Monday, January 02, 2006

Winning the Guessing Game

Despite all the hand-wringing over marketing getting "a seat at the boardroom table," the irreversible trend we’re seeing in measurement of marketing effectiveness has improved both the return on marketing expenditures and the credibility of the marketing function within the corporation. Database technology, analytics, and Web presentation tools have all contributed to an unstoppable wave of desire to understand and quantify the impact of marketing expenditures on the company’s bottom line. All this is unquestionably for the better.

But there's a much bigger game being played out in corporate boardrooms, one in which dashboards are performing a critically important function. And sometimes marketers get so wrapped up in the financial and statistical orgy of metrics they lose sight of the true competitive advantage afforded by an effective marketing dashboard.

You see, the things that are countable can be counted by anyone. Given similar resources, competitors will always achieve parity with respect to the foundational elements of statistical analysis and optimization. Everyone will soon have their own media-mix model, and portfolio management of ROI will become the de facto standard for how marketing resources are allocated.

But what can truly separate us from our competitors and deliver exploitable marketplace advantage is not being better counters, but becoming better guessers.

Guessing is what we do when we don’t have enough information to be certain about the likely outcome of a decision — which is most of the time.

There’s a strange correlation between the potential magnitude of the risk of a given decision and the propensity to have to guess. The two are directly proportional. That’s why people still manage companies and computers just provide “decision support.”

I've seen effective marketing dashboards facilitate a better guessing organization in two ways:

  1. By assembling the relevant information in a form and manner that improves the ability of the human mind to find the synaptic links between previously unrelated elements and see patterns where no numerical analysis has.

  2. By providing a “learning loop” to rapidly test assumptions (a.k.a. “guesses”) against observable facts to enhance the quality of the decisions in the face of uncertainty.

In a world of rapid assimilation of information, it’s the development of proprietary insights that will distinguish one company from another. Insights can start out as just “guesses” but, through tools like the marketing dashboard, rapidly evolve to become known facts long before the competitors ever figure it out.

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