August 05, 2011

Worshiping False Business Gods, Finding the Right Metrics

Web Statistics Can be Addictive. But Are They Really Your Business?

Many employees at businesses are focusing on the wrong metrics and keeping themselves busy on tasks that don't help the bottom line - often for reasons like inertia, or because of bad instruction from a superior. In my role as an advisor for multiple small startups, as well as being a third party consultant through the work I do with Paladin Advisors Group, I often find myself talking with people who are frustrated with the bottom line, who know what they're doing isn't having direct impact to success, but continue to do it anyway.

For example:

Search Engine Optimization (SEO) and Web statistics

Search Engine Optimization can be a false god of metrics. Web traffic and user visits can be addicting. Once a company experiences a level of traffic, or a rate of visitor growth, it can be something they don't want to let go. A slowdown in Web traffic or even a reversal can make them react by taking less advisable measures, such as spawning dozens or thousands of algorithmically-created Web pages with low value in an attempt to game the search engines. And if they get caught, as some did with Google Panda this year, the blame goes to the engines, not the people implementing bad behavior.

In discussions with one firm, they acknowledged the quality of the visitors through these non-human pages was pretty bad. Bounce rates were high, signups were low, and they really were not their target customer anyway. But the company struggled with the idea that seeing Web traffic decline, with a better focus on high quality content and visitor conversions was more important. They didn't want to let go of their numbers!

So we talked about what they really should be measuring. Was it revenue? Was it new customers? What about application downloads or signups? What was the right thing to be incentivized on?

User Counts

If SEO is not the catch, user registrations can also be another number that gets out of control. As most of you know, once you get a user, you can always list them as having been a user. So this number always goes up. But how many are active users? And how do you define active? Is this number increasing or decreasing?

Social Media

And don't get me started on counting Twitter followers and Facebook likes... given that social media is so new to some people, they really don't know how to measure success, but I would say it always comes back to the company's bottom line and finding real revenue users.

Busy Work vs Real Value

In my career, I've prayed to false gods of Web traffic and rote activity that occurs "because we've always done it this way". I've run Web campaigns that had little success, but could show that I ran the campaign as a deliverable I achieved. I've sent newsletters that few people opened, yet sent another one the following month. But where I felt the best was getting real new leads into our CRM tool ( that led to real meetings, opportunities and revenue. Being able to track real revenue back to activity I had initiated or assisted on meant I, and my group, had delivered real value to the company.

So think about what metrics you are measuring. Are you responsible for raising Web traffic? Tracking Twitter followers and Facebook likes? Downloads? Users? Find out what you really need to show business momentum and success, and push on that. For praying to the false god won't work forever.