Digital analytics — measuring human behavior in the digital realm — can be used in many different ways to help business owners make better decisions. This includes real estate agents, brokers, franchises, and the army of vendors and consultants who serve them.
Increasingly, there are tools and charts and dashboards and infographics scattered throughout any business decision-making activity. Some of these tools and charts are useful. Some are decorative. Some are merely marketing pitches insidiously dressed up as meaningful data.
Today, the first encounter with analytics for many business owners is either the generic Google Analytics dashboard or some other vendor-produced tool. While I am a big fan of Google Analytics, I think that it is unfortunate that so many start this way.
You see, tool makers and analytics vendors have a specific approach to analytics that serves them well. It is their goal to make a tool that is the most useful for the most people. This means that they will focus their efforts on areas that the analytics vendor can measure well, that the analytics vendor assumes are relevant to the average business, and that most business owners have said they care about.
The problem is that your business might not be the average business. The metrics that can be easily gathered by one entity may not be one that is relevant to your business success. If you’re new to using analytics, the metrics you follow at first may not be the ones that are actually the most important.
My favorite example for this is site-wide bounce rate — the percentage of people who visit a site and see just one page before leaving. Bounce rate is often a number in a large typeface on the first screen people see when logging in to Google Analytics.
If you were to make a line graph of the financial well-being of your business and overlay another line graph of your bounce rate, would these two lines correlate or not? If the answer is no, then there’s no reason for bounce rate to be a large number on the first screen you see when logging into an analytics package.
Tool makers, media sites and vendors will often be the ones providing metrics. The metrics they choose may not align with your specific business goals. Sometimes innocently, sometimes ignorantly, sometimes insidiously.
This is why moderate and advanced usage of metrics leads to keeping your own dashboards, spreadsheets, charts, graphs and reporting methods. Instead of focusing on what Facebook or Google or your website vendor thinks you should be focused on, you can instead focus on what you know matters for your business.
Edward Tufte explains Conway’s Law as it relates to data visualization like this: "A common conceptual error in analytic design: information architectures mimic the hierarchical structure of large bureaucracies pitching information."
Some people may think that presentation of analytics data — the charts, the metrics and reports — isn’t that important. They may think that one sort of chart is just as good as another so long as the data is the same. People who think this way are usually quite bright and have a pretty sophisticated approach to analytics. But they’re wrong.
The presentation really does matter because it influences how you think and what possibilities open up. This is true in all data-driven work, whether it’s a chart and graph representing hundreds of data points or even more so a PowerPoint slide representing the analysis of thousands of data points.
Remember that in 2003, before the space shuttle Columbia exploded on re-entry, a roomful of NASA engineers and decision-makers — a group that is likely very sophisticated in their understanding of numbers and data — failed to grasp the consequence of attempting re-entry even though this information was displayed to them on a PowerPoint slide.
If your understanding of data exceeds that of a roomful of NASA employees, then you’re probably fine with using whatever out-of-the-box analytics reports and tools vendors provide for you. Otherwise, it is worthwhile to pursue the clearest presentation format most relevant to your business — as opposed to whatever is most relevant for Google, Facebook or another vendor.