Monday, 7 October 2013

Measuring Up - Using Measurement To Make Better Business Decisions

A few weeks ago I went out for coffee with someone and the conversation turned to social media, and in particular the ROI of social media. Ah the ROI of social media, the elephant in the room. Now this particular person explained that his company had measured the ROI of social media, to see whether they could justify hiring a social media manager. They had done the maths for 2012 and calculated that they had made the princely sum of £3,000 from social media. This figure was based on how many people sent a tweet or messaged through Facebook asking about advertising and then went on and advertised. But I think we all recognise that is too simple a measurement, social media is so much more holistic than that.. and it's more important than that. This is about whether you want your business to exist in 5 years time, it's that business critical.

So how should they have been measuring social media? Well, they didn't need to measure to justify a hire, because with everyone in your company embracing the role of social ambassador, you won't need a social media manager. I have heard so many amazing examples recently of companies that do amazing things with social media, just by educating and empowering their wider teams. More on this another time.

The fact is, it is very easy to measure. You can measure everything... Well, not you personally necessarily, because you, like me, will be constrained by processes, resources and technology, but in theory one could measure everything. And the is the part in the blog post when I'm supposed to list all the various, amazing and oftentimes free ways to do that. But actually some of you will already be using these, or something better, and those of you that aren't are a really a bright bunch who can learn how to measure in minutes.

Okay, here are a few I use:

No, I don't want to talk about how to measure... 
What I really want to address is the why? And the what? of measurement.

Measurement is you map and compass
You see without measurement you don't know where you are, where you're going and where you'll end up. Measurement is our map and compass. Measurement will show us how we can best serve our clients, measurement will help us shape the future of our business and measurement helps us make better decisions.

I want to start by looking at my former employer who I never really mention, the plucky little start up: Google. Now actually my obsession with measurement started long before Google. I worked in commercial radio and the RAJAR measurement was the reason I got out of bed to read a 6am bulletin, but didn't have to get up to read one at 5am. But working at Google took my love of measurement to a whole new level. Because like everything Google does, they do measure on a different scale!

Now this story is an oldie but a goodie, and lots of people have told it in far more detail and with more aplomb that me... But here goes... back in the day Google paid search results appeared in blue text, and some bright spark noticed that results were appearing as two different shades of blue, depending on the search type. They wanted to have one consistent shade of blue, but which to choose? Now in lots of companies if you wanted to make a decision like this you'd ask the HIPPO, the highest paid person's opinion! But not at Google, at Google they conducted a 1% experiment and tested 41 different shades of blue. It turns out that there is a type of blue that people are more likely to click on and this particularly clicky blue generated millions of dollars in extra revenue. 

This is a great example of where measurement adds value. Google's business objective (before they got into driverless cars and geek specs) was to make money from advertising (it still is!) How do you do that? Clicks, clicks and more clicks, so conduct experiments to generate more clicks and prove your value.

Use this example in your own business. When working out what to measure look at your business objectives. What are the priorities for your CEO, CFO and/or board of directors? Set up a number of experiments based on those objectives/priorities. Measure those experiments and importantly, fail quickly. Be scrappy or epic, but don't do something in between. If you're going to make an album, make Thriller!

Make the biggest selling album of all time
Then use these experiments and the results as your invitation to the top table. The HiPPOs want to make informed decisions and you can help them.
  • Measurement helps us tell great stories.
  • Measurement helps us make decisions - scrappy or epic
  • Measurement makes us useful and valuable
How: use a tool, many of which are free, and ask for help.
Why: to make better decisions and get a seat at the top table
What: Align your measurement experiments to the business objectives, make it scrappy and fail fast, or make Thriller!

Do you have any example of great measurement tools I should be using? Or examples of where measurement has provided you with a really interesting insight or an invite to the top table?

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