Analytics? We Don’t Need No Stinking Analytics…….

Okay, so the heading is just a bit over the top, but I don’t believe by much.

I’ve had several websites over the past few years & when I used to speak of them it was always from the Analytics perspective. How many unique visitors did the site have? How much time were they spending on it? What was the Bounce Rate? What city were they arriving from? What foreign countries, etc., etc., blah, blah, blah ad nauseum.

I realized that we had been sold a bill of goods by Google and took the current Analytics at face value as gospel. It was also, I believe, a stroke of genius on their part when they made these available to anyone by offering them at no cost.

What did those metrics really say? More importantly what didn’t they say?

“Most businesses measure only Activity Metrics which I’ve come to believe don’t tell the whole story. What we should be looking at are Outcome Metrics  which monitor impact,” according to Jonathan Becher, CMO SAP.

After reading his brief column titled “Counting What Counts: How Outcome Metrics Have Changed the Game” in the Sept. 24th issue of Forbes Magazine, I felt that I has found a kindred spirit.

This idea that maybe we were looking at the wrong metrics was the basis for the movie Moneyball in which Billy Beane, then the General Manager of the Oaklands Athletics MLB team turned the baseball world upside down with his theory. He had a lot of naysayers within, old school scouts, owners, even his own team manager.

In baseball where $10 million plus annual salaries are fairly common Beane was given a very small budget  ($40mil) to field a team of 25 active players & 15 others who make up a 40 man roster. Beane determined that baseball had been all wrong in what metrics it was using to draft & trade players & what their dollar value was to the team. Statistics such as stolen bases, runs batted in, and batting average, typically used to gauge players had been determined by Beane to be relics of an earlier time.

Instead he theorized that metrics such as OBP (On Base Percentage) SLG (Slugging Percentage) were the Impact Metrics & were far more important than RBI’s, SB’s, & BA.

Oakland went on to a 103 – 59 record, second only to the New York Yankees who finished the year with a 103-58 season at the cost of over $100 million just for player’s salaries to achieve the same number of wins.

Becher goes on to say “We live in an increasingly data driven world. Unlocking the power of the data & analytics provides insights & a competitive edge….”

This is exciting to me & I plan on looking more into the Impact Metrics versus the easily attainable Activity Metrics that we currently put so much faith into.

I now know what Ed Kless feels like when he’s attempting to teach software partners a more financially sound method of billing for their services. Many of those partners are CPA’s, a group who thrive in the thrill of Hourly Billing. I believe that it takes courage & a firm conviction to believe in something that is totally opposite of the “norm.” It makes it expodentially difficult when you exist in a world that lives on the time worn creed, “But that’s the way we’ve always done it.”