Z Score lets you compare “apples and oranges”

Z Score lets you compare “apples and oranges”

The Z Score is the magic bullet of Six Sigma, allowing you to objectively compare “apples and oranges” and be confident of the results.

In simplest terms, the Z Score demonstrates the “efficiency” of any investment, showing how well scarce resources (such as Marketing dollars) are used.

Let’s take an example: Think of the fuel efficiency of cars. One car gets 30 miles per gallon, the other 15 miles per gallon.

This doesn’t mean the car with 30 miles per gallon is a better car than the 15 miles per gallon car at all. It simply means in the ONE task - efficiency of fuel consumption - the 30 mpg car rates higher. 

That vehicle may also accommodate only two people – making it entirely impractical for moving a large group. 

In our determination of efficiencies of Marketing investments, we are trying to accomplish the same thing. Which opportunity will go the furthest on the same amount of resources?

There may well be compelling reasons that can overshadow this metric – as in the car analogy. Independent of these other reasons though, we essentially are trying to determine which investment is the most efficient in delivering on the set of goals we have identified.

Our application of this theory using the Z Score is “dimensionless.” What does this mean? It is not restricted to one metric, such as fuel efficiency. The dimensionless model allows us to compare activities that are trying to achieve widely different objectives.

For example, in a social media campaign we may wish to capture names of qualified leads. After analysis, we find that activity has an efficiency Z Score of 2.5.

A separate experiential marketing initiative may have as its goal employee recruitment and retention. It turns out to have a Z Score of 3.1.

So which is better? It’s the same as fuel efficiency – the larger the number, the more efficient the process is at achieving the goal for which it has been designed.

The ability to determine investment efficiency provides Marketing decision-makers an unsurpassed tool in planning, evaluating and directing the use of scarce resources.