2016 has been interesting for many reasons.
Here's a quote that keeps coming up.
- "Can you please tell me the three or four KPIs that, if I track them, will help me grow my business?"
"KPI's" of course are "Key Performance Indicators".
Too many of us have been convinced that if we knew a handful of facts about customer behavior, then we could mysteriously change the trajectory of our business.
If that were true, then why can't IBM's Watson figure out metrics that help IBM reverse a four year sales decline? I mean, they have the best metrics machine on the planet ... and so what, right?
Metrics are not the issue.
Business knowledge is the issue.
We don't want to admit that we don't know what to do.
So let's try a little experiment.
Here's your quiz for tomorrow.
Let's say that there are three primary sources of new customers.
- Google / Paid Search: On average, you make $5.00 profit acquiring a customer via paid search, and you generate $12.00 of profit in year one and you generate $27.00 of lifetime value.
- Facebook: On average, you lose $10.00 acquiring a customer via Facebook, and you generate $8.00 of profit in year one and you generate $20.00 of lifetime value.
- Offline Advertising: On average, you lose $15.00 acquiring the customer via Offline Advertising, but you generate $20.00 of profit in year one and you generate $50.00 of lifetime value.
Well, you want metrics that matter - and there isn't a more important metric than lifetime value. Tell me what you, the strategic marketer/analyst, do with this information? And don't tell me you need more information!!!! Your CFO is staring at you. What do you tell her?
We will answer this question tomorrow.