically fall into one of two categories.
- They have one metric to measure performance and they respond hastily to movements, or when performance changes.
- They have several metrics and no clear understanding of what they mean or how they impact their business objectives.
The first step in overcoming these hurdles is to develop a Measurement (Analytics) Strategy.
Developing a Measurement Strategy isn’t simply about having an arsenal of metrics in your back pocket, ready to whip out when there’s movement in Key Performance Indicators (KPI). It’s about having a plan and strategic vision for how you’re going to measure performance. This helps businesses have a proactive strategy including data analysis, rather than simply reacting to swings in the data.
A Measurement Strategy doesn’t need to be all-inclusive; it just needs to document the approach to measurement and how it ties back to the business goals and objectives. The reason that this is so important is because when changes in metrics occur, it’s important to understand why the movement happened so that a quick response can be implemented. The Measurement Strategy acts as a roadmap to identify metrics that aligns with the business goals and objectives and the intentions of different audiences that interact with a business.
The intentions of different audiences is important because not all visitors to a website have the same intended purpose for visiting. If audience A comes to the website for an intended purpose and audience B comes to the website for a different intended purpose, then different metrics should be defined for these two different audiences.
Another key component to remember in the Measurement Strategy is that KPI should really be limited to 3 – 5 key metrics. Keep KPI limited to only a few key metrics so that focus can be maintained, and continue to document additional metrics and segments that will help provide context later when an analysis is needed.
Other components of the Measurement Strategy can include the format and frequency of reporting. Will automated web-based dashboards be displayed on monitors live throughout the office for everyone to see? What will they look like? What is the plan when KPI dramatically change from one direction to the next? Having answers to these types of questions will make all the difference in whether a business proactively or reactively responds to changes in data.
At the end of the day, the more marketers are able to analyze and understand data, the better decisions they can make. The size of the data isn’t what matters, it’s the planning and strategy implemented with the data that will define the right metrics for measuring online performance.