Business, commerce, and customers are ever-changing, so what do you measure and optimize to ensure your business and brand will grow? Political and religious differences, gender-identity and racial acceptance, as well as growing real and perceived socio-economic differences are fragmenting markets and audiences. Tribalism reigns. Everything. Is. Always. Changing. How to choose what to measure?
The metrics mystery is a question with many answers, but regardless of the answer, the metrics we typically choose often prevent us from seeing the future clearly and building lasting relationships with customers. Traditional business intelligence measures progress toward business goals, not insight into customers. Retrospective insights do not contribute to a brand’s ability to lead. Real-time analytics measure only what is happening right now. And predictive analytics typically anticipate only transactional level metrics. Critically, brands must also measure how their customers are changing and why their values are evolving because if a brand doesn’t provide leadership and relate in relevant ways its customers will part company.
The challenge is to separate your own business goals from goals that customers have for your products or services. Facing a tidal wave of new information available from customer interactions, too many companies choose to measure only business-centric metrics.
Don’t Get Sucked into Surrogation
Harvard Business Review recently identified the source of dependence on misleading metrics, “surrogation”, which is merely substituting one thing for another. Despite the full range of measurements available, managers tend to choose the simplest. Visits, newsletter registrations, conversion rates, average revenue per user – so many points in the process that can be measured – are all like the plot lines on a map.
As customers move from discovery to consideration, from purchase to post-purchase support, their measures of a brand’s performance evolve. Marketers must be on the same page as their customers. Too often, marketers choose metrics that appeal to the business and consequently lose sight of when customers’ attitudes begin to change.
Human relationships are multi-dimensional and require a map that changes with the audience. Insights require data combined with experience and judgment, which companies now can tap on-demand, even at the senior levels of marketing experience.
A Cautionary Tale
HBR authors Michael Harris and Bill Taylor focus on how Wells Fargo’s misguided efforts to engage customers turned sales practices toxic, resulting in millions of illegally created accounts. That’s an example of a proactive response to poorly chosen metrics. Every quarter, new accounts swelled, and Wells-Fargo leadership saw success. They were focused on one number and fell into a trap that would poison their brand for years.
Surrogation prevents brands from understanding and reaching the ever-evolving customer, whose own shape-shifting reshapes markets. Instead, the brand measures its business results and projects them back on the customer. Success looks like a match: both sides got what they wanted. However, as consumers get more means to measure brands, their sentiments and assumptions will be central to the brand’s ability to align with their values.
Brand metrics reach far beyond transactional metrics and must embrace abstraction courageously. When brand managers choose a surrogate parameter, they often turn away from the complexity of the customer relationship, simplifying it, and reducing corporate performance to financial outcomes alone. Today’s holistically oriented consumer who is aware of the consequences of business externalities will hold companies to a higher standard.
The Values-Driven Customer
What, then, to do? The answer is tapping a diverse set of outside-in perspectives into what your data means to your business.
Sure, businesses can hire more internal experts who will live inside the company and attempt to map the outside world, but because of surrogation, business metrics will consistently overwhelm more complex engagement metrics. Nobelist Daniel Kahneman explains this persistent business challenge: the human mind relies on the law of small numbers and easy availability of information when judging the world. Brands choose measures that have worked, even when they are failing to deliver actionable insight.
Widespread change is an opportunity, too. It is no longer necessary to spend a lot of time and effort to vet outside experts for long-term representation before a company can access diverse, external marketing experience to pressure-test its internal metrics strategy.
The marketing industry, like mobility, medicine, and meal delivery, is becoming a distributed service accessible on a shorter-term basis, versus the traditional, slow-to-move agency model. For example, Metaforce has constructed its business on this insight. What if you could invite an experienced, dispassionate, ”second CMO” to review your data, talk with your business and product teams, and offer actionable ideas that extend your vision and your existing marketing investment? Moreover, a plethora of new tools makes talking directly with customers simple, fast, and cheap relative to the broadcast network era.
The question to ask today is, do you have enough people with sufficiently different perspectives to spot the meaningful social signals in your data?
Metrics are great tools. Great managers are in short supply. The emerging answer to surrogation is to open your company to more discussion, with third party marketing experts and through easy experimentation with off-the-shelf tools - before investing in a decision to either significantly shift your metrics strategy, or to stay on your current course.
It’s from these unexplored corners of the consumer landscape that every new business and brand building opportunity will come. Tune into them by breaking the monolithic power of traditional business metrics. All it takes is a little additive perspective delivered by teams skilled as surfacing insights.
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