> In your experience what are the characteristics of companies truly
> succeeding with analytics? Let's set aside published ROI case-studies
> and most of what we hear from our friends in the vendor community for
> the time being ... do you, or any reader, have a good handle on what a
> company needs to be "like" to really benefit from analytics
> investment?

I think it's the "culture" issue; as a company, you have to want to dig
into data and really understand your business. Guess this pre-supposes
that you (as a company) believe that understanding the guts of your
business through analytics will drive actions that increase profits. If
the company doesn't generally support this idea, there is no incentive for
anyone to pursue it and the company just happily skips down the road.

> In my recent report I postulate that staffing for analytics is
> important, a hypothesis well-supported by data, and make
> recommendations regarding staffing levels and support for analytics
> staff. Unfortunately I was unable to well-characterize companies most
> likely to succeed with analytics, mostly because the characterization
> proved very difficult to make.

Yes, and of course most people don't really relate to the "company" but
their own division or functional silo. So you might have manufacturing /
engineering groups who live and die through analytics but marketing is not
held to the same standards and thought processes. This is where the idea
of Six Sigma Marketing comes in, it's a "bridge" of sorts that tries to say
(perhaps to the CEO and CFO), "Hey folks, if the engineers can engage in
continuous improvement through ongoing analytics, so can the Customer
Service silo and the Marketing silo and perhaps others."

> So I'm interested in your thoughts on the subject -- based on
> companies you and others in the group have worked with, what is common
> to those best able to maximize return on investment in analytics?

At a higher conceptual level, it is companies that support a culture that
is not afraid of failure. Another way to say this is experimentation and
testing are encouraged throughout the company. "Evidence" of such a
company is when you see the various levels of employees working
cross-functional teams with a common problem-solving mission.

The most common place "analytics" lives is in Finance with "Business
Analysts", who are mostly tasked with analysis related to financial
controls and producing financial reports. If marketing or customer service
was willing to expose themselves to the rigor of these analysts, they would
undoubtedly be able to improve their business areas. But that takes
substantial guts and confidence in your abilities, and a "culture" that
supports this activity.

One tenet of this culture is the idea that it is OK to make mistakes, as
long as they are corrected and there is a process for continuous
improvement. You can't engage in this process without analytics, success
and failure need to be defined and measured. The easiest way to make the
culture happen is to team a department head with a Business Analyst
familiar with the area. Often, you find this finance person *already* has
insightful questions that could lead to improvement, but "never asked"
because "it's not my job". And often, to make this all work, you need IT
support of some kind.

So you get cross-functional problem-solving teams that as a core have
marketing (in the strategic sense, not PR or Creative), finance, and IT
represented, and the work is judged on hard analytics. Then you add other
disciplines as needed based on the particular problem you are trying to
solve. If the culture is flexible enough, this can turn into "Business
SWAT" where the best and brightest cross-functional teams roam through the
company as "consultants", tackling the hardest business problems, which
(surprise) are usually cross-functional in nature. And "blame" is never on
the agenda, it's about "how can we help you make it better?" You need a
culture that is clear about this idea in order for people to expose
themselves to the analytics-based scientific process.

Web analytics is a microcosm of this idea. You have marketing, finance
(ROI component), and technology (hopefully) all working together based on
the data. That's why I think there is a higher mission for web analytics;
it's a "prototype" that can teach companies a lot about how to manage a
data-driven business.

At the highest level of this culture, managers "demand" these SWAT teams
because the success rate and business impact is so high. As the various
departments or functional silos produce wins and losses, capital (budget)
flows to where the successes are and away from the failures. When managers
see this happening, they jump on board, because they want the budget
flowing their way. This creates a natural economic supply and demand
scheme with a reward system for participation built in.

What kind of companies do you see really engaging in this kind of culture
right now? Those that for legacy reasons have always had access to their
operational and customer data and have been using analytics for years.
Many companies have not and web analytics is the first taste they are
getting of the power and leverage in the scientific method. For these
companies, web analytics is a "duh" item - they get it right out of the
box, because it's more of the same to them.

The longer term question is, can we flip this idea over, can a successful
culture of cross-functional approach and continuous improvement used in web
analytics create a "duh" moment for other areas of the company? Will "best
practices" and success stories create an environment where people say to
the (web) analytics team, "Hey, can I get some of that over here?"

Methinks there is more going on with web analytics than meets the eye; it's
potentially a platform for the creation of a new business culture, a
culture based on the scientific method - Six Sigma Everything. Sure, it's
awkward and maybe the web is not meaningful enough yet to many companies.
But as we thrash all this out, there is something greater being learned
here.

Right now, most CRM projects can't show ROI because nobody knows what to do
with the data, how to turn it into action that improves the business.

Sound familiar?

What about it all you web analytics hot shots, wanna take a crack at CRM?

Do you really think it is conceptually different than what you do now?

Jim
jim@...
http://www.jimnovo.com