In this post, I will examine how bad metrics help. Something doesn’t have to be perfect to be useful. Often the act of creating a metric, even a bad metric, creates debate/conversations which highlight what we do, or do not, know.
Two Scenarios
Consider the following scenarios:
A) The plan was unveiled in the meeting. A proposed moderate increase in price would lead to increased profits. It sounded reasonable to all.
B) The plan was unveiled in the meeting. The marketing manager suggested a 3% increase in price. The argument was that this would generate $2 million more in profits. A few analysts shuffled, clearly surprised about the number. How would the price increase be applied? One of the reps asked. The marketing manager responded, “Across the board”. Several sales reps suggested the most price-sensitive customers would leave. One rep spoke up asking, “What provision is made for customer defection?” “1% of revenue”. A voice noted that the three most vulnerable clients each represented 2% of total revenue. 1% did not seem at all reasonable. The 3% increase was unlikely. While the $2 million in additional profits was unconvincing. The meeting descended into bickering.
Successful Meetings Often Use Metrics
Which was a successful meeting? If the intention was to aid decision-making I would argue the second. The numbers were wrong but they created a conversation.
Metrics get everyone onto the same page and encourage debate. Metrics illuminate what matters. If your plan is silly it is better to know that now than at the end of the year. Metrics force you to acknowledge your assumptions. This is the first step towards improving them.
Most measurements have flaws. But these imperfections are the very sparks that ignite discussion, expose underlying assumptions and help to align strategy and tactics.
Neil Bendle, 2010
How Bad Metrics Help
My key point is that waiting for a perfect metric means you’ll never use them. Not using them is a recipe for confusion. This can sometimes appear to be consensus but people just don’t know what they are agreeing to. Something doesn’t have to be perfect to be useful. On many occasions, bad metrics help.
For details on popular marketing metrics and how not to mess them up, see here.
Read: Neil Bendle In Praise of Imperfection Deluxe Knowledge Exchange Q4 2010. For our Marketing Metrics book see here.