Data is now the most valuable resource on the planet.
If you’ve read any of our other recent blog posts, you’re probably aware of the fact that data recently surpassed oil as the most valuable resource on Earth. While that came as a shock to some, to others this has been a long time coming.
Studies show that data-driven businesses are 23 times more likely to acquire customers, 6 times as likely to retain those customers, and 19 times as likely to be profitable.
As businesses have realized the value of data, the demand for more and more consumer data has exploded. Despite the general acknowledgement of the value of data, it’s estimated that 60-73% of data collected isn’t used in decision-making.
In this post I’ll cover a couple of ways that you can leverage data to make better decisions in your ecommerce business.
Understand your customers
Most marketers understand the importance of using data to drive their marketing decisions. The problem that most marketers face is getting accurate data that they can trust in order to make the right decisions. So that’s where we’ll start.
Truly the bane of every marketer’s existence, over-attribution is a constant in today’s marketing landscape. An example of over-attribution would be when you look at Facebook and they claim to have generated $10K in sales, and then you look at Google and they claim to have created $10K in sales, but you only had $15K worth of sales in that period.
Over-attribution occurs for a myriad of reasons. One of the primary reasons that it can occur is that the different ad platforms utilize different conversion reporting. Facebook currently utilizes a 28-day click and 1-day view conversion window. That means that if someone clicked on your Facebook ad and then came back and purchased from you within 28 days, they claim 100% responsibility for that sale. Google, on the other hand, utilizes a last-click attribution model. That means that they award 100% of the credit for the sale to the last click that someone used before purchasing.
There are many solutions to solving over-attribution, but none are perfect. The first solution that we always recommend is UTMs.
UTMs are pieces of tracking information that you can append to a URL in order to improve your tracking. These can help you see exactly what ads, emails, or blog posts people clicked on in order to get to your site.
UTMs are amazing for increasing the granularity of your tracking and allow improved insights into what efforts actually drove people to your site. Unfortunately though, they don’t completely solve the issue of over-attribution. While they will allow you to see exactly what ads drove people to your site, you still have to deal with the different attribution windows in your reporting.
The best solution to the over-attribution problem is, unfortunately, also one of the more complicated ones. Multi-touch attribution most accurately reflects the client journey across platforms. By tracking the clients journey, these models can assign a portion of the total sale revenue to each platform that took part in the client’s journey. The reason that these can get complicated is because you need to model and decide how you want to assign credit to each platform.
Some of the more popular models that people use are: time decay, which allows you to decrease the amount of credit given to each touch point based off how long ago that happened; position based, which assigns 33% of the credit to both the first and last touch points, and then distributes the remaining 33% equally across the other touch points; the final option that we want to cover here is linear, which just assigns equal weight across every touch point.
Both UTMs and multi-touch attribution have their place in a marketers tool chest. We always recommend using UTMs, and multi-touch attribution can help with more advanced marketing initiatives.
Once you know where your customers come from, the next thing that you need to know is what they’re buying from you. Thankfully most ecommerce platforms readily provide this information. The important metrics to look at here are: average order value (AOV), lifetime value (LTV), and repurchase rates. Additionally, you should examine each of these metrics through the lens of how different products affect them.
In the early stages of a business, AOV is extremely important. We’ll cover more on this later, but the important thing to note is that if you can keep your cost per acquisition (CPA) below your AOV then you’ll always drive a profit off your ads. This will allow you to scale your advertising, and your company with it.
As you grow more advanced in your tracking and data, LTV becomes more and more important. As you grow in your understanding of LTV, AOV begins to matter less. Rather than worrying about driving a profit off the initial purchase, you can take a loss up front. Knowing the lifetime value of your clients gives you more freedom and flexibility in the acquisition of clients. This can lead to explosive results, just see what it did for Danette May:
The final important metric that you need to know about your customers ties in with AOV, and that’s repurchase rates. If you know when your clients will come back and repurchase from you, then you can accurately chart how long it will take for you to break even on your ads. Even more importantly, charting this metric over time allows you to see how your post-purchase marketing efforts affect your customers.
Understand your costs
In addition to understanding your customer behavior, you need to understand your operational behavior. We talked a lot about acquisition costs and advertising costs in the previous sections, but another important cost is the cost of goods sold (COGS).
In order to determine an acceptable CPA, you need to know what the costs of your business are.
Every business has their own view on how they calculate this metric. Some choose to include their operational costs in their COGS. Some only roll in the marketing costs, but not the salaries of the team. You need to determine the costs associated with the products that you sell in order to properly decide on acceptable margins.
Once you know the margins that your business needs in order to operate properly, then you can appropriately decide on your allowable CPA.
Tracking these metrics will allow you greater insight into your business and customers. Armed with this data, you can create exponential growth.
In this episode of the Data Rich show, AJ is joined by Kevin Brkal the president and founder of KNB Online Inc.
We talk through attribution models, ad spend, and how to protect your data through data ownership.
Check out our insights and conversation below:
Data- Amazing, but creepy
Kevin’s agency focuses on Facebook ads. The reason that they chose this as their platform is because of the Facebook audience network. Lots of different sites use the Facebook Ads network to sell ad space on their websites.
When it comes to the mobile web, any apps that collect real time data most likely use or sell that data. They can track your location and establish geo-fencing and geo-targeting to hyper target you as a consumer. It often freaks people out when they start to see ads for things that they think shouldn’t have a digital trail, but any number of apps on your phone could theoretically track that information on you.
As people get more and more creeped out by the things about them that are tracked, we see platforms cracking down on the things that can be tracked. The question that we naturally want to answer is how will this affect marketing.
Find a strategy that works for you
Before the internet, marketers still reached their target market. While we may not have access to as much information as before, you can still get mountains of data.
While browsers crack down on the data that marketers can access, no one is looking at location data being shared. Search engines also still sell randomized user data as well, so marketers shouldn’t panic just yet.
The primary victim of the data crackdown
Attribution modeling will get more difficult as browsers cut down on the amount of data that they share. This leaves marketers to rely more heavily on last-click attribution, or just saturate their markets with ads. The business who can afford to spend the most to acquire their customers always wins, but this may become even more important in the future.
Attribution is already a mess, but as browsers continue to limit the amount of data that you can gather on customers, it will only get worse. This change increases the confusion that ecommerce companies will have to deal with. Businesses just need to just gather as much data as possible to make an informed decision.
As we talked about previously, the best way to combat the confusion is to gather as much data as possible.
One of the best way to increase your data is to leverage UTMs. UTMs are free tools that everyone can use to increase the amount of data that you can gather. They allow you to create custom tracking parameters to gain better insights into your customers.
From there, you need to track your data in as many sources as possible. Facebook Pixels, Google Analytics, the back end of your ecommerce store; all of them track data differently. But if you have all of that data tracked, then on the back end a data company can extract the data and figure out the truth for you.
Another thing that you can do is alter the attribution models that you use in your tracking systems. Facebook defaults to a 28-day click window, and a 1-day view-through window. You can alter this window to better match your preferred attribution modeling.
In today’s marketing landscape, there is no limit to the number of touch points that you can have with your customer. The trouble that most businesses run into is deciding how they want to attribute back to the touch points across the journey.
Google Analytics defaults to a last-click attribution model. This means that the thing that drove them to your site the time that they converted gets complete credit for the sale. Facebook has an attribution window, in the which it claims full credit if a sale occurs in that window. The trick that marketers need to use is a blended model.
Adidas recently stopped their branding campaigns in favor of campaigns that seemed to be driving their sales, based off last click attribution models. They quickly discovered that the branding campaigns that they were running warmed their customers enough to click on the direct response campaign and purchase. Based off the data that they looked at, they thought that they made the right choice to cut the branding campaigns.
The most important thing that companies need to do when working with an agency is make sure that you’re owning your data. Whatever agency you work with, you need to make sure that they create the ads under your account and that they track with your pixel. The reason for this is that then you own that data. If you allow them to run the ads under their umbrella or with their pixel, then they own the data. In the event of a dissolution of the partnership, they could sell that data to your competitors.
Regardless of who you work with, it’s extremely important to own your data. Many ecommerce companies have started to move away from Amazon, because Amazon owns all of the data on its platform. As Kevin correctly pointed out, Amazon can take the data that they gather on your customers, and the things that they purchase from you. From there, they can recreate your product under their umbrella and force you out of your own market. It wouldn’t be the first time that they did.
Businesses have finally begun to recognize the value of data, as data has just surpassed oil as the most valuable resource on the planet. Businesses have begun to recognize the value of owning their data from top to bottom.
Take action from your data
Once you own your data, the next important thing to do is take action from it.
In order to know what actions to take, you need to know what your primary objective is. If you’re an ecommerce company, you likely want to increase sales. B2B companies likely want to increase leads. The important metrics that everyone should track are the cost per acquisition (CPA) or cost per lead (CPL). From there you want to calculate your return on ad spend (ROAS). If you’re looking at generating leads, it’s important to know how much it costs for you to turn a lead into a customer, or your conversion rates from leads to customers. Once you know that, you can find the lifetime value of those customers (LTV). If you have your LTV and your conversion rates, then you can reverse engineer your allowable CPL.
Don’t take too quick of action though
With all data, it’s important to find as many sources of validation as you can. In this hyper-connected world, it’s unfortunately easy to have skewed data; as this commercial points out:
Many analytics systems fail to recognize refreshes on thank you pages, which can dramatically skew your data. At Praxis, we have found that the best way to stop this is by creating a first party cookie that loads into the user’s browser the first time that they visit the thank you page. From there, you can update your tags to only fire in the event that the cookie is not present in the browser. Obviously, this still isn’t a perfect solution to the problem, but it can reduce the negative effects of over-attribution.
The most important metrics
Kevin has found ROAS to be the most important KPI in his business. Anyone who runs ads obviously wants to turn a profit on those ads, so it is very important to make sure that you track your ROAS.
Regardless of the metrics that you measure, the most important thing that you can do with data is validate. Track everything through multiple systems, don’t put your trust in any one. At the end of the day, these platforms want you to spend more money with them, so they will skew the data in their favor.
Data can be overwhelming at first, but it is your friend. Data will help your business scale and grow faster than anything else. AJ pointed out that you need a relationship with your data. The more time you spend with your data, the more in sync you can get with it. The better attuned you are to shifts in the data, the faster you can react to sudden changes or opportunities.
If you need help with Facebook advertising, Kevin is a great resource and can be reached at kevinbrkal.com
We’re down to the wire when it comes to Black Friday and Cyber Monday 2019. Because of the way that Thanksgiving fell this year, the holiday sales cycle is compressed and shortened. This compression has already had tremendous impacts on ecommerce businesses this month. Ecommerce companies across the spectrum are struggling to get traffic and conversions out of their standard ad spends.
In this post, we’ll walk through ways that you can leverage data to help you maximize your ROI and ROAS. While we’re focusing on Black Friday and Cyber Monday, these tips and this information is applicable year-round.
How to make sure that you maximize your ROI this Black Friday-
The first step to maximizing your returns is making sure that you have data.
That means getting your tracking in order. Lots of business owners and marketers put tracking off. It’s a common impulse.
Tracking takes time and it feels tedious to set up triggers and events for everything on your site; but no one can make up historical data. If you don’t set up your tracking until you’ve already been in business for 5 years, you will miss out on 5 years of data and insights.
Even waiting to start until after the holidays will cause you to miss out on potential insights into how you can better capture and serve your customers.
We recommend that everyone do a quick audit of their tracking systems to establish where they are now. Some of the things to check in this audit are:
Do your UTMs all track properly across your customer journey?
Are your UTMs organized in a way that makes sense and actually helps you better understand your customers?
Can you see right now where your traffic is coming from, and which traffic converts the best?
If you can’t answer yes to all of those questions, then you won’t be able to get nearly as much out of your Black Friday data.
As we talked about earlier, you can’t analyze what you don’t have. So if you don’t have your tracking set up before Black Friday and Cyber Monday, you won’t be able to know what you can do to improve your results next year.
Moving into UTMs, you NEED to make sure to track all of your marketing efforts with UTMs. They can help you track variations on ads, help with split testing, and give you clarity into what marketing efforts actually drive results for your business.
Step two to maximizing your returns is reviewing your data.
If you already have UTMs in place and feel confident in your tracking, then you can take the next few weeks to review your data. Look at what has worked for you in the past: analyze which emails have the best open and click-through rates, check which ads yield the highest ROAS, what buttons drive the highest cart values, etc.
Too often we get caught up in our plans for the future. We get locked in a cycle of what we want to test next, and we forget to look at what we’ve done in the past that worked. Those that fail to learn from the past are doomed to repeat it. If you don’t go back and review your data, you could potentially miss out on huge, easy wins for your business.
As we talked about earlier, Black Friday being pushed back a week has changed the face of the buying season. Many ecommerce companies are in full-blown panic mode right now because their year-over-year revenues are way down from last year.
We suggest that rather than making month-to-month or day-to-day comparisons, look at your data through the lense of days before Black Friday. So, if today was 5 days before Black Friday, you could compare it to 5 days before Black Friday last year. Then you can start to analyze what your marketing efforts looked like on that day last year, what worked, what KPI’s you saw success in, and how those impacted sales on Black Friday.
We recommend focusing on driving traffic to your site, and getting them browsing your products. Then you can leverage retargeting to reach them during your Black Friday sale and focus on driving them to purchase.
What metrics you can use to get a leg up this Black Friday and Cyber Monday
Now, we want to switch gears and talk about what metrics specifically you should analyze and track to make sure that you have the best Black Friday and Cyber Monday possible.
Average Order Value (AOV)-
This one seems basic, and it is, but we see ecommerce companies forget about this frequently during this time of the year.
Most companies focus on their profitability and the discount rates around this time of the year. That should be a top priority, but you also need to make sure that you have your upsell flows, recommended products, and bundles in order to make sure that your AOV doesn’t tank. While you may want to focus on client acquisition, you still need to make sure that these new customers provide value to your business.
This is one of the primary metrics that you should review from last year. Explore what bundles drove higher cart values, what products drove cross-sales, and what upsell flows performed best for your business.
Promo Code effectiveness-
This seems like a no-brainer, and hopefully you already have examined this data. Looking back at what discounts you ran last year and seeing what worked, what failed, and what fizzled will help inform you as to what you should do this year.
In addition to just looking at the surface-level of this metric, we recommend that you deep-dive into when your customers used your different codes, what time of day they purchased, what the AOV was based off discount code, and what was the average discount per code.
Black Friday and Cyber Monday are some of the worst possible times to run out of inventory. Obviously you can’t perfectly predict this year based off last year, but by examining your historical data and comparing that with this year’s demand, you can get a better feel for how much you need to order.
Many ecommerce companies neglect to factor staffing into their costs. During this time of increased demand, lots of businesses need to bring on extra help; but they fail to account for this increased cost in their cost of goods sold.
Not accounting for this can easily turn your sale from an asset to a liability. Typically, as you increase sales, you also increase the amount of customer service tickets that you receive. If you don’t have the bandwidth in place for that you may need to bring on additional support, but they may not get fully trained in time. Additionally, the increased wait time to have issues resolved can cost you sales.
If you don’t have a solid plan in place, issues can sneak up and turn your holiday into a nightmare.
Lifetime Value of Customers (LTV)-
One of the biggest dangers that businesses face during this holiday season is acquiring unprofitable customers. Many businesses run loss-leader deals in order to acquire new customers and think that they’ll make up the loss sometime down the line.
Without tracking the lifetime value of those customers over time, you’re stuck guessing about their profitability. We have dealt with clients who offered discounts in order to acquire new customers, believing that they would make it back over time, only to discover later that they had overestimated the value of those customers. They thought that these new customers drove their profitability, but as it turned out, they dragged down profitability.
In order to maximize the effectiveness of your Black Friday and Cyber Monday marketing efforts, you need to understand what these clients purchase initially, what they come back to purchase, and when they come back to purchase. If you understand those three things, you can tailor your marketing efforts to their natural buying tendencies and dramatically increase your effectiveness.
Going through last year’s data and then looking at this year’s plan and making sure that they align is the key to a successful Black Friday.
How to leverage pre-Black Friday sales to your advantage-
We have found that if you can give your clients a juicy enough discount code, you can entice them to spend their money with you even if they know that they’ll likely get a better discount later. Some of the larger retailers have decided to just launch their official Black Friday deals before the official holiday.
You could also promote your pre-Black Friday sale exclusively to your email list. This provides value to those who have signed up for the list, and could entice others to sign up.
We have also tested the tactic of offering a sale before the holiday by pitching it as a way for the customer to make sure that they got their orders on time. If they took advantage of this sale before the holiday rush, they could get a good deal, and also avoid the hassle of holiday shipping issues.
How real-time reporting can increase your ROI this Black Friday-
Tracking and reviewing your data make up the first two pillars of your data temple. The third pillar is automation.
In today’s world, every system tracks one specific thing, and it refuses to share that information with any other platform. Because nothing communicates, it falls to humans to aggregate and gather all of the data together. It can take days or even weeks for people to pull together the data, get it placed in the right location for analysis, and then take action from it.
Praxis Metrics specializes in automating the process of gathering the data from all of the different systems where it lives, cleaning it so that all of the metrics align properly, and then visualizing it in real-time.
This real-time reporting allows you to adjust and tweak your efforts much faster than if you relied on manual reporting. This decreased time to insights allows you to experiment and improve your marketing much faster, allowing you to drive immediate results, rather than having to wait a full year to improve your strategy.
The goal this Black Friday and Cyber Monday-
The goal of this entire process is to help you have the best Black Friday and Cyber Monday possible. If you have set up your tracking properly, you should know where your best customers come from and what efforts drove those customers to your ecommerce site. These insights will allow you to double down on the things that actually drive results, and cut the things that didn’t work for you. You can reallocate your budget from the things that didn’t drive results to the things that do drive results, allowing you to increase your ROI, and bringing in more money that you can then reinvest into the marketing efforts that are actually working.
How can you assess your data maturity to understand next steps?
We always start with an audit of where you stand. In order to understand your next step, you need to understand where you are.
Even if you have set up your tracking previously, we recommend an audit. As your website grows and you make additions and changes to it, you can easily break your tracking, or miss out on tracking valuable insights.
If you fall into stage one, your entire goal is to gather as much information as possible. You can do this through Google Analytics, UTMs, defining your Key Performance Indicators (KPIs), and above all else, create Standard Operating Procedures (SOPs). If you can standardize your naming conventions for UTMs, SKUs, etc., you can save yourself hours of cleanup down the line.
If you fall into stage two, your focus is on automation. What compound interest is to your money, automation is to your time. We have had clients cut the number of man-hours required to complete a data project from 10 hours per month to 1. Automation allows you to scale your efficiency and effectiveness across the board.
The focus of stage three is optimization. Everything before this point deals with historical data. Optimization leverages the wisdom and knowledge gained from the previous stages and applies it to your future endeavors. This allows you to predict outcomes from your actions. This stage is where the magic truly happens. Your efforts yield predictable, exponential results, allowing you to rapidly scale your business.
Stage four is the buzzword stage. This stage focuses on leveraging AI, machine learning, etc. These technologies allow you to improve your business at scale through incremental adjustments.
No matter where you fall on the data maturity spectrum, Praxis Metrics is here to help. We offer free data roadmaps and coaching, analytics audits, dashboarding solutions, etc. If you want to learn more about Praxis Metris, visit praxismetrics.com or drop a line here.
Meaghan was recently interviewed on Lena Elkin’s podcast, Unfiltered.
Check out the full episode below along with our insights on the most important points.
How did Meaghan get her start?
Meaghan grew up in a home that was not entrepreneurial at all. No one in her family had ever gone to college, so she was taught that management was the goal. If you could reach management, you had arrived.
She had her first taste of entrepreneurship in college selling encyclopedias door to door. This experience allowed her to become her own boss and manager her own “company”. This opened her eyes to how her own individual contributions affected her income. Through this experience, she learned the value of being 100% responsible for herself and her outcomes.
After that, she became a sales consultant, but still under an organization. During this time, she met AJ. AJ is an entrepreneur through and through. He started creating companies at age 10, so he opened her eyes to the possibilities of entrepreneurship.
One of the biggest transitions that she had to make was to shift her mindset from individual contributor to growing a company.
Luckily, her journey with data started much earlier.
Meaghan was the math nerd from an early age. She jokes that she had more math books than friends. Meaghan loved math and numbers because everything had a correct response. Everything was either right or wrong, and it was clear why.
She had planned to become a math teacher, but upon discovering her gift for sales, she decided to focus on hustling while she could and teach later in life.
The sales bottleneck
In all of Meaghan’s sales experience, she relied on her inputs to create outputs. She either knocked doors to get sales, or she cold-called businesses to get sales. Enter AJ.
AJ worked in marketing, and Meaghan wanted to learn more about what that meant. So she shadowed him working on a client. The client had set up a course that he wanted to sell, so AJ set up a sales funnel and landing pages, and then sent out an email to his list. They had 500,000 on that list, so they sat back and waited to see the responses. Within 8 hours, the campaign had cleared $1.2 million.
Upon seeing this, Meaghan knew that she needed to make the jump from sales to marketing. Because of her background in sales, she helped with copy and closing clients. Upon spending some time in the agency, she began to notice patterns in the data.
In her time working in sales, she would split test approaches and different scripts. Over time, she perfected her sales pitch. Upon making the switch to marketing, she realized that they did the exact same thing, just on a larger scale, and with more automation.
The marketing bottleneck
While running the agency with AJ, they had to report back to their clients on the progress of their campaigns. So they had a marketer who had to run reports for clients all day, every day. He wasn’t able to do anything else because they had to get this data to their clients.
So Meaghan started researching ways to automate their reporting. She found the solution in the world of data analytics and business intelligence. She found that many of these programs could automatically do what they had someone doing by hand. The programs could extract the data from all of the different sources, aggregate it, and even display it in an easy to interpret format.
Once they rolled out these reporting solutions to their clients, they naturally wanted more. They wanted more information on their business and wanted that same powerful reporting for everything. Ultimately, everything that Meaghan worked on led her down the path to Praxis.
AJ and Meaghan pivoted their marketing agency into a data analytics agency, and now help business owners and marketers understand their businesses better through data.
How to take advantage of your data
The first thing that you need to do to truly take advantage of your data is set your ego and emotions aside. As Meaghan talked about earlier, numbers allow you to see in black and white. Rather than focusing on how they make you feel, you can use that information to help you grow forward and progress.
The next thing that you need to do in order to truly take advantage of your data is a process called “ETL”. ETL stands for Extract, Transform, and Load. Essentially, you need to extract raw data from the back ends of your systems, then transform it to make sure that it accurately reflects what you want to measure, and then load it into a business intelligence or visualization tool.
Lots of solopreneurs and early stage entrepreneurs end up needing to learn sales and marketing in order to get their company off the ground. Learning data as well would likely push anyone over the edge.
That’s a big reason why Praxis shifted down-market. We used to work with larger companies, but we found that they needed answers to the same questions that the little guys did. Everyone wanted to know what worked, what didn’t work, where to spend more money, and where to cut spending in order to better optimize.
The best time to start thinking about integrating a BI or dashboarding tool is after you’ve already hit $250,000 in revenue. For businesses pre-$250,000 it’s best to focus on tracking. Too many businesses wait until they get big in order to worry about their data; but you can’t leverage data that you don’t have. Every business needs to set up tracking, and the earlier you set it up, the better.
Most businesses spend all of their time worrying about their copy and their look and feel, but they neglect their tracking. Google Analytics is one of the most underutilized and error-prone tools on the market.
We see lots of big companies that come to us with very little or no data available to them, looking for answers to their business questions, but they don’t have any data. We have to take them back to the beginning and help them set up their tracking, and then we can help them analyze the data as it comes in.
Data is sexy.
Lots of people view data as something that happened in the past, and therefore not something that can help them in their current situation; however, the true power of data is that it can help you see the patterns in the past, and then predict and shape the future.
As we covered earlier, it’s very important to get started as early as possible with this process. So now we want to cover how you can get started:
UTMs are a free tool that every business can and should use for all of their marketing. UTMs allow you to pass information through URLs in order to better track where your traffic comes from. Adding UTMs to your external links allows you to understand how your customers found you and what content they interacted with.
UTMs allow you to see much cleaner, more granular data about the performance of your marketing efforts. This allows you to get better insights, allowing you to decrease waste and double down on what works.
If you want to learn more about UTMs, we have a course that walks through how to build them and gives you tools to help you automate the creation of your UTMs. Here is the link to that course.
AJ and Meaghan recently had the opportunity to have a chat with Bernard Kelvin Clive of the BKC podcast.
It was a great opportunity to get a multi-cultural perspective on business growth and development. Check out the full interview below:
Data is the fuel for business success
In today’s marketplace, every business works in the data business. No matter what business or industry you fall into, data is vital to your success. While many people still think about data in terms of “big data”, every business can capitalize on the data they have.
While almost everyone understands that data has value, few businesses know what data they need to leverage to scale.
When we talk about data, the key point to remember is that data doesn’t involve crazy math or calculations. Data is just information. Eventually, once you have enough information, you can begin to recognize patterns in the data, and predict the future.
Every business has the power to access “big data” at this point. Most programs that businesses use to run their operations contain data on the back end. This includes things like: when your clients buy, how much they buy, what they buy, and so much more. Just having that small amount of information can help you understand your customer journey’s better. Once you understand their journey, you can better market your products and services.
No matter the stage of your business, you can be doing things with data
At Praxis, we often talk about the data maturity spectrum. No matter where your business falls on that spectrum, there are things that you can and should be doing to make sure that you can get the most out of your data.
If you’re at the beginning of your business, this could be pre-revenue or just starting out, the best thing that you can do is start collecting data. Lots of businesses in the start up realm still have CRMs, POS systems, websites, etc. Each of these systems can be a treasure trove of data if you set it up to track data. Most small businesses though don’t take the time to make sure that they have everything set up to track properly.
You can’t create data from scratch
The reason that it’s so important to set these things up early on in your business is because you can’t go back in time and create historical data. So if you find yourself ready to start analyzing data three years from now, and you haven’t set your systems up to track your customers properly, then you have to start completely from scratch.
You can’t make data-driven decisions without data, and you can’t get data without taking the time to set up your tracking.
More is better when it comes to tracking
Even if you don’t have the time to analyze your data, it’s very important that you start tracking it now. The more that you can track, the better. While you may not use all of it in the future, it’s much better to have too much data than too little data.
Whoever has the greatest understanding of their customers will win in the end.
Several of the biggest companies in the world are strictly data companies, and part of the reason that they got so big is because they collected data to better understand their customers.
Data helps you better understand your customers needs and wants; this allows you to better target and attract the right customers, as well as retain your current customers.
As a business owner, data analysis isn’t your responsibility
Your job as the business owner is to make sure that you have properly invested the time and resources into gathering the data. If you’ve done that, you can have specialists analyze the data for what they need. Your marketing team can scour the data for better customer insights, your project management team can find bottlenecks in your processes, etc.
In order to make sure that you track the right things, you need to know what metrics matter. Too many businesses track everything and then get caught in paralysis by analysis. They end up spending time worrying about metrics and numbers that will only make a small difference, if any.
The key to analyzing your data is making sure that you look at the metrics that will yield results for your business.
The best way to find these “needle moving” metrics is to figure out what business questions you need answers to. Generally, you can narrow down the metrics that you need to keep an eye on down to 5-10 metrics. We recommend “leading with revenue”, which means that you should focus on marketing and sales first.
Wrapping up the foundation level
To summarize the foundation level of data maturity, track everything, but don’t feel like you need to analyze everything that you collect. That is reserved for stage 2.
Stage 2: Analysis
Once your business has matured to the point where you want to start leveraging your data, you’ve reached stage 2.
You don’t necessarily need to analyze the data yourself. You can have your team analyze it, agencies that you work with, or you can do it yourself if you’re data inclined.
One way to start analyzing your data is to figure out the business questions that you want to answer.
The number one question we recommend that every business owner ask is “where do my best customers come from?”. Every business should have a clear answer to this question. You should know what marketing efforts create customers that come into your business and stay with your business.
Another way to analyze your data is to just start looking, and then see what questions arise as you look at the data.
Sometimes, by digging into the data, you can spot anomalies or outliers that spark your curiosity.
Many business owners think that they don’t have the time to analyze their data, and that’s why it’s important to set aside time to do it. Make data analysis a priority and chunk out time to at least poke around in the data. You can spend that time looking for answers to questions, or looking for anomalies. Either way, it’s important to keep your finger on the pulse of your business.
Most businesses are just one data-driven decision away from exponential growth
As we said in the last section, it’s very important to at least wade into your data once a week. Additionally though, it’s important that you schedule time to deep dive into your data, at least once a year.
AJ and Meaghan realized during one of these deep-dive sessions the key to exponentially growing their business. They realized that they wrote off hours like crazy in order to keep their clients happy. They over-delivered on their promises to make sure that they had raving fans.
This yielded them happy clients, but when they looked at their numbers, they realized that it had cost them $500,000 across the course of a year. This one thing was preventing them from scaling their business properly.
They decided to start scaling back the amount that they would write off with each client. They decreased how much they would write off each month by just 25%. This caused them to increase their revenues by 350% year-over-year, and their profit margin skyrocketed up by 1,000%! This allowed them to scale their team up to 10X the size that it was.
The definition of insanity is doing the same thing over and over and expecting different results. Until you analyze your data though, it’s hard to know what you need to change.
A positive data-driven decision
We had a client who came to Praxis looking to get better information on the lifetime value of their customers (LTV). They thought that they had an accurate idea of what it was, but wanted to double check to make sure that it was accurate. Together, we discovered that the lifetime value of their customers was much higher than they initially thought. Upon realizing this, they decided to increase their allowable cost per acquisition by just $5. This decision caused the funnel to go from about 12 sales per day to 350 sales per day in just 2 weeks.
From there, the funnel kept expanding, and within a month, they started to average 600 sales per day on this funnel… All from one data-driven decision.
A negative data-driven decision
We had another client who thought that they knew their LTV, but once we got into their data, we discovered that they had overestimated their LTV. Because of this, the company found out that they were actually losing about $3 per customer that they brought in. And they were doing a lot of sales…
Because they sought Praxis help though, they managed to stop the bleed and update their spend to reflect their reality.
The data will tell you what to cut and what to double-down on.
What is the next step, where should businesses go from here?
The answer to that question depends on where you fall on the data maturity spectrum. If you are stuck in phase one, you need to get your tracking set up. If you’re stuck in phase two, you need to determine if you need help understanding the data and taking action from it.
The best thing that everyone can do right now is run an audit of your systems and see where you stand in your business. Diagnose where you fall on the data maturity spectrum, and from there you can see what next steps you need to take.
Another huge thing that helps all companies regardless of size, is to aggregate your data in one place. Some people call this phase “spreadsheet hell”, because it generally requires a lot of spreadsheets. If you want to avoid spreadsheet hell, we recommend leveraging a business intelligence (BI) tool. BI tools are much more expensive than just using spreadsheets, but they also allow you to perform much more complex analysis and leverage the data in new ways.
Tools won’t solve your problems
It’s important to remember that even if you buy a BI tool, it’s not going to solve your data problems. You still need to have your tracking in place, and you still need someone to analyze the data. Additionally, you need to have plans in place to take action on the data. If you see a dip in your data, you should have a plan in place as to how you want to deal with it.
Every company needs to start thinking about their data as one of their most valuable resources.
Data just surpassed oil as the most valuable commodity on the planet. Information is king. If you know more than your competitor does, then you have an opportunity to outmaneuver and outperform them at every turn.
Caesar’s Palace recently went bankrupt. On their balance sheet, they listed out their data as the most valuable asset that they had.
Every interaction with your clients is an opportunity to learn something new. If you’re properly tracking everything, then you can gain insights and scale your business infinitely faster than by going off gut instinct.
The fastest way to scale your business is to figure out what is already working, and double down on it.
What can people do to better use data in the world of branding?
Start tracking creatively. Tracking doesn’t have to just be about how many people came to the website, or how many people clicked a button. You can track anything that you can imagine. We had a client come through who used Instagram as their primary lead source. They went through all of their posts and tracked what colors they used in the post, how they framed the image, the location, everything. They then overlaid this data with their like, share, and comment data to find optimal posts.
Because they had this data, they knew exactly what their customers wanted to see from them and when. This allowed them to double down on the things that worked for them and cut out the waste.
In this podcast episode, we decided to cover some less common topics.
We cover deep dives into entrepreneurship, how to manage a business and a relationship, and much more.
How did AJ and Meaghan get here?
AJ started out as an entrepreneur early in life. He started a “company” called “AJ’s odd jobs” as a child, offering to do household chores for his neighbors. From there, he graduated to selling his family’s agricultural produce door-to-door. Finally, he moved into the technology sphere, building and selling computers; from there, he started a magazine, and then moved on to selling supplements online. While selling supplements, he found that he loved doing data-driven marketing, so he decided to create his own marketing agency.
Meaghan took a different path. Growing up in a large household with a single mom, the focus was always on finding a job and making it to management. As a way of paying for college, Meaghan sold encyclopedias door-to-door. This exposed her to the idea of being her own boss and “running her own business” while still having the support of an organization behind her. Because of her success in sales, she pivoted into a sales-coaching and consulting role.
Upon meeting AJ, she decided that she wanted to learn more about marketing. At the time, AJ’s business focused on building out funnels for clients. She decided to shadow them to understand what they did for one client from start to finish. She watched them build the landing pages and sales pages, and then watched AJ send out the email campaign.
Once she saw the success that they generated with little effort, she realized that she needed to jump from sales to marketing.
They started working together in the marketing agency together, and found that one of their biggest frustrations was getting data for and to their clients. This frustration eventually led them to the creation of Praxis Metrics. In finding a solution for their reporting, they found that all of their clients wanted to implement that solution for themselves. Eventually, that grew into Praxis Metrics.
How did Meaghan and AJ meet?
They met through a series of mutual friends who thought that they would be perfect together. They say that the universe was trying to get them together for a long time, but they had a hard time with the timing.
Once the timing was right though, they moved quickly, dating for only a few months before moving in together. Then they started running a business together a few months after that.
How do Meaghan and AJ get along so well?
Because they own a data-driven business, they of course are data-driven in their lives. They take personality tests to understand what roles and responsibilities each of them fit into well; they study each other’s love languages to know how to help the other person. And then finally, they took brain scans to understand how their minds work.
They primarily used the brain scans to better understand how their brains handle stress and stressful situations. They hook you up to the machine, with nodes across your entire head, and then put you through stages of stress and then recovery. By repeating this exercise, they gained a greater understanding of how each of them deals with stress psychologically.
Through these tests, they grew to better understand one another’s needs and why they behave the way that they do.
What advice would Meaghan and AJ give to other “power couples” or business partners?
Clearly delineate roles and responsibilities. This allows you “divide and conquer”. The best way to do this would be to map out each other’s strengths and then assign tasks that align with those strengths. This allows each of you to focus on your “superpower” and achieve individually as well as together.
The other piece of advice would be to communicate. Communication needs to be clear, and concise; and then you need to allow vulnerability in that communication. AJ and Meaghan like to do “check-ins” with one another to really check to see how they’re progressing in their roles as business and relationship partners.
How do AJ and Meaghan break up their professional and personal lives?
At the moment, they don’t really. Since the business is going through a phase of rapid expansion, they are on call all of the time. But they also recognize the importance of decompressing. They recognize when they approach their breaking points, and make sure that they don’t cross that line.
They make sure that when they do take time for themselves, they put away all things related to work and focus on being truly present in the moment.
Even in their professional lives, they work together to make sure that they align and don’t get too wrapped up in one thing or another. Because they have such open communication, they can tell one another when they need to take a break or realign.
They also use travel to force themselves to realign and get more into the moment. AJ and Meaghan built Praxis Metrics to allow all of the employees to travel and escape from the routines of office work. They encourage all of their employees to take trips and take advantage of the opportunities that come with working remotely.
Meaghan specifically uses travel to help her remember why they built this business and what their long-term goals are, as she can often get lost in the details. But by traveling, she can create opportunity costs for herself, which forces her to choose what she finds truly important.
Because they have this opportunity cost, it forces them to delegate more, and utilize their time as profitably as possible.
How Meaghan and AJ use NLP to help them focus
By learning NLP (neuro-linguistic programming), AJ and Meaghan worked to understand how their communication styles would differ based off their brain types. Since Meaghan is naturally “chunked down” or in the weeds, it becomes difficult for her to communicate with someone like AJ who naturally “chunks up”. Because they both know about these issues, they developed keywords and phrases to help them better communicate and relate to one another.
What “Bio-hacking” secrets would they recommend?
Meaghan and AJ use biohacking to better understand their bodies, and therefore increase their effectiveness. Because our DNA and our genes are the building blocks of who we are, it’s important to start there. They went to genetic coaches who read their genetic profiles and gave them actionable information on how to maximize the effectiveness of their bodies.
After understanding your genetic code, the next thing that they recommend is to get blood-work done. Generic doctors most likely won’t look at your blood-work to the depth that you need if you truly want to “biohack”.
The point of all of this is to increase the amount of data that you have on your body. The more data that you have, the more of a complete picture you can put together of how to optimize your body. Once you have this data, you can begin to change your lifestyle to better fit your needs.
How to truly get ahead in business and health:
Data will never solve problems; it’s just individualized facts. Data becomes valuable when you get enough of it to create information. Once the information forms a pattern, it can lead to knowledge. By leveraging knowledge, you can predict outcomes, which is wisdom. From there, you can take action on your predictions, which is the definition of Praxis.
What is Praxis Metrics, and what do they do?
Praxis helps businesses transform their data into actionable insights.
Just like the process that we just outlined, Praxis helps businesses take disparate data points, merge them into information, transform that information into recognizable patterns, and then make predictive models based off that.
By gathering all of your data and information together, you can see patterns across seemingly disconnected pieces of data and information, and then leverage that into action, or Praxis.
Big data used to be reserved for the enterprise-level companies, but now almost all businesses have an overload of information available to them. The problem now is deciphering the data and finding the valuable insights.
Praxis Metrics extracts the raw data from the back end of each of the systems in order to guarantee accuracy, and then they merge the data together to help our customers understand how to best take advantage of that information.
The goal of the entire process is to help business owners easily discover hidden areas of opportunities; as well as areas of waste.
Finding these things helps businesses achieve explosive growth. By eliminating the waste, and reallocating it to areas of opportunity, businesses can scale much faster than they thought possible.
Praxis Metrics primarily deals with waste. Praxis’ goal is to help eliminate wasted time, energy, and money. Once you eliminate the waste, your optimization efforts are exponentially more effective.
Praxis Metrics success stories
Praxis had one client that was spending an incredible amount on cold media. They thought came to Praxis asking for the lifetime value of their customers (LTV). Upon drilling into their data though, we helped them realize that they hadn’t taken into account all of their costs, and this meant that they were losing money on every customer that purchased.
Another client thought that they could only afford to spend $15 to acquire their customers. They came to Praxis and we helped them realize that the lifetime value of their customers was much higher than they thought. Based off that information, they increased their CPA by just $5 and saw explosive growth. That funnel ended up increasing in sales by more than 2,000 in a month. Because of this success, they hired a full-time data scientist to their team, and build their own dashboards. One data-driven decision revolutionized their company.
What does working with Praxis look like?
Every project with Praxis starts with assessing the data maturity of the clients. For those in the early stages of data maturity, they most likely need help gathering data. Unfortunately, all of the pretty and cool dashboards in the world do nothing without data.
If the client already has data, generally they have a ton of spreadsheets that they’re working from, and need help with automation. In this stage, we focus on data validation, extraction, and loading it into dashboards. Most of our clients fall into this stage.
The way that Praxis Metrics helps these companies generally is through our pre-built dashboards. As Praxis Metrics grew and worked with several large clients, we found that most businesses have similar needs. The questions that our enterprise clients asked us were the same that SMBs did. What’s working, what’s not, how can I improve, etc. Once we realized this, we began to pre-package dashboards that were built to answer these questions specifically.
This pre-packaging allowed Praxis to greatly reduce the costs of building these dashboards. This opened the doors to smaller clients who previously couldn’t afford these type of insights.
What makes Praxis different from other dashboard companies?
Most dashboard companies only offer the dashboarding software. They have built powerful tools, but once you purchase them, you’re on your own. Praxis Metrics doesn’t have software tools, we act as an outsourced data agency that will help you harness the power of your BI dashboards. We have a team of on-demand data scientists and dashboard engineers available to help you complete your projects; but once they’re built, you don’t have to worry about them anymore.
Most companies can’t afford to keep a data scientist on staff, so we make it so that they can rent one as they need them.
What are the most important metrics that most businesses overlook?
There are a handful of metrics that most companies overlook, and they all interact.
Number one is the customer acquisition cost (CAC), specifically broken down by source.
Number two is the lifetime value of customers (LTV), also broken down by source. This one is particularly difficult for most ecommerce companies, as most are omni-channel, and that makes the reporting more difficult.
Number three is days to cancellation, viewed as a cohort analysis, not an average. Averages are inherently evil because they smash together all of the highs and the lows in order to give you one number. The cohort analysis allows you to see a bell-curve of the data, allowing you to better understand the spikes and valleys of your subscriptions, rather than one static number.
Number four would be the cost of goods sold (COGS). Many businesses struggle to get the true costs of each of their products because of bulk shipping or bulk ordering systems. Excel has a hard time breaking things down to that granular of a level, but a robust business intelligence tool can perform those complex calculations and give you the true cost of each of your products on a daily basis.
What are weird things that AJ and Meaghan eat and drink?
Pickle juice. Because she never drinks enough water, she uses pickle juice to boost the cellular water absorption so that the little water that she drinks actually gets where it needs to go.
How do Meaghan and AJ enter a state of flow?
Hypnosis. They have an app that they use that helps them to focus in and reach their subconscious and tap into the state of flow.
Wake surfing. Meaghan uses the outdoors and solo sports to help her reach her state of flow.
What habit or opinion do they have that other people disagree with?
AJ believes that people are the most important resource on the planet. Many people believe that money or time are the most important things, but AJ believes that people are the most important.
Meaghan believes that she is the most important resource on the planet…
If AJ and Meaghan ran a school, but could only teach one, non-traditional lesson, what would it be?
AJ would teach people the basics of understanding their bodies and how to think about things rather than what to think.
Meaghan would teach about the theory of how to make time travel possible.
What books had the greatest impact on them?
“I dare you”, by William Danforth when he was younger.
And now, it would be “The one thing”, by Jay Papasan and Gary Keller.
Meaghan also chose “The one thing”, by Jay Papasan and Gary Keller. That helped her to realize how much of a procrastinator she was as well as how unproductive she was. And then it helped her break out of those habits.
Meaghan’s second choice was “The power of now”, by Eckhart Tolle. This helped her to become much more present in the moment.
“Letting go”, by David Hawkins. This helped them understand the different vibrational frequencies that we resonate at, and helped them to find better motivation and emotional stability.
What do the first 30 minutes of their days look like?
Gratitude, showering (cold), and then mediation.
Just jumps right into work. She starts looking at emails in bed, and then looks at her calendar to see when she can squeeze those things in.
Since her mornings are the most productive time for her, she wants to get the most important things done quickly, and then deal with tedious, less important work later in the day.
What advice would they give to their previous bosses?
AJ never really had a boss, but he would recommend understanding and learning their employees very well. Not just personalities, but what gets them excited and motivated.
Meaghan would start by saying that she was sorry, because she never truly lived up to her potential working for someone else. And then thank them for the opportunities that they gave her. Finally, she would recommend that they invest in the tools necessary to help their employees and people reach their fullest potential.
Where do they go and what do they do to get inspired?
Meaghan is his daily inspiration. Then comes nature, and their trips. Those all get him inspired and excited.
Numbers inspire Meaghan and get her excited. Nature also inspires her.
If they had 24 hours to make an extra $5,000 how would they do it?
Meaghan said that if this were a little while ago, she would have invested it in Crypto-currency.
AJ would borrow their friend, Mike’s boat and take people out on the lake and teach them to wake-surf. Meaghan is an excellent wake-surfing instructor and AJ is a skilled driver. They have a 100% success rate in getting people up between the two of them.
They would combine the fun of the boat with NLP coaching, and business coaching; and that would allow them to quickly raise that money.
What’s the best advice ever given to them?
The best “advice” that Meaghan ever got was from a mentor who told her that she had no integrity. They pointed out that integrity means doing what you say you will do, even if nobody holds you accountable.
He told her to examine her checkbook and her calendar to see what she actually valued, as what you spend your time and money on truly shows your values. Upon examining hers, she realized that she wasn’t being honest with herself about what her priorities were, and worked to bring what she said her priorities were into alignment with her true priorities.
The advice that he actually gave her was that at any point, your time and your money need to be in alignment with what you claim your goals are.
AJ’s grandfather taught and showed by his example that you should always leave people better than when you met them. No matter who they are, they should always be better because they met you.
What silly thing should people do more of?
Laugh at themselves, and dance however you want. AJ apparently makes good practice of this every day, gyrating in a “bizarre” way at Meaghan.
Definitely dance, and allow yourself to release and just let the music flow through you.
Would they rather fight one horse-sized duck, or 100 duck sized horses?
One large duck. Because he wants to conquer it and then befriend and ride it.
Thought AJ was completely wrong. She wants to be able to lord over the tiny horses and crush them as their god.
How would they go about convincing someone to do something good that they didn’t want to do?
Chunk up! Tie the thing that they don’t want to do to something higher and help them to see that this really is the best thing for them.
If you can find a higher purpose that you both agree on and then help them to see how this task ties into that higher purpose, then they will most likely perform the task.
Apart from eachother, what makes Meaghan and AJ happiest?
New adventures. There are chemical changes that occur in the brain when you experience something new, and Meaghan has trained her brain to crave those chemicals, so that makes her very happy.
Having new experiences with people. AJ derives a lot of value from people, so it’s important for him to be around others and experience new things with them.
What can people do?
Reach out to Praxis Metrics! Our primary vision and purpose is to help other businesses grow and realize their potential through data; so if you have data questions or concerns, reach out and we’ll do our best to help.
Make sure that you have your tracking set up. Once you have the tracking in order, everything else can fall into place later, but you can’t make up data that doesn’t exist.
In today’s market, businesses are a dime a dozen. Virtually anyone can start a business from a laptop in a coffee shop. The question is, how do you break through that noise, get in front of your customers and get them to purchase from you?
We’ll cover those questions and more in this podcast episode from the A-Game Advantage.
Don’t work in your business; instead, work on your business
As an entrepreneur, it’s easy to get caught up in all of the things that you need to do. Everyone has a to-do list that could last a lifetime. The problem is that entrepreneurs often get too caught up in their to-do lists.
We often hear from business owners that “someone needs to do it”, so they do it themselves. They often get stuck in the mindset of when they started the business; if they didn’t do it, no one would.
While it’s extremely important to continue to hustle and set an example of hard work, you need to make sure that your time is being utilized effectively. Too many small business leaders don’t make time to leverage their superpowers for the business.
This was the exact problem that our friend AJ Vaden struggled with in her business. She used to spend hours working with her accountant to figure out the commissions for her employees, contractors and affiliates every month.
She knew that she wasn’t properly utilizing her time by looking through reports, exporting information into spreadsheets, and analyzing it; but she felt like if she didn’t, no one would. Every hour she spent on manual reports took her away from her true value in the business, and carried a HUGE opportunity cost.
Unfortunately, many owners, marketers, and managers feel this same way. They force themselves to do redundant tasks like report generation because they NEED the insights from the reports they create. Valuable information lies cross-platform, so they build manual excel sheets in order to pull fragmented pieces of information together so that they can make better business decisions.
How do you escape the cycle?
There are two simple options when it comes to making the switch from working in your business to on your business: automate or delegate.
Both of those options have their pros and cons. Automation tends to cost more in up-front investment, but pays off handsomely over time. Delegation has a lower introductory cost, and can help you find new talent for your business; but you’re still relying on humans to do the work. Humans tend to cost more than machines over time, and they make more errors. So, by now you may be wondering what our friend AJ decided to do.
She decided that in order to scale, they needed to automate out their reporting. She decided that she wanted a long-term solution that would scale with her business. So, we helped them create custom dashboards that automatically calculated commissions, and took care of specific, one-off scenarios that used to take hours to figure out. They went from 10 hours down to one hour of manual work per month; saving them tens of thousands per month in costs.
Big businesses would like for SMBs to believe that somehow they have more knowledge and information than them. While large companies may have more historical data, SMBs now have access to treasure troves of information. Between tags, pixels, and cookies, you can get an unbelievable amount of data on how your customers interact with your brand.
There are several reasons that businesses may struggle with their data:
1- They’re overwhelmed
As we talked about earlier, there is a ton of data out there. It’s hard to determine what is useful information and what is just noise.
If you struggle with this, don’t worry, that’s a common issue to have. We have helped hundreds of companies through this issue with a process called “Metrics Mapping”. Metrics Mapping helps you find the metrics that you need to measure and cut out the vanity metrics.
The process for Metrics Mapping is very simple. Start with your high-level business objectives and goals. From there, determine what questions you need answered in order to hit that goal. In the example below, we want to double our revenue over the next year. We then need to ask, “How do we increase conversions off the site?”.
From there, we need to look for the metrics that will answer this question for us. We decided that the most important numbers for website conversions were conversion rates, customer lifetime value, acquisition costs, and profitability.
By simplifying the metrics that you need to measure down to the bare essentials, you can eliminate a lot of the confusion and fear that accompanies dealing with data analysis.
2- Fear of what the data will tell you
Another thing that can help reduce the stress of dealing with data is viewing it as a story. All data tells a story, but sometimes we don’t want to hear that story. If you never look at your numbers, it’s very easy to deceive yourself into thinking that things are one way, when they’re really very different.
It’s important to be able to step back, remove emotion from the equation, and analyze your data with fresh eyes.
Those who ask the important questions, such as what’s working and what’s not working, are the ones who are able to set themselves apart from the competition.
If you’re not looking at your data, your competitors are
What drove Blockbuster and Barnes and Nobles out of business? Failure to adapt to a changing landscape. Right now the landscape is shifting beneath our feet. Data just surpassed oil as the most valuable commodity in the world, and several high-level acquisitions for data companies have been announced by Google and Salesforce, totaling $18.3 billion dollars.
Your data is extremely valuable, whether or not you choose to use it. Some businesses get lucky and manage to grow their business without leveraging their data; but that’s generally because they have a great product or service and just stumble into success. They succeed in spite of themselves. If they actually leveraged their data, they could be at the top of their respective markets.
The 80/20 rule
80% of your results are driven by 20% of your efforts. Your data can tell you which 20% is driving the results, allowing you to double down on the things that create real value for your business, rather than chasing vanity metrics that do nothing for your business. Businesses that capitalize on this can double or quadruple the results that they see, not because they increase their efforts, and not because the increase their budget; but because they increase their understanding and knowledge.
This divide between the data-driven and the non-data-driven is separating the market drastically. Those capitalizing on their data are quickly becoming the 20% collecting 80% of the revenue.
How to begin taking advantage of your data
Your output is only as good as your input.
Everything starts with your tracking. If you don’t have accurate tracking in order, then you can’t make good decisions off of your data. The most important place to start is with your revenue metrics. We recommend that companies get their tracking in order for marketing and sales so that they can see an accurate picture of the financial health of their company.
The question you need to be able to answer is “What are you doing in your business right now that is working?”. So you need to start tracking where your conversions come from. Do you convert referrals better than direct traffic, Google ads better than Facebook ads, email better than social?
For most companies, this information is already being collected for you by various software tools. The trick is finding where it’s tracking, making sure that it’s accurate, and then analyzing it for insights.
The mistake that most small businesses make is ignoring their tracking. They either think that they’re too small to worry about it, or they think that it’ll be ok if they just implement it later. The problem with this is that when you finally get to the point where you want to utilize the data, you won’t have any data.
Tracking is the foundation for data.
Even if you’re not ready for “big data”, or even to analyze it, it’s important that you start to track your data. Even if you’re not using it now, a few years down the line, you’ll be very grateful that you gathered that data so that you can glean important insights from it.
What tools should you use?
On the marketing side, you need to have Google Analytics set up on your site. Google Analytics provides answers to some of the most important tracking questions that you can have. The only downside to this tool is that it’s notoriously difficult to set up properly, and it can be difficult to find the data that you’re looking for if you’ve never used it before.
In addition to Google Analytics, Google Tag Manager is a free tool that will help you manage all of the other tracking codes that you want to apply to your website. From Facebook pixels to LinkedIn advertising, every platform has their own proprietary tracking, and all of that can get messy on the back end of your website. Google Tag manager helps to keep the code that you have to install on your site minimal, and keeps your tracking organized.
On the sales side, you need to have a CRM set up that allows you to track your sales, clients, how they found you, and your sales cycles.
What changes when a business starts really tracking their data?
When a business starts focusing on their data, they speed up their time to value and their scalability. If there are two businesses that sell the same products, the one that understands what does and doesn’t work for their business will be able to eliminate waste from their organization much faster, and therefore bring in higher returns from every investment that they make.
We have seen companies that were planning to reach $50 million in revenue in 5 years scale that number down to 12 months because they started to double down on the things that work and eliminating the things that didn’t. By understanding their customers and what resonates with them, they were able to rapidly scale their business simply by doubling down on the things that are already yielding results.
We had one client who wanted to know one specific question: what was the lifetime value of their customers. They came to us for help with this question, and we helped them discover that they had greatly underestimated the value of their customers over time. So they decided to increase their allowable cost per acquisition by just $5. This decision helped them increase the number of sales from 15 sales per day to over 300 in less than a month. From there, their numbers kept rising, and now that one funnel brings in more than a million dollars per year in revenue.
This client was able to see that level of transformation off of just one metric, and one simple question.
So many entrepreneurs come to us at their wits end. They push themselves to the brink trying to grow and scale their business; but once they understand the things that they don’t work, they’re able to stop worrying about that and stop dedicating time to it. This allows them to focus in on the things that provide value to their business, and it rapidly simplifies their lives.
One of the primary goals of this process is eliminating waste. Eliminate the 80% of things that eat up your time and energy, and focus in on the 20% of things that are providing real value to your organization. Doing this helps you reclaim your time, and allows you to increase the value of your output dramatically.
How to use data to stand out to investors
We work with a lot of VC firms who talk about how helpful this data is when analyzing their companies. The data helps them understand the story of the company. Having data helps these investment firms understand the true potential of these companies, and helps them apply the 80/20 rule in the businesses that they invest in. They can focus on the 20% of their companies that produce the highest results for them, and then stop investing in the 80% that underperform.
Having all of your data in order also helps when trying to pitch investors. Many investment firms have teams that they use in order to validate your data, but if you can show them exactly where the data comes from and how it’s validated already, it will put you head and shoulders above your competition.
How to use data to help you in your daily life
Health and fitness are an easy way to start leveraging data in your life. There are an infinite number of metrics that you can use to measure your health: from weight to pant size, the number of reps that you perform at the gym to your cholesterol levels.
One of the more obscure ways to leverage data in your everyday life though is in your relationships. By leveraging data in your relationship, you can start to track where your points of conflicts are, then you can start to drill down into why that conflict is occurring, and finally learn how to prevent it from happening again.
The goal of data is to leverage it into changing human behavior; both in business and in relationships.
If you look at your calendar and your checkbook, you’ll quickly see where your priorities truly lie.
Creating a data-driven culture within an organization is a monumental task; especially if the organization is well established. In this blog post, we hope to outline the benefits of creating a democratized data-driven culture and some steps that you can take to achieve it.
What is selective data culture?
Most companies have a selective data culture. In this culture most employees don’t deal with data. Data resides in the C-suite and with the data team (if one exists). General employees receive nuggets of information, but they never see the numbers behind it. This often leads to something called the “Atlas effect”.
The “Atlas effect” occurs when an organization relies on one individual to keep all of the data and insights in their head. A system like this results in the individual becoming invaluable to the organization and causes major disruption when they leave.
In order to create a true data-driven organization, you need to democratize your data. This means sharing as much information as you can with your team. This creates a culture of transparency as well as serving as inspiration for your teams.
Our client, Organifi, has created a culture around their data. They democratize their data by having their dashboards displayed on TVs in their office that anyone can look at. And they have daily huddles around their data to make sure that they meet their goals every day.
This has created what they call the “lift effect” for their business. The “lift effect” has resulted from everyone seeing each other’s metrics, causing them create friendly competitions between departments.
You can see more about the effect that this type of culture has had on Organifi here:
Data democratization allows you to engage your entire team in the business data. By doing this, you can leverage the collective strength of your organization. This protects you from relying on individuals, and the “Atlas effect”.
What are the benefits of a democratized data-driven culture?
“You can’t manage what you don’t measure” -Peter Drucker
In a data-driven culture, employees with less technical skills still work with, and benefit from data. Data allows employees to track their performance and impact on the organization over time, keeping them more engaged in their work. Employee engagement massively helps organizational growth, as engaged employees measure 17% more productive than their peers. Additionally, engaged employees report 20% higher sales than disengaged employees on average.
When employees know the criteria that they are measured against, it helps them remain focused and engaged in their work. Allowing them to track their performance over time helps to remind them of their improvement over time, or serves as a motivator in times of stagnation.
In addition to allowing employees to track their own performance, data-driven organizations allow employees to contribute their specific understanding and knowledge to an analysis. This diversity of viewpoints allows organizations to benefit from a wide variety of ideas. These ideas help them experiment with a number of solutions, and discover new opportunities.
Having someone from marketing look over finance data may seem counter-intuitive, but they may provide critical context to a trend that the finance department didn’t have. Having an operations expert look over sales data can help them understand needs of the team and update or implement new processes to streamline their performance.
In data-driven cultures, employees can discover, reuse, and adapt data to their situation. For example, investing to know the lifetime value of your clients pays off massively over time, as this information provides contextual for your finance, marketing, and operations teams.
As employees gain exposure to data, their data literacy will naturally improve. As data literacy improves, the insights that they bring to the table will get better and better. This cycle increases the potential output of every employee, lifting the entire organization to new heights. This is known as the ‘lift effect’ and we’ll talk about that more later in this post.
As touched on in the previous benefits, data-driven cultures experience several major financial benefits. One study found that data-driven companies had a 20%-30% higher EBITDA than similar companies.
In 2006, only one of the top-10 companies by market capitalization was data-driven. By 2017, data-driven companies held 6 spots on the list.
Data recently surpassed oil as the most valuable commodity in the world. Is your business sitting on an untapped oil field?
How to start democratizing data
The easiest way to democratize data is to share it. Organifi decided to display their data so that any and all of their employees could see it. Other companies may choose to do weekly meetings where they announce important business KPIs to the entire team. No matter how you go about it, the goal here is to get everyone excited and involved with company data.
Next, it’s imperative that the data be connected to a goal. Data is like gasoline, the goal gives you a destination, and your actions are the vehicle used to reach the destination. Data should fuel the decisions that you make to get to your destination.
From there, the process simply repeats itself. Create new goals, gather new data, share with the team, gather their insights, and hit your goals again.
As you complete this process over and over, it will become the norm and part of your organizational culture.
If you find yourself struggling to create a data-driven culture in your organization, we can help you achieve your goals. Schedule a call with a Praxis Metrics data expert to see what’s possible for your organization.
Data recently surpassed oil as the most valuable commodity in the world. The question that we need to ask ourselves is “Why?”; why is data so valuable, and are we making sure that we are getting the maximum value out of our data.
Why is data so valuable?
Data in itself is not particularly valuable. Data is simply a single point of information. The value of data is the actions that you are able to take a a result of the data.
As an example of this, knowing that it is raining does nothing for you in itself. It is simply a point of data. When you begin to merge related points of data together, you get information. By extrapolating your information into patterns, you get knowledge.
Data, information, and knowledge are all powerful tools, but they only help you understand things in hindsight. Taking that knowledge of patterns and using it as a model for the future allows you to gain wisdom. But that wisdom in itself does nothing for you without taking action from it, which is Praxis, or the practical application of wisdom.
Data is like a race car. It has limitless potential, but it requires you to put fuel into it before it realizes it’s value. Data requires analysis and action in order to create any value for your company. This brings us to the question of:
How do I make sure that I’m maximizing the value of my data?
There are two ways to make sure that you are getting value out of your data, internal monetization and external monetization.
Internal monetization refers to utilizing your data to glean insights to help your company. This can be things like improving your marketing efforts, managing customer experience, or management of your supply chain and equipment maintenance.
Most companies use the internal monetization of data to identify areas of inefficiency. Our client, Digital Marketer, was one of these. We helped them discover a structural issue with their site that was causing a huge SEO issue for them. Upon discovering the issue, they implemented a fix and saw a 50% increase in their traffic. You can read more about that story here: Praxis Metrics Case Study – Digital Marketer
Another way to monetize internally is to leverage data to expand your product and service offerings. Our client, Danette May, found themselves in a similar position to this. They had been trying to expand a funnel that they had built to offer it to more clients, but they found that they couldn’t increase their ad spend to reach this new market and maintain profitability on the product. They were about to abandon this idea when they came to Praxis to try to figure out what their lifetime customer value was; we helped them discover that their LTV for that funnel was much higher than they initially thought. This allowed them to increase their allowable cost per acquisition by $5, which caused them to experience explosive growth, and now that funnel brings in millions in revenue per year. You can read more about their story here: Praxis Metrics Case Study – Danette May
Another way to take advantage of your data is to monetize it externally. This can include selling the data that you have on your customers, creating mutually beneficial partnerships with other data-driven firms, and creating new subsidiaries or divisions within your company to take advantage of insights that you have gained. Selling and trading data with other companies is growing more challenging, as data rules and regulations are becoming much stricter across the globe, but these type of partnerships can be extremely lucrative for both parties if done properly.
How can I start monetizing my data?
The most important thing that you need to do before trying to monetize your data is to make sure that your data is accurate and “clean”. Attempting to make decisions off of bad data is like trying to drive that race car, but with a filthy windshield that you can’t see through.
Once you have confidence in your data, the next thing you need to do is start to figure out what numbers are actually important to you an your business. We recommend a process called “Metrics Mapping”. Metrics Mapping helps you to understand exactly what you should be tracking, and what actions you should be taking based off of your numbers.
Metrics Mapping starts with determining your business goals and objectives. So if your goal is to double your revenue by 2021, then what questions do you need answered in order to get there? An example question would be “How do we increase the revenue from our website?”. From there, you can determine the metrics that would help answer that question. “How many conversions are we getting per day/month?” “What is our average order value?” “What are our repurchase rates?” “Where do we get our highest converting traffic?” would all be good questions that can help lead you to the metrics that you need to be tracking.
Once you know what you want to track, the next step is to figure out where your “source of truth” is for each of these metrics. Revenue per day/month should be tracked by your accounts (Paypal, Stripe, bank), average order value should be tracked through your sales system, highest converting traffic can be found in Google Analytics, etc. Once you have your “source of truth” selected for each of the metrics that you need to track, you know where you need to check in to see your progress.
Once you know your metrics and where they live, you need to assign someone to manage them. Even if it’s yourself, it’s critical that someone be specifically responsible for these metrics. This person needs to keep an eye on the metrics and know exactly what’s going on with them at any given time. Whether improving or worsening, this person should be aware of why they’re changing.
Once you have your metrics mapped out, the next thing that you should do is start aggregating and visualizing your data in business intelligence dashboards. These dashboards will help you track your important metrics over time, and at a glance.
At Praxis, we prefer dashboards that go beyond just simple visualizations. We build dashboards that merge multiple sources of data in order to create new, reliable data sets. Our dashboards perform complex analysis and calculations to help you not only understand what has happened in your business, but also help you shape the future of your company.
We’ve built everything from “command centers” where executives and investors can log in to see all of the key metrics that they need, to drill-downs that allow you to see the performance of each of your ads. Through our experience creating these dashboards for our many clients, we have perfected their creation and roll-out. We have more information about these dashboards and what they can do for your business here: https://praxismetrics.com/dashboards/ltv-dashboards/
This article contains a roadmap for data monetization. This may seem overwhelming, but we can help you wherever you are in your journey. We offer services for tracking, dashboarding, and even metrics mapping. All you need to do is follow this link to schedule a free Praxis Metrics strategy call to get a personalized data roadmap for your company from a Praxis Metrics data expert.
One of the most frustrating aspects of marketing right now is over-attribution when comparing Facebook reports to Google reports.
This occurs when you log into Facebook and it tells you it earned you $100,000 in a period, then Google says it earned you $100,000 in that same period, but you only received $125,000 worth of orders during that same time period.
This, unfortunately, is the new norm in the attribution war. Both Facebook and Google want your advertising money to go to them, so when it comes to tracking and reporting, there are a few things you have to understand:
Even though the two platforms integrate with each other, each is entirely separate. They have different goals, definitions, standards, and abilities for tracking.
Each platform only owns their own data. That means, when you go into the reporting aspects of Google Ads or Facebook, you will have mathematically biased information. Each platform only sees one variable (their ads) as an impact on your sales. However, there are always multiple variables involved—multi-channel marketing, public relations, organic posts… even the weather and political climate can impact your sales.
So, when you log in and see varying information, they’re not trying to lie, they’re just presenting their side of the story.
Everyone knows that there are three sides to any story. Each person has their version, and then there’s the truth, which is somewhere in the middle. So, when it comes to Facebook and Google reporting, neither is lying, but also neither is showing you the entire picture because they both are inherently biased. Facebook, for example, counts any conversion that has seen an ad on their platform and then converts as a “view-through” conversion; and Google uses last-click attribution by default in their reporting because that favors them.
Then how do I get data that I can trust?
There are two steps to get accurate reporting on your marketing efforts in your systems.
Get as much information as possible. Information is simply multiple points of data brought together to allow you to see patterns and gain answers to questions, like:
How much overlap do we have in reporting?
Are there clients that have been exposed to multiple marketing efforts?
If so, are we tying together their customer journey with accurate tracking efforts?
What are all the possible impacts on our sales?
How have they impacted sales before?
Are there correlations?
How are you going to answer these questions to get the insights you desire? You must have the data in order to be able to analyze the data to get insight.
That means, tracking is the first and primary component of accuracy in your reporting:
Are you tracking your client’s journey?
As we discussed earlier, Google uses last-touch attribution to assign credit to conversions. This slants credit towards Google, as by the end of a customer’s journey they tend to be aware of your brand, and therefore more likely to search for your name and click on a search ad or organic search result.
Google Analytics has many attribution models that you can try out to see which one works best for you. From position based (Which assigns 40% of the conversion value to the first and last touch, and then distributes the remaining 20% across all other touch points) to time decay (which assigns credit based off how close to the conversion date it was), it’s important to make a conscious choice of which attribution model you want to use. Each attribution model has its pro’s and con’s, but by staying aware of how the model affects your reporting, you can reduce bias in your reports.
Are you using pixels?
Tracking pixels have exploded in popularity. Many popular advertising platforms now use tracking pixels in order to track conversions and user interactions with the ads. Pixels provide amazing reporting because you can install them almost anywhere, from emails to landing pages, and, as of now, they can’t be disabled by a browser.
Pixels can help you gain greater understanding over how users interact with your advertisements and your website. Providing granular data about user’s behavior based off the platforms that they visit your site from.
Do you have unique identifiers for your clients that allow you to see their customer journey?
Specifically, you need a way to assign a user-id to your clients so that you can track their behaviors across devices. If you don’t have this set up, then when a user changes devices, you will lose all of the data from their initial visit. This can lead to incomplete customer journey’s and skew your attribution data.
Do you have organized UTMs setup?
The very best solution for the attribution problem is to utilize UTMs in all of your marketing efforts. UTMs allow you to tell Google Analytics exactly how you would like to categorize your traffic. Every external link that directs to your site should have UTM parameters appended to them in order to help assign credit to the proper source. You can even add in campaign data in order to track which of your campaigns drives the best traffic to your site.
UTMs can be one of the most powerful tools available to marketers, or they can be their downfall. UTMs need to be standardized and utilized consistently, or they will make the data even more convoluted and confusing. You need to implement standardized rules for your UTM usage across the organization in order to make sure that your data remains as accurate and clean as possible.
If you don’t already have these things in place, that is your top priority.
By organizing your tracking efforts, you can start gathering the data you will need in the future. If you need help with your tracking, visit the Praxis Metrics – Google Analytics Audit service page to read about how we can help you get your tracking in order.
Once you have tracking in place, you can typically manually create Excel reports that give you a much more accurate depiction of your marketing efforts (including lift effects and other variables). However, over time, that becomes tedious and time consuming and allows for too much human error.
The next logical step is to automate via ETL (extracting, transforming, and loading the information from these systems into a singular place) and then to visualize the combined, clean data with a dashboard.
This enables you to eliminate wasted time, effort, and give you insights in a quick and digestible manner. This process can be very intense and require the help of a data scientist.
Fortunately, we specialize in exactly this type of process and can help you revolutionize your data reporting. If you’d like to learn more about how we can help you with ETL and visualization, visit us here.
Bonus #3: Democratize your data
This one may seem out of the blue, but it can change the way that your entire organization interacts with data.
Democratizing data means providing access to data to everyone in your company. Not just information that pertains to their specific corner of the business, but the business as a whole. We have clients who have walls of TVs dedicated to displaying their data for the entire company. Everyone from entry-level employees to C-suite officers has access to the same data.
You may be asking yourself, “How on earth would that help my business?” Everyone has different backgrounds and experience, so when one person looks at a metric they will see one thing and come up with an action item based off their experience; but if you bring in another set of eyes, that person may see something totally different and come to a different conclusion. Democratizing data and making it accessible to more people will lead to greater insights and more options for ways to proceed.
Accountants can be creative, and marketing people can help solve operational issues. Democratizing your data can help you gain a myriad of insights and give you an edge over your competition.
You have tons of data; but data alone will not grow your business. It’s the insights from the data that will inform your team on how to grow. Companies that focus on causation will scale. Those that don’t, will fail.