Wednesday, April 16, 2008

Diagnostic and Success Metrics

It took me a while to figure out what is the difference in these two metrics and one day I was explained in a very nice way, which was embedded in my mind.

Success Metric - A metric which the CEO or CMO would care about. Example: Total new clients or revenue
Diagnostic Metrics - A metric which is used to explain or diagnose the success metric if it over achieved or under achieved. Example: Click-through rate, Interaction rate, Landing page visits

I feel it is very important to put them in the measurement plan and also realize if it is feasible to calculate them. The reason I talk about feasibility is that many time due to technological limitations, it is not possible to get all the data required to calculate the metrics.

For example our friends at Google do not accept third party vendors (example: DART) to serve display ads (banner) and thus it is hard to get the number of impressions and clicks or any other post-impression, post-click activity for the banners served through the Google ad network. Yes, I do know that Google just bought DART - and trust me until this day, they do not accept third party tags.

I have been in various situation where earlier it seems feasible to get the data but when the campaign really launches, it becomes hard or impossible to get the data. OR sometimes the correct tags are not put in place which enable to get the data in the correct form.


Tim Wilson said...

I like the "success metrics" vs. "diagnostic metrics" distinction. Those are new terms to me, and, personally, I like to use the term "metrics" only in the success metrics realm -- they're a way to determine/monitory whether you have achieved your objective or not. You can't (shouldn't) have a metric (success metric) without having a target for it. What you refer to as diagnostic metrics are what I would put in the realm of "follow-up analysis." All too often, I see people wanting to measure everything and *not* make the distinction between the two areas you highlight. The reality is that they NEED to measure ALL success metrics and compare them to their goals. But, if they meet or exceed their goals, there is minimal value in drilling down to the diagnostic metrics level (the exception being if there is a hypothesis that the target can be dramatically altered and still be achieved, in which the diagnostic metrics may come in useful for testing that hypothesis).

Online Marketing Analyst said...

Thanks for your comment, however when you say - "if they meet or exceed their goals, there is minimal value in drilling down to the diagnostic metrics level", I disagree as the diagnostic metrics help you understand at each level of consumer flow where did you exceed the goal and then help explain it. I have worked with clients which required the explaination that why are we exceeding the goals. I think trying to explain each metrics helps you build a complete story.

One example is that, if there is an increase in conversion rate -this indicated probably higher seasonality or was there a new product launch or increased brand awareness.