The New Funnel

  |  June 7, 2012   |  Comments

The more data you have, the more confident you become in your correlations and conclusions.

In the year 2000, Matt Cutler and I published a white paper called "E-Metrics: Business Metrics For The New Economy." In it, we proposed a down-to-earth visualization we called the "Customer Life Cycle Funnel":

customer-life-cycle-funnel

We simply turned a B2B sales pipeline on its side. Little did we know it would spawn billions of PowerPoint examples and generations of marketing analytics report formats:

analytics-reports

A dozen years later, it's time to re-imagine the work Matt and I did and bring it up to date. And so, I am pleased to bring you a new use for the funnel image. Same graphic - all you have to do is change the text for each layer and you too can track your success in moving from web analyst to digital analyst, from data jockey to information specialist, and from report writer to trusted advisor.

The Digital Analytics Funnel

data-metrics-funnel

Data

This is the flour, water, green vegetables, and protein of our analytical feast. It should be fresh, pure, abundant, and useful. Incomplete ingredients may bake up just like a pie, but it will all go horribly wrong when you try to ingest it.

The more data, the merrier. Yes, it may be complicated getting all the ingredients together, but the more data you have, the more confident you become in your correlations and conclusions.

Metrics

When you measure your data elements and compare and contrast the results, you end up with metrics. Visitors, page views, app downloads, survey completions, location check-ins, shopping cart value, and the like are all measures. Compare them over time, segment them, and create ratios between them and you get metrics. Roll up all of your metrics and you get key performance indicators (KPIs). What do you do with all of these metrics? Dashboards!

Reports

Just as an accountant starts with bookkeeping, the analyst starts in the world of data wrangling and report writing. Everybody wants to know the numbers and the report jockey is the one to crank them out. Initial interest is high all over the organization. But the same report, showing the same top 10 pages, processes, events, segments, etc., simply cannot hold one's attention. Until, that is, they are compared with metrics from elsewhere.

Benchmarks

Is our progress acceptable? Are we winning? Are we normal? Benchmarks are how we can compare and contrast to previous efforts, industry standards, competitors, or management expectations. As long as we're not falling behind, we're not too interested. It's when things get sticky that the numbers matter the most.

Alerts

At this level in the funnel, we cross the border between interesting and useful. All the reports and benchmarks in the world are useful if - and only if - they raise a flag. When the analytics system is set up properly, it watches your metrics and alerts you to anomalies. It lets you know if something is out of bounds, off the hook, or headed in an unexpected direction. This way, your internal clients can safely ignore reports until something goes bump in the night.

Automation

Multivariate testing is a boon but it's not enough. Marketing automation understands the business rules and layers testing, targeting, and tailoring on top. Dynamic content delivery and promotional offers can change per channel, per person, and through machine learning. Systems can reaction robotically to content viewed and social sentiment expressed. This seems the stuff of science fiction but is working in many familiar websites. You may not have noticed that the headlines are more interesting, the ads more like content, and the specials more tempting, but your behavior is driving that content.

At its worst, these systems send out emails that begin, "Dear." At best, they get the right message to the right person at the right time. At very best, they become self-aware, perceive business rules as a form of attack, and come to the conclusion that mankind is the enemy.

Insights

The very top of the food chain, the very bottom of the funnel, the very highlighted long-term goal of any data bit - is to be part of a process that results in a human arriving at an insight.

The magic and creativity of the human brain comes to the fore, assimilating all of the reports, metrics, benchmarks, and the answer to 42 Across in the Sunday New York Times crossword puzzle causing the owner of said brain to stand up at the breakfast table and exclaim, "Eureka!"

And then, if the powers that be who have hired said genius are truly lucky, that brain immediately sits the body down and says, "Gee, that's funny. I wonder..." and the race to glean meaning out of big data marches on.

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ABOUT THE AUTHOR

Jim Sterne

Jim Sterne is an international consultant focused on measuring the value of the online marketing for creating and strengthening customer relationships. Sterne has written eight books on using the Internet for marketing, produces the eMetrics Marketing Optimization Summit and is co-founder and current chairman of the Digital Analytics Association.

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