Companies that do not wise up to the fact that measurement is MORE important than spending money are going to die. The ones with more cash (Apple, Microsoft) will die slowly. The ones with less cash on hand (start-ups, struggling businesses) will fail quicker. Marketing and advertising can be up to 40% of annual expenses, but very few companies measure their effectiveness. How can you ‘correct’ what you cannot measure? Why would you spend $10,000 on a banner ad, and then only measure how many ‘clicks’ it generated? Companies need to measure the effects of their activities in terms of the whole system, including sales. I believe so strongly in this, I started a company, Karmaback, to try to help businesses solve this problem.
Engineer-types understand the word hysteresis. The idea is simple: for any measured system, where the output is not ‘easily’ predicted by its input… under-correction and over-correction create a ‘ringing’ pattern called hysteresis. Anyone who drives a car understands this intuitively: it’s the steering-wheel micro-adjustments you make while you drive. You see the car is going a tad too far right, you steer a tad to the left and vice versa. In business, we have many steering-wheels (knobs), and going the way you want is, hopefully, growing sales not clicks.
I leave you with 1 last thought. Any banner with a hot girl or an outrageous claim is going to get clicks. What knob, however, is going to get sales, and how are you going to measure it?
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It seems my idol may disagree with me.. or not. Some of Seth's posts are a bit obscure.. this one:
http://www.typepad.com/services/trackback/6a00d83451b31569e20120a632a179970c
seems to say data driven decisions are flawed? WOW. How wrong can one person be!
Seth's Blog latest post.
ugh, lets try that url 1 more time.
Seths blog on data 7 decisions… not quite making sense.