Moneyball – A lesson in translating analytics into action
http://fivethirtyeight.com/features/billion-dollar-billy-beane/
As the regular baseball season winds down this week, and Moneyball is being run regularly on cable, we can take a lesson from Billy Beane in turning data into action.
The first step is properly understanding which metrics are actually indicative of performance. In other words, what are the things that should be measured and managed that actually influence the top line. In the movie version of Moneyball, the key indicator is identified as On Base Percentage. In the movie, Brad Pitt as Beane states it very clearly “You get on base, we win. You don’t, we lose.” When asked about why he wanted a particular player that the scouts had dismissed he states, “He gets on base a lot. Do I care if it’s a walk or a hit?” Beane decided that the key indicator was team OBP and then took action to maximize that indicator. He ignored other stats that so many other baseball professionals felt were important.
To take this lesson over to Marketing, perhaps we need to stop looking at many of the standard Key Performance Indicators (KPIs) like website visits, page views, page view duration, open and click through rates for email marketing, keyword rankings for SEO and all the other easy-to-access metrics. Instead, we should identify those things that can be more clearly linked to the company’s Revenue Goals. Designing strategies and campaigns to create conversions and then sort the wheat from the chaff so that we can hand off Marketing Qualified Leads (MQLs) to sales should be the real KPIs. Of course we then have to close the loop with sales and track the percentage of MQLs that turn into real sales. It’s not that standard KPIs are not important, but they don’t really help us understand how we as Marketing Professionals are contributing to Revenue.
Perhaps looking not at KPIs, but Revenue Performance Indicators (RPI’s) is a better way to approach the job at hand. I’m sure that every market and every company will have a different set of RPIs, but until you know what those RPIs are for your company, you can’t do much more than hope that trial-and error gets you to where you want to be.