Given the ocean of data available to brands today, some advertisers sometimes find it reassuring to surround themselves with a multitude of this data: graphs, dashboards, indicators, etc. But often, this abundance of data prevents them from finding the beacon that will guide their business to success.
Consider the following two scenarios:
- You present quarterly performance to your boss and your report includes a hundred slides. Deep down you know that only a fraction of this information will be withheld. What are you doing ?
- Your digital dashboard includes 98 metrics in 12 dimensions and even if your size 6 font makes it fit on a single page, you know that this operation makes the data incomprehensible. How to move forward?
If you’ve ever found yourself in a similar situation, then you’ve passed the first step towards your data analytics black belt, namely, realizing that data shouldn’t be used to address the fear of not being enough. to use.
In this article, we’ll see how simple techniques can help you strategically select the data that will provide the most actionable recommendations for your business.
I. FOCUS ON KPIS AND ELIMINATE METRICS
It is essential to differentiate a KPI from a metric:
- Metric: A metric is a number.
- KPI: Key Performance Indicator (KPI) is a metric connected to the success of your business.
The time spent on a page, the number of followers or the volume of visits are all metrics. Each of these metrics fall into the “interesting” box but are not related to the “success of your business”. It is possible that a variation of +/- 25% of one of these metrics has no impact on the overall performance of your company.
The number of transactions, the margin or even the income are very good KPIs. Each KPI has a strategic value and makes it possible to answer a specific question, for example “It is therefore thanks to this that we had a very good year!”. It is almost certain that a variation of +/- 25% on a KPI is of paramount importance for your company and in some cases makes the difference between end-of-year bonuses or a social plan.
When you find yourself faced with an impressive amount of data, identify the metrics that will only be used by the operational teams to carry out micro diagnostics (many digital players are already working with these metrics) and focus first on the KPIs because these are the indicators that will matter to your senior management.
Every company should have about 6 KPIs for a CEO and 12 for a CMO. Do the exercise for your own company and if you arrive at 30 KPIs, it may be time to review this organization.
II. FOCUS ON KPIS WITH PRE-SET OBJECTIVES
Goals : pre-established numeric values indicating pass or fail.
In practice, setting goals is extremely complicated. You have to be an expert in forecasting, studying the competition, seasonality, taking into account the planning of investments and any organizational changes or changes in the media mix.
This is why most companies set goals only on KPIs that are worthwhile.
Now take a look at your own reports/dashboards, do you have targets for 32 metrics across 12 dimensions? How were these goals determined?
If you find yourself in this situation and your goals are achieved via a rule of three from last year’s values, they may not take into account the whole picture and may not allow not to correctly answer the question: are my actions a success or a failure? A question every CEO asks.
In this case, start by identifying the KPIs that really require your investment to determine their objectives based on an in-depth benchmark of the market and the competition, your company’s internal policy, detailed projections of their evolution and a little of your common sense.
III. FOCUS ON OUTLIERS (OUTLIERS)
You have now identified the 12 KPIs relevant to your activity and, after a lot of research, you have assigned objectives to them. The question that now arises is: each time you consult your dashboard or your reports, how do you identify what is behaving normally vs. what requires your attention?
The answer : Focus only on KPIs for which performance deviated more than 3 standard deviations from the mean over the study period.
A little “statistics” parenthesis:
For an indicator roughly following a Normal distribution, about 68% of the values will lie within + or – one standard deviation of the mean, 95% for two standard deviations and 99.7% live between -3 and +3 standard deviations.
By focusing your attention only on performance that deviates by more than three standard deviations, you are ignoring the expected and looking only at the unexpected.
If your KPIs have few variations, consider only two standard deviations.
The goal is really to highlight abnormal behavior, because if performance is within the expected range, what is the point of communicating to your superiors “performance is as usual”?
Identifying outliers and understanding the phenomena that caused them is really the key to generating value with your data and being able to make informed decisions.
There are different approaches to identify outliers, a good trick is to use the confidence interval to notice at a glance if certain elements need your attention or not.
IV. CONTEXTUALIZATION IS KEY
This trick is probably the most difficult because it requires being a real data ninja, but it is probably the one that will have the biggest impact on your business.
No CEO wants data. As a data scientist, it costs me to write it but it is true!
A CEO only wants to be influenced by data and thus focus on solving problems that will move the company forward. While problem solving is one of their key skills, understanding data is not. So the next time you report results, consider adding text next to each metric that answers the following questions:
Why did this metric behave like this?
An explanation of the factors that caused the fluctuations. The added value of the figures you present will be increased tenfold if you are able to contextualize them. The task can be difficult because the factors are often multiple and involve knowledge of the entire data value chain: launch of a campaign, change of broadcast format, addition of a player in the media mix, seasonality, tracking , …
What actions should be taken?
Explain, based on the explanatory factors, what are the next steps to take. The success of your recommendations will depend on your deep knowledge of how your business operates and its strategy.
By doing this exercise you will achieve two goals:
First you will highlight that with regard to useless metrics, regardless of the answers to theWHY/WHAT, the impact will be insignificant and these metrics will quickly no longer be looked at by your senior management.
For the remaining metrics, these will probably be your KPIs, discussions involving their management will be the most productive for your business!
After a few months of using these tips, you will see that the fear of not having enough data will be gone, that the whole hierarchy will have a clear view of performance and that discussions on the direction to take will be even more productive. never seen!