TMAI # 157: Well done! Compared to what?

You are working your heart out and sending data into the organization like there is no tomorrow. And yet, your imposter syndrome is rearing its ugly head because all of that data is driving barely any action by your Senior Leaders.

Assuming your data/analysis is sound, one of the biggest reasons senior leaders in your organization do almost nothing with the data is that often have no idea if the performance they are looking at is good or bad.

This sounds a little kooky, but Senior Leaders react to things being red, orange, or green - when they clearly understand if someone needs to be rewarded (themselves!), if someone needs to be put on business probation, or if someone needs to nudged into making a different career choice.

Green. Orange. Red.

If that is not clear, it is highly unlikely your hard work, filled with love and passion, will yield an organization where data's influence is felt in the decisions being made about the present and future of the business.

The missing ingredient in your reports and dashboards in this situation is context - specifically comparative context that lights up the good, ok, not so good.

This Fourth of July, while you are at home making the best of this unique situation, I want to share seven (7!) simple yet amazing analytical strategies you can leverage to increase data's influence.

Ready?

Let's use three extremely common Web Analytics metrics that you are likely reporting.

Here is the current business performance in your dashboard:

Visits: 1.2 mil. Bounce Rate: 62%. Conversion Rate: 1.6%

Impressive, right?

Hmm.... Maybe.

They do look impressive.

But, are they?

For each KPI, is it clear to you - or your boss - if someone deserves an ice cream cone or a pink slip?

Sorry. I mean, is the Green, Orange, Red clear?

If you can't answer that question... Congratulations, you are normal!

Here are the strategies you can use to give your KPIs context - comparative context - that will make it clear to your boss, and her boss's boss's boss, what the number means...

1. Use Pre-Set Targets.

While creating targets is hard for any KPI it also happens to be my favorite strategy for providing context.

Only savvy organizations with integrated teams across Finance, Marketing, Strategy, and a sponsoring CxO typically are good enough to create goals.

If you are blessed to be the type of savvy organization that has Goals - you know where the business is aiming to go - then it is also quite likely that those goals have targets.

For example, one of the goals was to drive more relevant traffic (Visits) to the site and the target was preset at 7 million.

Now your report can be stuffed with context:

Visits Actual: 1.2 mil | Visits Target: 7 mil.

BOOM!

I mean Oops!

I mean, valuable context. :)

If you have KPIs without (stretch) targets you are not doing Web Analytics, you are doing Web Iamwastingyourlifeandminelytics. It is less fun.

Bonus: Few things exemplify a culture of excellence like the routine ability to set stretch targets. And, no element signals a corrosive culture like routinely gamed targets.

2. Use Industry Benchmarks.

You are a young organization. You have not quite accumulated enough historical data and analytical savvy. It can be hard to set targets to provide context to actual performance.

In this case, you can borrow targets from your industry or specific competitors.

Trade associations have performance data for key metrics at an industry level. Many tool vendors provide key metrics across at least their customer base. Research entities are a very good source as well. Your digital analytics tool like Google Analytics has a section with them. Or, honestly, just Bing the KPI you are looking for and add +benchmark to your query and you are likely a click away from the answer.

The great thing about industry benchmarks (ideally from like-type and like-size companies) is that they 1) bring a neutral external view of reality, and 2) stop you from getting too full of yourself.

The downside of industry benchmarks is that your overall strategy - maybe you win too much, maybe you are losing too much - could be very different from the industry/competitors.

Still... Now your report can be stuffed with context:

Bounce Rate Actual: 62% | Bounce Rate Ind Benchmark: 38%

Instantly useful, right?

It is to your Senior Leaders for sure.

3. Use Averages.

There are many ways to calculate averages.

If the above two strategies are not a choice you can make, you can use your past performance to provide context for your KPIs.

Now your report can be stuffed with context:

Conversion Rate Actual: 1.6% | Conversion Rate Average: 0.9%.

Champagne for everyone!

And, for the Analyst more hard work figuring out the root causes of this wonderful success.

Bonus: Use upper and lower control limits to get context for a current data point in a trend.

4. Use Like-Type Time Periods.

We had 0.2 million more visits this month vs last month.

We had 12 points of higher conversion rate compared to same period last year.

We had 82k higher conversions compared to an average 2021 Sunday.

All good ways to use like-type time periods.

Your challenge will be to take seasonality into account. As an example, week over week might not be a good idea in your case, same week last year might be more prudent.

The other challenge with using like-type time periods to provide comparative context is that your business strategy might have changed so much that no past behavior is relevant. For example, your spend on Marketing is 3x of what it has ever been. No time period will qualify as like-type. So, ve careful.

(Hopefully, your company was wise enough to create targets when they decided to triple the Marketing budget!)

5. Use Segments.

All data in aggregate is crap.

Identify the most relevant, intelligent, segments for the KPI you are reporting and use the segments to provide context.

Visits Actual: 1.2 mil

Great. Now. Add this context...

Visits: Google: 450k

Visits: Display: 300k

Visits: Email: 200k

Visits: Direct: 100k

Now that 1.2 mil number is infused with helpful context - even though in this instance all we are doing is showing top sources.

Oh, and you can do even better since you are an Analysis Ninja! Add a trend to the raw number...

Visits: Google: 450k, +12%

Visits: Display: 300k, -50%

Visits: Email: 200k, +18%

Visits: Direct: 100k, -2%

Sweet mother of pearl that is amazing!

In a merging of smart recommendations, the percentages could be, in the order of preference, targets, industry benchmarks, averages, like-type time periods. :)

Few things explain performance like smart segmentation.

6. Use Costs.

Not everything costs the same.

Paid traffic usually costs a lot more than organic traffic.

Delivering brand lift in one channel (say YouTube) is usually way more expensive than another channel (say Facebook).

Converting people from Russia is way more expensive than converting the Swedes.

A higher bounce rate on your newly designed dynamically created landing pages hurts your business way more than that same bounce rate on your "old school" static pages because they were way cheaper to produce.

You can use this cost differential to accomplish our goal of providing context.

Let's practice applying this smart strategy with our KPI Visits used above. We'll do that by using a cost KPI called Cost Per Visit (CPV)...

Visits: Google: 450k, CPV: $14

Visits: Display: 300k, CPV: $68

Visits: Email: 200k, CPV: $0.06

Visits: Direct: 100k, CPV: Unknown.

I can hear you screaming: O. M. G!

Put yourself in the shoes of your Senior Leader. This is way more insightful, right?

As you look at the numbers, the implication is not that $68 CPV for Display is horrendous in comparison to Email's CPV of 6 cents. Rather, it is sparking this: Is Display advertising bringing us an audience that is impossible to find anywhere else and that audience's conversion rate is 18% and Lifetime Value is 42x of Email?

If the answer to that is an emphatic YES, that's a green.

If the answer is, well we have a lot of people employed in our team and Agency doing display, that's a red.

The introspection sparked by the context you provided will result in your Display advertising program going bye-bye.

Few things drive business changes like highlighting costs.

Ask this simple thing of your Marketing: SHOW ME THE MONEY!!

7. Use a BFF Metrics.

If all of the above strategies are improbable at your company, and I desperately hope that is not true, there is one last thing you can try: Find a BFF metric that'll provide context.

Here's me applying that strategy for the three KPIs we've used in this newsletter...

Visits: 1.2 mil. Visitors: 0.1 mil

Bounce Rate: 62%. Page Value: $0.006.

Conversion Rate: 1.6%. Revenue: $18.4 mil.

In each case, there is context from something else that is relevant, something else that will cause the right kind of introspection.

Metric pair 1: That is a lot of Visits from so few Visitors; excellent for a news site, terrible for a support site (and painful).

Metric pair 2: The pathetic Page Value demonstrates clearly the heavy price you are paying for that horrendous Bounce Rate.

Metric pair 3: If your Revenue target was $12 mil, that is a great Conversion Rate. If instead the target was $25 mil, falling short at $18.4 mil given context to your 1.6% Conversion Rate.

Every great BFF pairing provides a nice kind of spark.

So much better than just puking the metrics out by themselves.