Sunday, March 06, 2005

Measurement Mania

Now that CMOs must justify spending more often and in more detail they have found the religion of metrics. But like many converts in a rush to offer louder and louder hosannahs, they miss the nuances of the measurement game.

The biggest single error is to measure anything they can measure rather than measure things that impact on the performance of a business. Usually the earnest metrics novice latches on to whatever data is available. In no time we know the cost per service call, the the number of web inquiries divided by the cost of website hosting or the cost per unit of postcards multiplied by the number of names targeted. Soon high minded KPIs follow.

And while amusing, most of these numbers don't really tell us anything useful either in terms of the happiness of customers, the glide path for acquiring or retaining customers or the profitability of the deals we are doing. Too often we measure activity rather than productivity. And productivity requires context in terms of organizational objectives and goals.

The object of measuring is

1. to set and measure progress against definable objectives

2. to understand the factors influencing productivity and profitability

3. to find inflection points to maximize yield from resources.

Metrics ought to be organized to acheive these basic objectives. Anything less is just trivia.


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