At the recent DAA Los Angeles Symposium, I spoke on a best practices roundtable about how to move analytics beyond mere reporting and put data to work to make a meaningful, positive change in your business. One of the recommendations the panel made was to understand the key business question. For if you don’t know the business problem you’re trying to solve, it can steer you away from the results you really want to achieve.
So how do you go about identifying the right business problem to solve? It starts with understanding of the bottom-line goals of your business, and identifying the actionable changes, or levers, that will affect those goals. While this may seem like a daunting task, identifying a business problem worth solving can be broken down into three manageable steps:
Step 1: Interview key stakeholders to identify key metrics.
Start by identifying and interviewing key stakeholders from the sales, marketing, product and executive teams to understand what their priorities are and how their performance is measured. For instance, the CMO may only care about the number of leads flowing through the sales channel, but the CFO is interested in the profitability of sales. Aligning multiple stakeholder perspectives will help to ensure you’re addressing your highest-priority business problems.
For example, let’s say you work for an insurance company and you’re interviewing the CMO, who is focused on producing leads. Some of these leads turn into policies, which have an associated revenue amount. Your company’s business goal is to produce the most high value policies, and yet the CMO is focused solely on generating leads, regardless of the rate at which those leads ultimately convert into high value policies. In this example, you would need to find a different way to measure the performance of your marketing efforts that isn’t focused on generating leads, but rather on the company’s business goal of generating maximally profitable policies.
Step 2: Identify the levers to pull that impact these key metrics.
Once you’ve defined the business problem, identify the levers that will help solve that issue or satisfy that need. Ask yourself, what are the actions that can be taken to help further the business goal? Returning to the insurance example above, marketing spend will certainly be a key driver of leads through sales funnel, but profitability may be based on a number of other complex factors, such as policy pricing, what promotions are in market, competitive offerings, and more. Many potential factors must be taken into consideration in order to find the right levers.
Step 3: Test the levers.
Once the levers are identified, test them accordingly to see if they are successful at advancing your business goal. For example, I previously worked at an organization with a business goal of increasing sales of a new product. We had a hypothesis that the complexity of the online registration process was reducing the number of sign-ups for a free product trial. We believed the complex registration process was a key lever limiting the sale. Less sign-ups, less sales. It made sense. So we radically simplified the registration form as a result. But when we stripped away the registration barriers, what we got was a lot of sign-ups, and not a lot of paying customers. We recognized that the barrier to entry of the registration form ultimately helped to weed out those people who were less motivated to spend money on the product. Our hypothesis was true – less complex sign-up, more trials – but it wasn’t a business lever. It didn’t drive a change in the key metric of sales. So when identifying levers, remember it’s equally as important to test them to ensure they are producing the desired outcome.
If your analytics aren’t helping you progress from business issue to business outcome, it’s just fancy reporting. The key to success starts with asking the right question, and then identifying the right levers to drive your business forward.
- Phil Gross, Director of Product Management, Visual IQ