While the title may sound a bit intimidating, or more like a physics lesson, it isn’t. This is actually something that a lot of us do, or are asked to follow every day.
It’s a straightforward law named for economist Charles Goodhart: When a measure becomes a target, it ceases to be a good measure.
What does that mean in day-to-day terms? A lot.
Goodhart’s Law in Action
For example, when the internet was young(er), many people in marketing positions decided that unique visits was the best measure of a site’s effectiveness. So, they began building sites that encouraged traffic - the more the better.
I’m guessing the logic was, the more people you have walk through your ‘store’ the better chance you could sell something. And much of the marketing team’s energy was put into boosting those visits.
Eventually, for businesses like financial institutions, this target was used to the exclusion of other methodologies. Even advertisers joined the bandwagon, assuming the more people that looked at an ad, the better.
Then, it was discovered that volume wasn’t the magic bullet like it is for many brick and mortar establishments. The amount of time a potential customer spent on the site was much more important. It also indicated that customers were looking deeper into
the site, which meant the entire site needed to be sticky.
Some of this transition happened because marketing tools and methodologies developed along with the online marketplace. And that is precisely the point. Adapting to new trends is important, and that can be tricky for institutions that have always seen consistency
and gradualism as the prudent strategy.
There is a balance to be struck, but sticking to those tried and true tools in an age of rapid change gets you down the Goodhart rabbit hole.
Getting More From Your Data
The fact is, you really need to better use the tons of data that you already have.
“We see this more and more,” says Aaron Junod, Vice-President of Product Development at Geezeo. “We’ll talk to financial institutions that want a unique and robust tool or platform for their customers. They’ll hire an application development firm to build
a tool, but neither can manage to tease out of the data information that helps build value into the app for the customer.”
This is what enhance data is all about - getting your data to take you where you need to go.
“There are always going to be metrics to judge the success of your online marketing efforts,” observes Junod. “But the point is, don’t get blinkered by your metrics.”
Today, there is plenty of data to look at - that hasn’t been a problem in the financial industry for a while.
But the challenge is how to interpret that data so you can make the best use of it. Enhancing your data, gives you a granular understanding of your customers (and potential customers). In doing so, you can then target specific offers to them, instead of
shotgunning offers to your entire base.
Instead, you can use your data to learn about your customers, and with that information apply techniques like trigger marketing and adoption marketing to your arsenal. And the best thing is, you already have the tool box at your disposal.