Metrics are good. They can be valuable and you can glean insight from them. But my admonition to all is that you proceed with caution when it comes to using metrics and data to make business decisions. All too frequently, I see business leaders completely absorbed in spreadsheets and reports. Percentages, conversion ratios and growth rates are bandied about liberally. Unfortunately, what’s commonly lost in translation in this exercise is the context behind the data.
Context doesn’t exist in a spreadsheet cell. It doesn’t appear as a footnote in a Salesforce.com report. Context is nowhere to be found in benchmarking metrics. Yet context is the most vital factor in every formula, because without it, you are operating in a vacuum. You are making decisions devoid of the most important dimension, which is what I refer to as ‘business reality’.
Harkening back to my college days, I was struck by what my Statistics II professor would always tell us; “You can make statistics say whatever you want them to. You can make statistics lie.” I recall being very confused by that notion and approached him after class to ask him what he meant by that. He told me that all statistics are predicated on samples. And that its quite easy and common practice to manipulate the samples to support whatever assertion you are trying to prove with metrics that do. He further explained that statistics and metrics are used and cited as the basis for making virtually every decision made in the world, yet no one bothers to question the samples used to generate the statistics in the first place. He ended the lesson by saying that the vast majority of statistics are not accurate because the samples used were not statistically relevant in the first place.
This lesson and business reality was further driven home with me when I worked for a large, prestigious market research firm in Boston during college. I ended up becoming a manager and got involved in the creation of surveys and focus groups that we would use on behalf of our clients. All of the market research was supposed to be objective and accurate. Our clients would pay us big bucks to conduct the market research and they were mostly blue chip Fortune 1000 companies that we were working with. Here’s the dirty little secret, we tailored the surveys to elicit the responses that were most favorable to our client. We doctored the results by ‘selectively’ including in the survey results the responses that our clients were looking for, rather than all of the survey results that would skew the outcome and possibly show our client in an unfavorable light with their customers or markets. This was done intentionally and as I learned, completely common in the industry.
It would be analogous to looking for a doctor that would only tell you that you look great, don’t need to lose any weight and shouldn’t cut back on your caffeine or alcohol consumption. Everyone laughs at how absurd that sounds but most people prefer the Hollywood ending rather than the reality of the world. It’s no different in the business world. I’ve been in sales and sales management for over 20 years in my career and it never ceases to amaze me how many people don’t look for the context or meaning behind the data and metrics. Most seasoned sales managers simply have a visceral sense when the data or metrics are wrong and most tend to be proactive about getting the context before citing or using any data for decision purposes.
How do you get the context behind the data? You ask smart questions to the people that are creating the data in your systems of record like Salesforce.com. Is ‘all’ the data being entered in to your systems of record? Is it being entered objectively or subjectively? Are there things happening in the real world that can explain vitally important trends that simply aren’t captured in the data or metrics? Are the system of record rules of engagement well understood by everyone that uses them and are they applied consistently? My experience shows that most sales teams and companies do a poor job in this area, and yet they are the first ones to cite reports, metrics, stats and reference spreadsheet formulas as to how their business is doing.
It’s like the old United Airlines commercial where the company has lost touch with their market and customers. The grey haired CEO passes out airline tickets to all of the execs around the conference room table and tells them to get out there and visit their customers. Don’t lose touch with the real world; you need to talk to your field sales people and customers to find out what is really happening out there. Don’t get lost in spreadsheets and metrics because without the context or meaning behind the data, you most likely have flawed assumptions that you are basing your business decisions on.
We help companies improve their sales conversion rates or effectiveness. As part of any audit engagement, we look at both the data and the context behind the data. Typically, we glean far more insight from conversations with sales reps and customers then we do from the Salesforce.com reports or spreadsheets. In fact, we commonly find embarrassing flaws in the metrics that are being used to make the business decisions through the context. So get out there and find the context behind the data, you’ll be making informed decisions when you do!