Data can cause pain and irreparable damage

Tracking is deadly. It skews our perception of reality, gives us a dangerously false sense of security, and pushes us into making poor decisions.

In our own company, we track the work that we do to near-psychotic levels of accuracy. Note that isn’t a boast thinly veiled to look like criticism (I’m thinking of “my greatest weakness is my attention to detail”). We track our time to a truly pathological level. I’ll explain why with an example.

Right now we’ve been investing a great deal of time and effort building our online course on Search Engine Optimisation.

I myself spend an average of five hours per lesson, which includes preparing the content, filming and editing.

There will be 12 lesson in the course, so we’re looking at around 65 hours just to create the content. Then we’ve also had to set up a payment and access system, video hosting, pricing, creating the launch content and the hundreds of other little things that have been involved in this particular adventure.

For the sake of this example, let’s say that the total number of hours spent on the project will be 100. And (hypothetically) let’s say that we sell access to the course for $500, and manage to sell to 50 people.

So we’d be looking at a revenue of $25,000 for 100 hours of work, working out at $250 per hour. Not bad.

So in this scenario, when I do my maths, I’m reasonably happy.

But what if I’d stripped out two of the lessons, saving ten hours, thereby generating the same revenue for $278 an hour?

And what if I then raised the price to $599, still managed to sell to 50 people, thereby generating a revenue of $29,950, working out at $332 an hour?

The time spent would have been identical, but with a healthier profit.

And let’s not stop there. What if the value of the videos was so incredibly high that 10 of the 50 original people told some of their friends about the course, half of whom then went ahead and purchased? What if the quality was so low that 10 of the original 50 asked for their money back?

The same principles can be applied to any sort of spend – whether time, effort, money or pretty much anything.

“Google AdWords doesn’t work for me” may be down to a poor landing page, the wrong product price, incorrect bid levels, poor value proposition, bad targeting or simply not knowing what on earth you’re doing with Google AdWords.

“Spending five hours creating a single one minute video blog post is crazy” depends on what you do with the video. If it’s little more than a rant about Google’s new look then you may be right, but if it impresses the person who then spends more than $2,000 a month on your service, then the time spent starts to look more effective.

Over the years I’ve spoken at many different conferences around the world, and we eventually drop the events that we get no value from. Value can mean new clients, new ideas, quality networking and more.

Yesterday I received an email from a person I met at a conference in 2004 who’s now ready to start working with our company. Ten years ago! If that person signs up for our services at $2,000 a month and even only remains with us for one year, that would be $24,000 from a person I would never have met without attending that event. If I’d decided the year before that this event wasn’t worthwhile, the meeting would never have happened.

So what should you do about it? Ignore data completely?

I’m not saying that tracking is a bad idea – far from it. But gathering data is only a small part of the process of analysing it. The information needs to be fully understand, flaws and weaknesses need to be identified and where possible quantified. Just having access to the data does not make a decision in any way more informed.

Care should be taken when using data to write in stone.