Even though metrics may not seem the most exciting part of business, it’s measuring metrics that are the base for your business if you decide to construct an objective to work towards. Every single metric, marketing or otherwise, needs to be thoroughly analyzed in order of reliability, sensitivity, responsiveness, cost/benefit, comprehension, and balance.
Ensuring reliability
Reliability, in terms of research, ultimately means repeatability or consistency. Metrics are considered reliable if they would give you the same results over and over again, as long as the metrics you’re tracking are not changing.
For example, if you were to weigh yourself on scales that are always 10 pounds out, you would still have a reliable metric. Ultimately, every measurement in your business should be tested to determine if it’s measured in a reliable and secure way. So, you should be measuring with the same methods, processes, decisions, models, assumptions, etc. If the way you measure is not clearly outlined, it will have more room for error and is highly likely to become unreliable.
Valid results
Even though validity is usually thought to mean accurate or reasonable, this is not quite right. A measure is valid for a particular purpose and must be reliable to, in turn, be valid. Something could be valid for determining the market share but not the valuation of your business. Testing validity can be done in a number of ways.
The two tests that are commonly used would usually look at whether other content or subjects would agree on the use of the measure for its purpose, the other would look at whether the measure is predictive of the construct it’s intended to provide guidance about. This second type of test would be best for an indication of KPI as a prediction of other metrics like revenue etc.
Measuring the benefit of cost
This particular method focuses on how much time does it take to collect data and analyse the right information and what benefits could come from measuring this? This method should help your business to determine whether the benefits outweigh the costs given the time, focus, and analysis required to measure this.
As an example, in sales, numerous sales managers would ask their representatives to collect and input data that they don’t follow up on or use in their assessment of the business. The costs of the time it takes to collect and input this data to simply not use it for any benefit to the company are simply unnecessary.
The above information should help you better understand the pros and cons of each measurement that is employed to help track and monitor your business. Each of these measures needs to be evaluated correctly and ensure that nothing is unbalanced or risky in isolation. Measurement is down to how you operationalize it and how well you triangulate measures to accurately reflect a certain phenomenon, trend, or divergence.
Finally, as measuring is a tool that creates change, you should ensure that each measure is tested profusely so that it does not dilute focus or waste any time finding data for little use or unactionable issues.
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