Thursday, June 08, 2006

Digital Dashboards

Digital Dashboards

Ouch! Here's a terribly glib article on executive dashboards for marketing and CRM. A couple of major problems: the article claims that executives should specify the information they need so that they are not overwhelmed with the "wrong" data; and that data should be continually reported so that marketing people can see how well they're performing.

These don't seem like problems to you?

Consider:

1. Executives at most companies don't know about customer value management, perceived value, measuring brand equity in the new digital network economy, and so on. These metrics are all precursors to sustainable revenues. Instead, most executives are interested mainly in revenues as the metric because they have stockholders and analysts to answer to. So, they'll look for revenue data and maybe profit or ROI. But most won't look for return on the customer relationship.

You can easily make your revenue goals in marketing by doing silly things like deep discounting. You can even make a lot of profit by selling a lot of cheap things at a high price in a one-off kind of way. But you cannot sustain either in a free market economy where customers talk. You are destroying brand equity and hacking up the net present value of future customer earnings. So, I ask you: Who should determine the information that executives get? The answer is NOT "executives" if they're obsessed with the quarterly report.

2. OK, let's talk about continuous reporting. Don't get obsessed with the short-term. Don't compensate performance on the short-term only -- or even primarily. Don't constantly rejigger things because you're nervous about results. For example, if you put out a promotion and it doesn't do well, how far do you look for the root cause? Do you only look to change the things you can immediately control without understanding first what might have caused poor campaign performance? You've got to think about the entire value chain for the customer to find out why you're underperforming. Maybe the campaign needs time (so don't fire the agency). Maybe the campaign landed on deaf ears (because the value prop was terrible, since you're out of touch with customers). Maybe your prospects had a better deal from your competition (what? you're not tracking competitive choices?).

Continuous reporting can be your enemy because it can make you a nervous wreck. Look for trends, look for creating consistent customer value, look for how your success or failure impacts your entire company.

Here's a story about how revenues and great quarterlies are terrible. In the late 1990s, Calvin Klein went ballistic when Warnaco, a licensee of his, struck a deal to sell his designer jeans -- at Costco.

Warnaco: Hey! Great revenues this week! Celebrate!

Not, said Klein. You're destroying my brand! I want the license back!

With these thoughts in mind, read that article to see if I'm right. Is it glib?

You tell me.

1 comment:

Paul Ward said...

Ah, commenting on my own blog entry! Well, it keeps the comments in a thread.

The current issue of CIO Decisions has a great special on digital dashboards. You'll need to subscribe to read the article, but if you're into the strategic side of IT, it's well worth it. Here's the link. Check it out!