{PODCAST} In-Ear Insights: Early Warning Systems for Marketing Analytics

In this week’s In-Ear Insights, the Trust Insights podcast, Katie and Chris discuss early warning systems. When looking at your analytics, what metrics constitute leading, realtime, or lagging indicators, and how should you think about using them to determine when trouble is brewing? Learn about what exponential math is, how it factors into trend detection, and how SEO and social listening help build your indicators.

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Machine-Generated Transcript

What follows is an AI-generated transcript. The transcript may contain errors and is not a substitute for listening to the episode.

Christopher Penn
This is In-Ear Insights, the Trust Insights podcast. In this week’s In-Ear Insights, we are talking about early warning systems. One of the questions that came to us recently from one of our customers was, how do we set up early warning systems so that we’re not taken unawares by some kind of crisis? Obviously, the talk of the entire planet is the current situation, where the indicators that we could have seen coming and how do you deal with just general business disruptions? If there’s some kind of impending challenge? How do we get in front of it? So Katie, when you think about early warning systems, what does that bring to mind for you?

Katie Robbert
If you’re talking about it in the context of business, you know, I think about things like my revenue, I think about things like my website visits, I think about things like how strong is my sales pipeline, those for me as a business owner are three key performance indicators that tell me the health of the business at any given time. And so when I think early warning indicators as a business, that’s what I think of I think as a broader term, people often assume that it means like, changes in the weather pattern or natural disasters. And so there’s obviously two different ways to approach it. But if we’re thinking about it in the terms of business, I think about it for the health of the business. And is there something happening that tells me that, you know, cuz I’m going to start losing customers, or I’m going to stop bringing in more revenue. So those are the two things that I think about, what about you, Chris?

Christopher Penn
I would disagree with you on that because I feel like revenue is a lagging indicator of what’s going on. By the time somebody cuts their budget, or says, you know, I’m hanging up the phone, whatever cause that I feel like would have happened a while ago. So real, real world example the the current crisis, we I’ve seen indicators of this being a problem since early January, but it took three months for it to trickle down and now we’re seeing the impact. And only really in the last week or two have we had customer conversations with customers about you know, having to scale back or or put certain programs on hold. So, from that perspective, there was a lot that happened in the three months leading up to this until these but that the revenue trigger would not have been tripped like as a tripwire until last week.

Katie Robbert
So I disagree with your disagreement. Um, you know, I, you know, I I agree with your statement that revenue, it shouldn’t be that early indicator, it’s the output, but unless you know what the output is, you don’t know if your early warning indicators are the right ones. And so for me, I want to know, is my revenue going to be affected and so if I start to see that my revenue is affected Know that I’ve missed some kind of an early warning indicator if it’s catching me off guard. And so it’s also means that I need to have good solid historical and clean the collected revenue information in order to know Okay, this is normal right now we typically dip in q1, but we come back up in q2. And if we don’t start coming back up in q2, then I need to start digging deeper in other places. So that was I guess, where I was coming from when I was saying that revenue for me is probably the wrong terminology. It’s, it’s the output. It’s not the early indicator, right?

Christopher Penn
That makes sense because that goes back to a lot of what we talked about with KPI mapping you This is the KPI that really matters.

Katie Robbert
Right, exactly. So how does you know obviously there’s a lot of different things going on in the world right now. A lot of things that are you know, businesses, small businesses, particular don’t have a lot of control over but you know, in general, everyday business world, people should be setting up these early warning indicators not as a an alarm system, but more of an alert system to say, hey, it looks like things are changing, whether it means your customer base is changing, the reputation is changing. What they want is like whatever the thing is, how does someone start to think about putting together an early warning indicator alert system for themselves without it being too complicated? You know,

Christopher Penn
I come back to two major branches. One is social conversation, which is more qualitative, just understanding what your customer base is saying. And that’s something as simple as if you don’t already have a list on you know, Facebook or Twitter or Instagram or whatever, of your top customers and seeing what it is that they’re talking about. You know, when they’re not talking to you. That would be a good easy first step. If you start slowly start seeing people say talking about Oh, you’re noticing a slowdown. Let’s see if there’s anybody else seeing this kind of thing. That’s Goody That to me is a really good very early indicator that the conversation has changed. That’s where a lot of you know the the pandemic conversations first started, they first started on Twitter. And you know, there were a number of people that raised the flag very early on to say this looks like it could be a thing. This is behaving typically. The second and I think the one that is most relevant to marketers in particular is is search search trends. There’s two kinds, right, there’s branded and unbranded the branded search. I think it’s the most relevant to your business. Are people searching for your business by name? your products or services, your key executives less or more? in to your point earlier, you do need the historical data to understand is seasonal, or is this a typical and then there’s the unbranded search for your category if people are suddenly stopped searching for, you know, marketing analytics, Hmm, okay, why why does that drop off of a cliff? Oh, it’s because the entire planet shut down. But being able to see that early on, you might say, hey, there’s we’re seeing softening of demand. A lot of what a lot of what’s really challenging for people mathematically right now is that we’re dealing with exponential math. And exponential math is super hard for people to wrap their brains around because we don’t see it. In our daily lives. We are linear thinkers. We can see things going on in line, but exponential change in anything is so like, whoa. So the whole world change now what’s been happening, but that doubling rate is is very difficult to see. There’s an example of a football stadium and you’re pouring drops of water into that stadium and one drop, I think it’s like one drop per second. And you start 1pm. And the question is how long until the football stadium completely fills with water and the example goes up by 130. There’s a small puddle in the middle of centerfield by 145. The water is now about two inches deep, and then by 150, the same is half full Like, what? What does happen? So with a lot of these search trends, you’re going to see minuscule changes at first and then you’re going to see things fall off a cliff. So being able to interpret exponential math, I think for a lot of people requires machines to help them.

Katie Robbert
So I want to take a step back for a second, because there’s two things that you said that I have questions on. So the first one was something because now I’m sort of wrapped up in the term exponential math. Man, I just lost it. So let me get to the second question instead. Oh, back to social listening. So this is what happens to my brain on a Monday morning, that’s fine. Um, so back to the social listening. So you said keeping an eye on your top customers. So my first question is, what kinds of terms what kinds of things or keywords should you be looking for as a marketer? So obviously, you mentioned things like slowdown, you know, are there other terms that mark Like, aha, it looks like this could be something. And then my other question, you know, on the second part, the SEO side, you know, where does one discerned that there’s either something big happening, that’s going to affect all of us versus there’s a new player in town who’s just taking all my traffic.

Christopher Penn
So on the first on social listing that is purely exploratory, there is no keyword list, you have to do the work of, you know, following up and keeping an eye on the people that matter to you within your customer base. And that’s where, you know, your typical account executive or account manager would actually be best spending their time, less on, you know, cranking out dumb PowerPoints, and more on Hey, I just noticed my, my customer here to start sharing a whole bunch of links about this topic. I wonder why what’s going on, maybe I should pick up the phone and say, Hey, you need any help with this kind of thing. Just something as simple as that. You know, one of our customers was not paying attention to the whole pandemic until they were and then they’re like, this is a big deal. Yeah, we know we’ve we’ve said this. Here’s some more things that are helpful to get you up to speed quickly. On the second topic on search. It depends. So this is where having a lot of different search data and a lot of different macro data really helps. So one of my favorite tools we share this in our our slack community analytics for marketers, which if you’re not a member of Govert to Trust insights.ai slash analytics for marketers, is Fred, the Federal Reserve database from the St. Louis Federal Reserve Board, paid for by US taxpayers. It’s free data from our 700,000 different economic series everything from real estate sales prices to the price of crude oil to what a cup of coffee costs. And when you pull together, you know, 50 or 60 different economic indicators, you can very broadly see Oh, something’s up right you can tell that you can see that early on. So, in the in the current situation, you start to see weakness in some financial indicators as early as late February, you’re like, hmm, something’s going on there. And then as time went on, more and more indicators went off the rails, pulling that data is free, analyzing that data is free. So that gives you a sense of the macro perspective. And if there’s no change in the macro for the indicators in your industry, then you start to look at Okay, maybe there is a new competitor who’s eating our lunch because the industry as a whole is not shifting. Whereas, you know, in our current situation, everything is shifting. So there’s, there’s no way to not see the impacts of macro level events.

Katie Robbert
So for those of us, I’m pointing at myself, who wrote I know, I would like to say that the way that I look is because we’re all working from home but this is literally the every day you know, what you see is what you get. So for those of us who aren’t as savvy with pulling external data sets, pulling them into some sort of a system processing them, analyzing them and then interpreting them. Are there news lists or newsletters or websites or something that has already done the work to analyze some of this data already, that we could be looking at on a weekly basis, a monthly basis to see, Has anything changed? You know, and what of our own data should we be looking at, in addition to social listening, and SEO, because obviously, we’re collecting a lot for ourselves, we should be collecting all of our website data, all of our customer data, all of our financial data, you know, other kinds of data usage data, what do we have, that we can look at that would go, aha, something’s wrong.

Christopher Penn
So that’s two different things. Let’s tackle the second one on our own data. That’s where something like a Google Data Studio dashboards really going to come in handy where you can put together metrics at each level of your operations. To say like, you know, audience, interested prospects marketing, qualified lead sales qualified leads customers revenue. And again, looking at us if it’s just a series of six line charts and all six kind of turned downward all at once, like, Huh, something like that. That’s I can’t emphasize the importance of a good dashboard enough. On the first part on what you should be tuning into that is dependent on your industry and what you have access to and what’s available. Like there’s probably two there’s there’s two different newsletters that I read daily that are sent out that I think are worth paying attention for me because they’re of interest to me. One is called the daily brew. And the second is defense link. And those two give two very different perspectives on the world daily brew is kind of a business roundup with, you know, some general financial indicators and some news and defense link is collected open, open, non non confidential information about the United States military and what it’s doing around the world. Where troops go, that’s where interests go, right? So being able to see like, Hey, we’re moving this this is happening here is a really useful set of macro indicators. So I think for your industry, there is some data that should be available. And if there isn’t, that is a golden opportunity for your company to produce that for your industry and you become the voice of record for your industry. So like, here’s what we’re seeing in the data that makes for a super compelling newsletter. One of the things that we’re very proud of I’m personally very proud of about the Trust Insights newsletter is that every week you get fresh data that we’ve extracted because nobody else is publishing it about a certain data series, social media, search content, etc. And it’s for our industry for our and for our customers. I typically have a customer in mind when I’m putting together the data each week and it’s kind of like writing to that customer. It’s just everybody gets it. But that’s that’s something that I think is should be Top of listing, it’s a great way for you to keep up on what’s happening in your industry. But it’s also a great way for you to serve your customers in ways that make you difficult to replace.

Katie Robbert
So, you know, one of the questions that we’ve asked our network, just because we were curious about it was what makes you forward or share an email newsletter. And I think that you really just, you know, summarize that in a very nice way where it’s information that you can’t get anywhere else. And so that’s one of the things that we try to do. But if you think about your client, base, your customers whether you’re b2b or b2c, it really shouldn’t matter. You should be sharing with them information that you think they will also find valuable. And they may then in turn, share information with you like, so this is what I’m also seeing. And so it’s a really good way to start collecting on the ground information of what’s happening, how people are feeling. It’s the real live version of social listening

Christopher Penn
Yeah, exactly. You know, that’s exactly it. And it’s not just social listening, it’s data listening. I think there’s a good distinction between too because social listening, it tends to be qualitative in nature, you cannot rely on the statistical validity of, you know, a group of loud baths or, you know, people just talking to the air talking to themselves on social media, we know a bunch of folks like that. But it does give you a bit of the sense of who, what the conversation could be about, but the data listing part of having something that extracts and presents, you know, financial data, key industry metrics, etc, is so essential, and being able to digest that down quickly into hey, here’s what we’re seeing. We’re seeing unusual activity in this measure, or this measure, like one of the ones I love to pay attention to, even though it’s really obscure is the Baltic Dry index. This is the price of a cargo container on international ships is a great leading indicator of commerce because a company There’s not buy space on a, on a cargo ship unless they actually need it. It’s not like speculating on a stock, you have to use that space or you’re just throwing your money away. So if retailers are not buying cargo space, that’s a good indicator that they’re, they are struggling to meet, you know, to find demand for their products, which tells you about the consumer market. And so it’s a good leading indicator of consumer purchasing power. That if I was if we had a retail client, like Target or whatever, we’re like, Hey, this is a thing. Are you you know, are you seeing this too? Is this going to affect you so data listening is a I think a great companion to social listening?

Katie Robbert
Well, and I would also add the caveat with social listening. One of the things that we can do as humans that machines are not as good at yet is understanding sarcasm, nuance, those kinds of things. And so you as the human need to pull out all of those different emotions and meanings and sub contacts from From the social listening data now, you know, again thinking back to, you know, small businesses, people who might not have a lot of resources. If you’re using a service, a free service like Google Analytics, one of the things that Google Analytics does within their AI of their system is it starts to highlight for you things that it is seeing, and it sort of is off to the right hand side. It’s called insights. And so every day, you know, or actually, in real time, these are updating as you’re collecting more data, and you can go check them out. And it will say, I found some anomalies in your data, or here’s what I’m seeing in your data. And the more you interact with it, the smarter it gets about the types of things that you as, you know, the data collection person, the person who cares about the information, that’s what you want to see. And so, if you are, you know, low on resources low on time, but you can go check out your Google Analytics account, I would highly recommend checking out the insights Because it will say, I see an anomaly in your data and you can start to correct say this is not an anomaly it seasonal or just help the machine understand what it’s seeing. Or maybe it’s going to bring up things that you might not be aware of. So for us recently, the insights were telling me I’m seeing a drop in conversions to your you know, newsletter signups or your contact forms. And then when I take a step back and look around at what’s going on, well, that makes sense because everybody’s trying to figure out what’s going on for themselves. They’re not thinking about what newsletter should I be signing up for? Who should I be buying from so it it was something that I appreciated being alerted, but also not something I wasn’t already aware of. But there have been times when I’ve been alerted to Hey, this looks weird. And so it gives me sort of that early indicator warning to go dig into something now. We’re early, how early is early and how like, at what point is it like The ship has sailed.

Christopher Penn
That’s, oh, that’s a really good question. Good question. It is a big question. And again, it goes back to that exponential math. So dust off your math hats. In order to understand what’s going on and be able to see it particularly early on is something you have to be able to do first and second order derivatives on your math on their data series. So first order derivative is how fast is something changed from one day to the next. So if it’s one to four, you should be seeing you know, the, you know, the essentially doubling is is one day behind the actual number because you’re doubling. That’s the first order derivative of velocity of your whatever metric, your website traffic, etc. Then the second order derivative is the derivative of that derivative. How fast is the speed changing? Or how fast are you accelerating or decelerating? Because if you’re just driving your car 45 miles an hour and you’re staying at 45, your rate of change and speed to zero, right, you’re going 45 you’re staying 45 he hit the gas suddenly and you go for 45 55 sell your rate of change is 10. For that time period, being able to see acceleration or deceleration in a trend is is your alarm bell, that’s the one that says, hey, this thing’s picking up and it’s continuing to pick up. It’s someone’s got their foot on the gas or the car is going faster Why? or someone’s got their foot on the brake and the car slowing down faster Why? That’s the early warning indicator that you can see within that exponential math. So you can’t see the number. You can’t even see the change in the number you have to see it the change of the change. And the good news is a lot of statistical software can do that for you so that you don’t have to you can do it manually, you could just do it in an Excel. I don’t recommend it because it’s laborious, it’s better to have software do it for you. In terms of understanding how bad is the the change or how, you know, is this an anomaly? Should we pay attention to it? It depends on the metric you’re looking at and how critical that growth rate is. If it is if your sales cycle is 90 days, but you’re you know that first touch to First conversion is seven days, then you want to have something that looks at, you know, a rolling seven day average, not the 90 day average, because the seven day average is going to tell you, hey, this number is about to go off the rails good or bad. So it really depends on your data. That said, there are a huge, huge number of proven time tested mathematical techniques for looking any Sousa date. And I would encourage anyone listening to experiment with that in Excel or in tableau, or Watson Studio, or whatever the software is of your choice. Experiment with all these financial techniques, because they’re really good at detecting change, and then telling you, hey, something’s going on here.

Katie Robbert
So I think the moral of the story is if you’re like me, and you are doing your best to keep up with what Chris just said, but yet your brain keeps playing the Macarena over again, because math is not your best skill. You’re so much better at other things and math is just not it. There are people like Chris in the world who can help you and this is not meant to be a true plug for trust. insights, but I would be remiss, I would be remiss in not mentioning it. Because, you know, this is one of the reasons why Chris and I work so well together, we have different strengths. And unfortunately, despite my best effort, math is just not one of my core strengths. I understand to an extent what he’s saying. But then I really rely on him to help me put the logical pieces together in terms of the functions. And so if that’s something that you’re looking to have help with, and it doesn’t need to be a complicated early warning indicator system, it may just be some guidance on, here’s what you already have, in your own data to look at. Here’s how you can get set up really simply. Or even Chris, you gave a really great example of setting up a Google Data Studio dashboard that really walks through those steps in your own personal sales funnel. So you can see, hey, something’s suddenly broken or not working or something’s accelerating over here and decelerating over here. You know, we You’re very well equipped to help you get those kinds of things put together. And then it’s just a system that you have and that you can just pay attention to. But I think that everything you’re saying, Chris makes a lot of sense. Because if we’re only ever reacting to what’s happening, we’re never going to get ahead of it. We need to have some proactive measures in place. And what that looks like is going to be different for everybody. But if you have nothing in your business, that helps you be proactive, you’re always going to be falling behind.

Christopher Penn
Yeah. And I would say, just to summarize, if you have nothing else, look at branded search, and then look at your website traffic, those are two really good, pretty common, generally effective indicators that tell you something’s up. There’s a bunch more and we could get into the math in another episode, but those two are good starting points. If you’ve got nothing else, start with those.

Katie Robbert
I agree.

Christopher Penn
If you’d like more information about any of this stuff, hop on over to the trust. insights website at TrustInsights.ai dot AI sign up for the newsletter while you were there to get some of that fresh data every week and of course, join the slack community we mentioned earlier. Thanks for listening and we’ll talk to you next time one helps solving your company’s data analytics and digital marketing problems. This is Trust insights.ai today and let us know how we can help you