If analytics is the answer, you're asking the wrong question

By Hugh Reynolds , written on October 29, 2013

From The News Desk

What makes a business successful? Put that question to every Fortune 500 CEO  in the country, and I can almost guarantee you won’t hear “analytics.”

Some CEOs will talk about putting the customer first. Some will stress the importance of awesome product design or service delivery. Others will say that having a great team trumps anything else. No one will tell you that analytics makes a business successful.

That is because success in any businesses, including mobile app and game development, comes from taking action, not gazing at numbers. Successful companies act with the intention of delivering a better experience or changing consumer behavior in a way that achieves business goals.

Analytics is somewhere in the background. To put analytics before actions is put the cart before the horse. Data alone does not solve any problem. Like a map, analytics can tell us where to sail -- it does not, however, rig the sails, turn the wheel and power you across the ocean. And to have a map in the first place, you first have to go explore the uncharted waters.

That’s why I am deeply skeptical of standalone analytics packages. Too often they gather huge amounts of data, which in turn gather dust. And in many cases they collect data that is disconnected from actual business goals.

Analytics only makes a difference when it  supports the activities that move the needle on the key performance indicators (KPIs) that businesses care about.

Consider Google AdWords: 95 percent of the product is ‘analytics,’ but no one refers to it by that name. Sure, analytics helps you analyze the keywords and geographic zones that are worth targeting, and those that are working. But it helps you aim: it doesn’t fire for you.

In the world of mobile apps and games, we have invested an awful lot in ‘analytics’ (possibly for the sheer delight of being able to track user behavior for those who come from a console world). However, in this context analytics doesn’t do anything. It has precisely zero impact on the things app developers should care about: retention, conversion and revenue.

Of course it’s nice to know what people do in your digital world. The problem arises when phrases like “actionable insight” and “turning analytics into action” are bandied about. We can also find ourselves collecting data that, whilst theoretically interesting, isn’t necessarily much use when it comes to informing our business decisions.

For example - and at the risk of courting controversy for the sake of it -- is DAU itself becoming something of a vanity metric? For many it’s the first number they look at each day - even though it doesn’t necessarily correlate with revenue and is a product of two other metrics (new users and retention) that you can actively change.

So to get around analytics paralysis, reframe your goals. The question is not “what can I do with all this insight,” but “what insight do I need in order to support the marketing activity that will drive my retention and conversion rates and grow my revenues?”

Instead of starting with analytics, we need to start with what we want to achieve. Nobody in the game industry wants to achieve ‘knowing a lot’ or ‘looking at a lot of data.’

If you want to drive retention, conversion and revenue, figure out how to do it and only then consider what role analytics will play in supporting that objective. Let me give you some specific examples of how our customers have done that:

  • In one example, a customer wished to increase retention through the use of loyalty bonuses. That’s the desire. Analytics was able to help identify where issues existed, and which types of user were churning. But leading from the active marketing angle, the business was able to construct loyalty campaigns in the form of bonuses, test those campaigns, deploy a winning variant and as a result see those retention rates increase 20 percent.
  • Similarly, we worked with a large game publisher on improving conversion rates. Analytics was able to identify which customers were unlikely to ever spend. The campaign driven approach was then able to promote highly discounted buy-ins that delivered revenues from a segment of users unlikely to monetize -- and as part of a package of measures see in-app revenues increase over 50 percent.
Seen in that light, analytics is merely one component in what I call ‘in-app marketing’: the process of driving KPIs through the continuous optimization (and testing) of user experience, and through targeted, focused marketing campaigns within the app that encourage conversion, retention, discovery or anything else that converts non-paying users into paying customers.

If you want to make apps mobile games that generate profit, stop looking at numbers and start making them. Successful businesses are ones where analytics is a means rather than an end.

[Image courtesy bluefountainmedia]