Tuesday, February 6, 2007

Everything is about context

Excellent post on SemAngel entitled "All the world's a stage". Put in a very simplistic way, a KPI becomes actionable only if it is put in context. Actionability (sic!) of a KPI is important: they should either drive action or provide a warm, comforting feeling to the reader; they should never be met with a blank stare.

Gary comment:
A report becomes actionable by using KPI’s to provide the business context within which an action can be identified or deemed worth trying. The more relevant context a report provides, the more likely it is to be actionable. KPI’s are the context builders that make up our view of what’s important and what isn’t.
This reminds me of two circumstances where context saved the face.

The brick and mortar retail store

Goal: A retail store without online ecommerce wanted to increasing brand awareness and ultimately, offline sales.
Strategy: Conduct an online contest.
Result: Visits KPI increase. Contest participation was high. Good!
Context: the #1 referrer was an online site tracking all kinds of contests... when subtracting what was deemed to be unqualified traffic, results were far from being that great... We determined the pattern was "come from contest tracking site/go right in contest page/fill form/submit/get out".
Simple recommendation: review contest rules, use a different kind of incentive: redeemable coupons in store.

The online music store

Goal: increase online sales, promote the revamped downloadable music section.
Strategy: use the massive opt-in list to communicate the best sellers and offer rebates on some downloadable musics.
Result: very good ratio of clicktroughs, even an increase in the conversion rate. Everything is great!
Context: people were actually buying only the songs in rebate, not reaching the profit margin which was achievable only if more than 2 or 3 songs were purchased. We couldn't identify an increase in repeat purchase ratios when compared to non-solicited customers. The more they would send emails, the more they would actually loose money.
Simple recommendation: change the rebates to be of the type "buy two, get one free".

The lesson

Are these two examples too simplistic? When looked individually, each KPI had a very good meaning and the WA provided nice graphics showing a clear and bright sunny day. It's only when those meaningful KPI's were put in context that the truth was revealed. And to take back the story analogy from SemAngel; trust your WA to give you the pen & paper, trust your analyst to make you a good story :)
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