Lies, Damn Lies and Analytics

Easy to get caged in your analytical playpen when you don’t know the why behind the data.  Learn to ask the tough questions.

The beauty of a dashboard is that access to statistics and results can be immediate.  With the press of a button, google analytics provides a host of information on a websites performance. The daily sales dashboard from the data warehouse has some good stats. The unfortunate result of that is proclamations of success or failure at any given point without comprehension of the why, can drive action which does real damage to an assortment, a marketing campaign, revenue drivers, purchase projections.  You name it.

The downfall of a dashboard is that many observing it don’t understand the why behind the current results.

• The average order value to our customer is continuing to increase annually.  We’re doing such a good job providing them with the goods and services they demand.  What do you mean the customer base is decreasing?  We need more customers!  Let’s grab them from our competition.
• Traffic to the website is spiking.  We’re brilliant!  Oh.  What do you mean that 500,000 catalogs landed in mailboxes this week?  That’s print.  Print is dead.  It’s all about our website.  Look at that increase in conversions!  Look at the average order value!
• Look at the revenue we’re driving with that discount coupon!  We’re up 30% in revenue!  We need to keep up price promotions on the entire site!  Our customer base is eating this up!  What do you mean we’ve lost 600bps in margin?  We’ll make it up in margin dollars!  Why are we out of our bestselling products?
•  Revenue in category A increased from 10% of the total to 20% of the total for a 100% increase in sales. Genius!   Really?  Give me the $.  Sales and margin.  If total revenue increased from $100,000 to $105,000, then category A increased from $10,000 to $21,000 which is 110% increase in sales in the category, driving an overall 5% increase in revenue.  Unfortunately, category B and C, which have higher margins than category A dropped in penetration due to downtrending product, or delivery issues, or price increases due to tariff changes, etc.  So overall gross margin came in at $32,000 vs. $38,000 LY, leaving less to cover overhead.  Where do we cut?

Basic arithmetic and an good understanding of the foundations of a business are all you need to dissect a dashboard.  How many times do you hear the why questions being asked?  Sure, traffic and page view increases to a site make everyone feel good.  More feet through the door are exciting.  But if they don’t funnel through with increases in conversions and order values, the story can be misleading and may not end well.  Give me facts tied to actual products and categories any time.  The right mix combined with more customers will have a happy ending.