Are You Collecting the Right Data? Lessons from American Apparel 

How many Facebook likes and Instagram followers does your company have? How about memberships, or downloads? As these numbers grow from hundreds to thousands to millions, you may assume that your business is riding high. Apparently your customers love you, and there are many more to come.But according to Thoryn Stephens, the chief digital officer at American Apparel, measurements like these can constitute what he calls “fake or false metrics.” They may be distracting you from underlying problems, or untapped potential. Instead, businesses need to focus on “the true metrics that drive value,” he said at the recent Wharton Customer Analytics Initiative Conference.Looking Under the HoodStephens gave an example of a business — a startup he had worked at — that had neglected to look beyond so-called false metrics. “This company was renowned as the darling of Silicon Beach,” he noted. “This was a few years ago; the tech scene was just starting to emerge in Los Angeles.” He said this company had “all of the flashy metrics” that look good on paper: over 2 million Facebook followers, 10 million members and millions of customers.But if one looked “under the hood,” said Stephens, the recency and frequency of these customers was very low. In customer analytics, recency means how recently a customer purchased something, and frequency is how often a customer buys. Actual buyers, said Stephens, turned out to be a “sliver of a percent” of the business’s presumed customers.

Source: Are You Collecting the Right Data? Lessons from American Apparel – Knowledge@Wharton

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