Sabermetrics & Moneyball

While browsing the Sports section of the Toronto Star over breakfast one morning last week, I discovered a baseball statistic I had never heard of before.

Cathal Kelly’s article about the Toronto Blue Jays focused on General Manager Alex Anthopoulus’ fine work in transforming the Jays into a ballclub with great young players and a bright future. In Kelly’s analysis, he also pointed out that the Blue Jays “already have the best player in baseball”, José Bautista, who “leads all of baseball in wins above replacement rankings.”

I’ve followed baseball since I was a kid, but this was the first time I’d heard of “Wins Above Replacement”. Since José Bautista is considered one of the best players in baseball, I guessed it was some sort of composite score that rates a player’s overall performance. Still, I wondered “What the hell is Wins Above Replacement?”

In doing my research, I read up on Sabermetrics, an approach to statistical analysis in baseball that emerged in the 1990s. I read about Billy Beane, the General Manager of the Oakland A’s, who is a leading proponent of using statistical analysis to aid in making decisions about which players to draft, trade or acquire. Billy’s work in this area led to a book being written about him called ‘Moneyball”. I also learned that many teams now employ statistical analysts and Sabermetrics experts.

Sure enough, Wins Above Replacement turns out to be a Sabermetrics statistic that estimates how many more wins a player would give his team as compared to a replacement player of below average quality. While there appear to be a number of formulae used by different Sabermetrics proponents, the principles they follow align nicely with my scorecard approach to measuring marketing programs.

Any Wins Above Replacement formula takes into account a number of batting and fielding performance metrics, weights those metrics appropriately, and tallies everything up to provide one overall score to assess a player’s contribution to team wins. Similarly, a marketing scorecard uses a combination of company, brand, customer and program performance metrics, weighted appropriately, resulting in one overall score to asses a program’s impact on the business.

They both:

• Have a limited budget (for players or marketing programs).
• Need to get the most for their money (spending efficiency and effectiveness).
• Need to get better results than their competitors (win games, make money).
• Need a way to organize and make sense out of lots of diverse data about the performance of their players/programs and team/company (so they can improve their player/marketing decisions).

This last point is the most important one. A general manager trying to assess the performance of different players on different teams, playing in different ball parks under different conditions, needs a way to organize and then convert all that data into one metric or score that enables rating and ranking players relative to their peers. Wins Above Replacement does that. It may be calculated in different ways by different teams, but so long as each team does its own calculations consistently between players and over time, their comparisons will be meaningful.

The same is true with measuring marketing programs. As a manager with a marketing budget, you need to evaluate the performance of different programs, with different objectives, for different brands competing under different conditions. A well designed marketing scorecard will give you a way to organize, evaluate and convert that diverse data into the single common metric you need to rate and rank each program relative to the others.

Pretend that you’re the Billy Beane of marketing and you need a decision support tool that helps you to organize and make sense of diverse data about a variety of marketing programs. With a scorecard based approach and your considerable wisdom, instincts and experience, you’ll gain the insights you need to improve your marketing effectiveness!