The Dow Jones, Moneyball and Marketing

Do you follow the Down Jones average?  Many people do, believing that it is a good barometer of economic health.  The Dow Jones average is actually just a snap shot of 30 leading companies. Over time, it’s a reasonable approximation of the health of those companies – but nothing more, as explained recently by NPR’s Marketplace Report.   The day-to-day readings are meaningless; the hour-to -hour readings even more irrelevant.

But this is not an uncommon problem. Many of us, erroneously belief that certain metrics are ideal indicators of success.  Clearly, grades aren’t always s a predictor of success. Who hasn’t heard of high school drop-outs Peter Jennings, Mark Walhberg and George Bernard Shaw?

Or how about the movie Moneyball? The entire premise is that that Oakland A’s were using batting averages and other not-so-important metrics to determine a player’s value.  One of my favorite scenes is (spoiler alert) when Brad Pitt, as Billy Beane, asks his team of scouts, “What’s the problem?” Why are they in last place?  His experienced, gut-driven team replies, “We have to replace Giambi.”  Beane disagrees and says, “No that’s not it. What’s the problem?” he asks again.  It’s only after he introduces new metrics, like how often a player actually gets on base, that he is able to put together a truly winning team.

As a marketing executive, I always believed that the number of leads was the ideal leading indicator of closed business.  Last year we invested in tools to identify and count leads; we hit the mark every quarter.  But those leads didn’t always turn into sales.  I learned that the number of leads is not a valid predictor of success. There are too many other variables that play a role in the actual quality of the lead:

  • Lead job title
  • Lead source
  • Lead urgency
  • Lead score (gathered from electronic interactions)

So, like Billy Bean, we are revising our metrics, tracking these other variables and expanding our horizons to other, less obvious ones. And when they make a movie about us, Angelina can play me.

Are you managing your business with the right metrics?

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