I'm reading this excellent book called Competing on Analytics by Davenport. If you're interested how to improve your business based on data and analytics, this is a must read. My colleague EJ took me to "The Analytics Revolution Conference" organized by SD Forum. Visit the website to see how many great speaker and companies were there, including Microsoft, eBay, LinkedIn, Twitter, Facebook, Zynga, IBM, SAP, HP and Yahoo!. They all talked about how they used Analytics to improve their businesses. It ranged from simple but effect A/B testing or Multivariate Testing to improve online sales on the Microsoft websites to a supply chain management problem HP is addressing with analytics to buy an optimal stock of harddisk for their PCs.

Two important messages mentioned by all speakers: what do you want to measure? and why? This all relates to the goal of your business or website of course. It is what Avinash Kausik calls the Three Layers of So What test. One case to demonstrate this was presented by Ronny Kohavi. On the Microsoft site they tested two versions of a page trying to sell the MSOffice suite. After some measurement, one version clearly was more 'successful' since it had 60% more visitors clicking on the advertisement of the product. Wow! A 60% improved conversion rate. That's fantastic..!

At a closer look, however, they found that the ‘less successful’ page was far more profitable because most of those people actually bought the software (and the ‘successful’ page stopped at the checkout). Fact was that the ‘less successful’ page showed the price of the product, therefore customers who clicked on the ad were more likely to buy the software. Bottom line, the 'less successful' version in terms of click-through was the most profitable version.

My question to you, are you measuring the right things?

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Jurriaan Souer
International business development - GX Software