Focusing on the wrong metrics is Damaging to Your Data Understanding
Our last several blog posts focused on layering in complexity when using data-born insights to drive campaigns and interventions. We’ve made arguments on starting with basic segmentation, weaving in dynamic segmentation, and how to experiment with micro customer journeys. These posts focus on using data to drive customer intent and shape the story you want told by influencing behavioral patterns. But what happens when we focus on the wrong parts of our data?
Getting Stuck In the Details
I think data is one of the areas where the phrase “Can’t see the forest for the trees” rings particularly true. Data users can focus so heavily on a single (or group of) descriptive statistics that they miss out on a vast array of opportunities. Here are some common traps the wine industry may run into when building a data-minded culture.
Steer Clear of Vanity Metrics
You have probably heard the phrase vanity metrics. This term is usually applied to data points that appear impressive but offer little actionable insight. So why are they so appealing? Well, they tend to be easy to measure and generally show positive growth. There is something intrinsically rewarding about watching these data points increase over time, and it feels like a win to be able to compare the endpoint numbers to the starting point. However, this leads to a false sense of success and can trap your team into focusing on the wrong goals. This type of data is not all bad, it has its place. It is a great way to support messaging when context is interwoven with the metric, but should not be the sole focus of data analysis.
Common Vanity Metric Sinkholes to Avoid
Customer Database Growth
One such metric I often see pursued is customer database growth – looking at the increase in your customer database month over month and year over year. Database growth is important, especially if your brand is engaged in any type of lead-generation campaign, but the measurement shouldn’t stop there. Rather than measuring your entire database, look at usable/emailable contacts and see how that has changed over time. Or, take it a step further and see what active purchasers look like overtime. If your active purchasing list remains stable (or even is declining!), then the leads you are generating are not the correct leads for your brand and/or you are not putting enough effort into customer retention. We all know that it costs more to gain new customers than retain customers, so let’s focus on how to measure retention and increase customer value.
Wine Club Sign-Ups
Wine clubs are often a large portion of DTC revenue. We, as an industry, look at our wine club members as our most valuable customers (whether they are or not is a different argument), and, as such, converting a customer or tasting room visitor to the club is considered a win by most. To this end, tasting room staff are often incentivized to sign-up new members. In addition to incentivizing staff, brands also offer incentives to the customer to join in the Tasting Room (e.g. additional discounts, waived cost of tasting experience).
Focusing only on the volume of new sign-ups can hide other problems within the club that contribute to attrition. If you sign-up 100 new club members a month, but are losing 95 members a month, while you are technically growing, I would argue that there is something (be it club structure, cost, shipment timing, benefits, etc.) that is damaging your relationship with club members. Relying on new club members rather than repairing those relationships is dangerous to your clubs’ long-term sustainability.
Step back and understand how different club tiers are performing. Look at your sales associates and see if there are patterns in how long the members they sign-up stay with the club. Experiment with your club structure and design. For example, assign a club concierge to new members who can help them make the most of their benefits and walk them through their first few club shipments and see how this impacts tenure.
Email Open Rates
Open rates are one of the metrics that are used to indicate an email’s success. However, what you are really measuring here is some combination of the subject line performance and user intent. If you have an email with 100% open rate but no conversions, reporting only the open rate can be incredibly deceptive and you lose the ability to craft a better message. Click-through rate is the next step but again, it can be a poor indicator of success if not carefully monitored. For example, I know of an email platform that includes unsubscribes as a “click” which artificially increases their average CTR and hides a critical problem in communication. When measuring clicks, it is not only important to know what the overall CTR was, but unique CTR as well. Taking it further, make sure each link is tagged, so you know what type of link is driving the conversion you are looking for. Don’t focus solely on sales conversions either. There are a number of micro-conversions that you can track that allow you insight into a customer’s eCommerce journey, allowing you to gauge intent and, hopefully, adapt your site to meet their needs. For example – product page views, club membership sign-ups, reservations made. Track how your customers interact with your site, understand their intent when they go to certain pages, and optimize flow by utilizing the data you have available.
Focus on Measuring What Matters
Whenever measuring metrics I encourage you to ask yourself, what am I trying to improve, change or affect? Then consider what combined metrics will give you the data you need to test, prove or change your process for the better. Also, consider how you will present the data. The way we present data, either in reports, graphs, or tables, determines how people process the information and what importance they place on it in the future. If we only present metrics in one way, our audience begins to rely on that presentation, and we become stuck. Part of a data-minded culture is focusing on data literacy and increasing capabilities. Data, its uses, and value shouldn’t be limited to a single department in your organization, and when data is isolated, it is not valued and thus does not provide as much impact as it can. Remember – your data represents the behavior of your customers, and if you do not value and listen to the data, you are not valuing or listening to your customer.