When we look over the reported numbers in a business, a narrative emerges. The actions, decisions that made these results possible line up as persuasive evidence of our brilliance or frustration casts aspersions on outside forces beyond our control.
Unless you hold a marketing or sales role, the narrative may not extend to imagine what your customers thinking about your business and what it offers. We prefer to find immediate causes for the results, and when we come up empty, we start over again. This is especially true when the results have changed direction.
Scenario A, after struggling for weeks and months, the numbers are starting to go up. That is revenue, where positive growth in the numbers matter. The cause and effect chain validates earlier decisions on investment, strategy, tactics especially efforts in marketing and sales. All of your decisions, your process and approach are paying off.
Scenario B, after a streak of healthy profits, the numbers are deteriorating. The supply chain costs are up and revenues are down. You begin to second guess all of your past decisions, especially the most recent ones that affect your basic cost structure. But what if you haven’t changed a thing? What if there’s no cyclical Halloween effect in your business and you are in the middle of five-year contracts on everything?
In both scenarios, the internal self-examination that leads to either accolade or second guessing doesn’t do justice to your business and its future. This is part of the deal with metrics that matter, that are meaningful.
We look at numbers and we associate them with behavior we understand. What we don’t always do is go the extra mile to understanding what the numbers really represent. Because assumptions behind every reported number dictate what the measure means.
Paul Downs, a cabinet-maker has shared his experience using AdWords in the You’re’ the boss blog. I can’t find the full story that appeared in yesterdays’ print edition entitled Mistake in a Pay-per Click Campaign, but I can share the link to his series. Paul’s business was Scenario B and when he couldn’t find any specific thing different internally he began to complain very loosely about wider conditions and blamed them for impacting is business. It took him months before he was willing to tackle head on the metrics problem . I don’t want to steal his thunder but suffice to say, that sometimes you have to be sure that you fully understand how a number gets put together before you determine whether its direction means what you think.
Hopefully the Times will post in the online edition the full story, Mistake in a Pay-per Click Campaign soon. But in the interim, here’s Paul Downs on Why I manage my own Ad Words campaign, and I’d love to hear what you think. What might have helped him turn things around sooner? What advice would you share with other business owners or division heads?