Move beyond "Can't Manage What You Don't Measure" (part I)

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. 

 The eye opener 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 role of analytics is much more than just tactical optimization of processes to increase ROI. 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 profitable 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 just falls 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!

8 Responses to “Move beyond "Can't Manage What You Don't Measure" (part I)”

  1. Interesting what you took from Davenport’s book. I was thinking a lot about the impact of analytics in maketing culture when I read it. Davenport confirmed what I was clumsily trying to put into concepts, that analytics are now very strategic to the success of a company. If we are to agree, then we must also agree that analysts/anlatycally-minded people will be key to the success of those companies.

    Today’s new Sergeant could as well be tomorrow’s General…

  2. Well said Jacques! Especially as a consultant, you are probably more in tune to the organizational / people implications + obstacles than I am.

    I really did like the book’s message for expanding our horizon and pride as analytically minded people though. Analytics pride! 😎

    Akin

  3. I think that these sort of changes, right now at least, are ones that require really conscious change – and is something that may be very difficult to change from the ‘analyst peon’ role but entirely possible to change from the outside *if* you have access to the right people in ‘management’.

    Also, as to the cunning plan at the end – trying to do this in a non-SaaS environment would have the privacy-conscious types rather worried, although the possibilities are very interesting.

    It rained this weekend. No burgers for me.

  4. Agreed Bob! I think both peons and outside consultants probably could use lots of case studies in order to get the attention of their management.

    And for non-SaaS data collection – it would only work as opt-in. Isn’t Windows or MS Office doing this for example? I remember the pop-up …

    Good to hear from you here!
    Akin

  5. […] previous post (part I) was dedicated to the lesson learned that analytics can be used tactically (e…. (e.g. for competing on analytics a la Netflix vs. […]

  6. […] recent post highlighted the central idea behind the book Competing on Analytics: Nam ely, many companies employ analytics (business intelligence) merely in a tactical role, i.e. […]

  7. Hi Akin,

    The topic for this post was very provocative…You sucked me in…I thought you were going to go in another direction with that. Very good post. I really believe that, despite the widespread acceptance of web analytics in the world today, the power of customer analytics is recognized by only a few right now. As with the Capital One example that you cite above, those early innovators who can leverage customer analytics to truly drive innovation in their business can reap massive rewards and competitive advantages. And once that happens, others will be quick to follow to eat the leftovers.

    I can’t help but wonder what GE/NBC plans to do with all of the visitor zip code information that they are going to be getting from their $3.5B acquisition of The Weather Channel. Perhaps they will figure out how to leverage that key piece of information in new and innovative ways.

    The web analytic peons of today could be the CEO’s of tomorrow. Great things can come to those who understand how to harness customer analytics.

  8. Much obliged for your comment Jason! And thanks for checking out this post too!

    When it comes to customer analytics, you guys at Foresee Results have an especially interesting take. Is there a use case that has surprised you or impressed you more than others?

    Over at CustomerThink.com where I also read and blog, the CRM gurus are always lamenting that customer satisfaction is not just a technology question. But foremost a matter of taking care of your customers the old fashioned way.

    As a techy and metrics dude I like to focus on what analytics & technology can do though 😎

    See you at SMX in SF or SES in San Jose maybe?
    Akin