If analytics is the answer then you’re asking the wrong question

Hugh Reynolds is the chief executive of Swrve.

Ask the chief executive of every Fortune 500 business in the country what the single most important thing to a successful business is and the answer likely wouldn’t involve the word “analytics.”

Many would reply with thoughts about being responsive to user needs, focusing on product design, or operating bulletproof delivery. Other CEOs might say the key for business is smart and targeted marketing or innovative sales initiatives.

All of those answers have some things in common. They involve action, meaning they are about implementing something to deliver a better user experience or changing consumer behavior. But another aspect all of these answers share is, in fact, analytics. Analytics is always in the background and is a core component of any sound business practice.

Despite its prominence, what app and game executives need to be wary of is thinking that analytics on its own will drive success. Large amounts of analyzed data will simply gather dust unless you have a crack team of analysts who can extract key insights that will spur engineering, marketing, or sales to take action. This is why stand-alone analytics packages should be greeted with healthy skepticism. Many of these solutions are good at compiling large and varied amounts of data, but they don’t always lead to actionable decisions unless you have the right team in place.

So what’s the alternative? Think about instances where analytics really makes a difference. For example, when it’s embedded as a support tool for products or services that drive change. It should be a part of something that drives the core key performance indicators (KPI) of the business. Consider Google AdWords, which is fundamentally an “analytics” tool, which is never called one by name. It’s a well-designed product that has a specific job to do that is matched with a specific need. Analytics is simply the engine.

Why are we having an analytics discussion when our world is mobile apps and games? For one, management in this industry has invested a lot of time and resources into analytics which helps to track user behavior or other similar actions. Unfortunately, it’s easy to point out what is wrong with data analysis in this context, namely that it doesn’t impact the main things developers care about, such as retention, conversion, and revenue. This doesn’t mean app and game developers don’t need visibility into their business. We need to measure performance and have some sense of the broader industry, but the trouble comes when the focus is on “actionable insights” or “turning analytics into action.” The proper way to look at it should be “what insights do I need to properly support activities that will drive retention and conversion”, not “what should I do with all this data.”

This is much more than semantics. You can of course turn analytics into action, but it’s simply hard to make that happen in a meaningful way. It’s even harder to know for sure if the analytics-driven changes to an app or game made a tangible difference in the bottom line metrics. The key is to start with what you want to achieve. Focus on the goal that will help you to convert prospects, retain and engage users, and build a sustainable revenue stream. Your goal isn’t going to be to “possess a lot of interesting data”, it should be results-focused. This showcases the limits of analytics, and underscores its role as a component in reaching goals, not the solution in itself.

Driving the primary KPIs for apps and games comes through optimizing and testing the user experience, targeted marketing campaigns within the app or game, and anything else that helps convert non-paying users into actual customers. Analytics provides context into these activities and provides the data to benchmark success, but developers first need a platform in place to generate those successes and not rely on analytics alone.

via VentureBeat http://venturebeat.com/2013/08/31/analytics-results/

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