Most companies have tried out some sort of data visualization or dashboarding solution. And lots of those companies feel like they have not gotten their money’s worth.
In this video, we sat down with Alex Brown to talk about how to: grow your eCommerce revenue now, increase lifetime customer value, and have accurate data you can trust.
As we discussed in the video, we came up with a refined list of KPIs that every eCommerce company SHOULD have insights into, but most don’t.
We built this “command center” that combines your top of funnel marketing efforts with your entire customer purchasing journey, so that you can see patterns and anomalies otherwise unknown to you, like:
Which marketing efforts are yielding the highest 30, 60 or 90 day LTV? Which affiliates are bringing you customers who come back and purchase again and again? What funnels are yielding the highest or lowest customer retention rates?
Knowing the accurate LTV of your customers is crucial for exponentially growing your eCommerce business.
Once you know how much you make per customer and how long it takes you to collect that money from each customer, you can adjust your budget to acquire them.
We had a client that grew from 15 leads per day to 350 leads per day using just this one metric. Check out their story here: https://bit.ly/2DpkdKd
Knowing the LTV of your customers allows you to answer a litany of business questions.
This dashboard gives you the EXACT insights into what your customer is worth at 30, 60, and 90-days. In addition to this, it also answers several other business questions you are probably already asking; but aren’t getting instant answers to, such as:
What variables in my business and my marketing efforts yield higher LTVs? Does customer LTV change when customers based off their traffic source? Does it change based off what product they purchased first? Are my marketing efforts increasing my LTVs, or making them worse? What products are people coming back to purchase after their initial sale? How many customers are repurchasing from us, and when can I expect that revenue? Am I speeding up my customer’s journey to purchase? Is it somehow slowing down over time?
Who are my best customers? Where did they come from and what are their purchasing behaviors? How much revenue am I getting from different products? How’s this month’s revenue compare to the same month last year, or last month?
This is just one of several pre-built dashboards that we have ready for your business. Our platform integrates with thousands of analytics tools to help you get the most out of your data.
Do you want to learn more about this pre-built LTV revenue and subscription dashboard? Be sure to watch our more in-depth video and apply to see if you qualify for this awesome dashboard then schedule a call with one of our data experts! https://bit.ly/2Zpwx6o
All that it takes to scale your business is the proper data. In the following video and blog post, we’ll take you through how to take advantage of the information that you already have and use it to scale your business, no matter the industry.
Data, Information, Knowledge, Wisdom, and Praxis
Let’s simplify and redefine your views and definition of data. Data is simply the path to information. And information is your road map to knowledge, knowledge guides you to wisdom, which ultimately leads you PRAXIS, which is the ACTION you should take based on the knowledge and wisdom you have.
Data is simply events or outcomes, information is when you understand the relationships between those isolated events, knowledge is understanding the patterns- looking at trends over time and correlations in what is and is not working over time, wisdom is understanding the underlying principles and CAUSES, while PRAXIS is the action you take once you have that wisdom.
Data is an event or outcome without any context or true value by itself. Something like: IT IS RAINING. In and of itself, that would not be a revolutionary.
Information, however, is being able to connected multiple pieces of data together to see correlations and relationships: “the temperature dropped 15° and then it started raining”
Knowledge is then understanding the patterns between the variables: “Knowing that when humidity is high and temperature drops, the atmosphere is often not able to hold the pressure and so it rains”
Then wisdom is where we able to stop looking at the past, and we are now able to extrapolate and forecast what WILL happen rather than what HAS ALREADY happened: “UNDERSTANDING ALL INTERACTIONS BETWEEN EVAPORATION, TEMPERATURE CHANGES, AIR CURRENTS, AND BEING ABLE TO PREDICT RAIN NEXT WEEK”
Lastly, Praxis is the practical application of all this wisdom in order to get positive results: It’s being able to predict that it will rain on your vacation next week, and that you need to pack boots and an umbrella to prepare for your trip.
The ultimate goal and outcome we are looking for is a result of the actions we take based on the wisdom we extrapolated from the raw data.
So here is a quick side note for you: “Not taking action from data is like owning a race car and never putting fuel in it” There is a ton of data available to you, but data itself will not grow your business. Data itself will not give you the results that you want, The knowledge you gain from data will help guide you and your team to make the best informed decisions on what actions they should and should not take throughout the day.
So let’s simplify this one last time before moving on to your action steps and road map to scaling.
Data is WHAT HAPPENED in your business, information is understanding the relationship between WHAT happened and WHERE and WHEN it happened, knowledge is understanding the patterns that tell you HOW that happened, wisdom is understanding the principles and mechanics of WHY that happened, which leads you to be able to predict when it might happen again in the future, and at each stage in this journey, Praxis is taking ACTION based on the data, information, knowledge and wisdom you’ve gathered.
Becoming Data Rich
By taking those actions, you are getting NEW valuable data. This is the path that the leaders in your industry are taking, this is what helps them grow and scale, it tells them exactly what is and isn’t working, and how to increase their revenues and profits… this is THE PATH ….. To becoming DATA RICH
Now you understand the road map on how to use data to scale. Up to this point in history, BIG DATA was only accessible to enterprise mega giants because collecting data and hiring data scientists for extracting and analyzing data could cost millions in Technology and Human Resources.
However, nowadays millions of rows of DATA can be found in our cell phones, in the back end of our email systems, and tracking on our websites, so raw data is now accessible to any small business owner.
So the question is, how can you take the raw data that is already available to you and use it gain knowledge and insight to scale your revenues and increase your profits?
That’s what we will be covering in the next part of this blog, what ACTIONS TO TAKE, no matter WHERE YOU ARE on the spectrum, to move to the next stage of data maturity.
Becoming Data Mature
So let’s start at the beginning: your outputs are only as good as your inputs. The foundation for growth is first HAVING data. When small companies come to us and ask us how to scale, they typically do not have a foundation for success.
Data Foundation Stage
Here are some quick questions to ask yourself to see if your company is in the data foundation stage:
Do you have tracking in place at all stages of your customer’s journey? Including a basic Google Analytics set up? Are you not using advanced tracking like UTMs, Custom Conversions, event tracking or pixels?
Do you know what KPIs your team should be monitoring? Do you have standard operating procedures that everyone follows for naming conventions in your systems?
Are you or your team members MANUALLY creating excel or google sheets for your reporting because it’s all stored in a bunch of different technologies and is disparate? Or are you simply logging into each of your systems to look at the native reports?
If you answered YES to most of these questions, then you are in the FOUNDATION stage.
Your main action step in order to become more mature is to focus on TRACKING and MONITORING.
Remember, your outputs are only as good as your inputs, so we need you to HAVE data first. That’s the foundation for you to be able to scale. In order to progress, you need to:
Implement tracking procedures in GA and UTMs
Define what metrics are important for you and your team to know
Implement SOPs to make sure the data is clean and consistent
Even if you don’t have the resources right now to do anything with this data, you need to start GATHERING it so that later, when you can afford to look back for patterns and hidden areas of opportunity, you have something to review… you can’t RETROACTIVELY pull data if the data wasn’t being tracked… so PLEASE, make sure you do this now… you will thank yourself later.
Once that foundation of data collection exists, you can move on to the next phase: Automation
You’ll know if you are in this stage if you have all the complex tracking in place, but you or your team is spending a ton of time gathering valuable insights from a bunch of different systems and compiling them together into google sheets or into excel and pivot tables.
Let’s chat about this for a second:
What compound interest is to your money, automation is to your time
It’s exponential leverage to scale It’s reduction in overhead, it’s focus on what’s important – the ANALYSIS of the information, rather than the collection of data.
To advance higher and to scale, the focus is on integrating your systems together so that they automatically transform the raw data into the insights you need to take action. This allows your team to focus on valuable actions rather than mundane data entry. In technical terms, this is called ETL (automatically extracting, transforming and loading your data into one place).
In addition, setting up this automation lays the foundation for visualized reports or DASHBOARDS. Dashboards allow you to quickly see the highs and lows of your business, and let you quickly see patterns and anomalies of success, as well as those areas of wasted time, money and valuable resources.
Finally, it also allows you to share this information with all the people on your team. You wouldn’t believe the value that democratizing your data can have on your organization… sharing this data allows your team to bring valuable insights to the table and different perspectives that you might not have seen. We call this the LIFT EFFECT.
So once you have the foundation of all your data tracking, and after that data has been gathered to one place, and you have automated reporting in dashboards,
THEN you can focus on optimization and analyzing really fun CAUSATIONS between your internal data and EXTERNAL factors…
For those of you who aren’t TOTAL nerds like I am, let’s define this because there is an extremely important principle in statistics that states: CORRELATION does not imply CAUSATION.
As a simple example: Polio rates and Ice Cream sales from 1949. Although they are CORRELATED, that does NOT mean that Ice Cream is the CAUSE of polio. It is very simple to see here, but how many of you make these assumptions in your business when you see trends or relationships like this?
The more data you have, the more accurate picture you can paint among it’s relationships. The more data points you have, the better you can tell which one is most accurate.
You have a ton of INTERNAL data, but there is ALSO a ton of incredible PUBLIC data that you can integrate with in order to gain a more robust understanding of your business, your ideal customers, and their purchasing behaviors.
Imagine knowing that when temperatures rise above 75º, your return on ad spend for your Sunscreen company increases by 15%… or imagine KNOWING that your customers with the highest lifetime values have certain demographics or political affiliations? Or that you have the best sales when certain economic factors align?
Here at Praxis, we have found:
COMPANIES THAT CAPITALIZE ON CAUSATION WILL SCALE:
THOSE THAT DON’T WILL FAIL
Here is a real life example of this in use: Walmart sees a 7x increase in strawberry pop-tart sales when hurricanes are reported off the coast of Florida or Texas. Imagine being a competitive grocery store and not having enough pop-tarts in stock. You would suffer an incredible opportunity cost of potentially millions of dollars.
Can you imagine how many small to mid sized companies are put out of business because they don’t see these patterns? Because they don’t capitalize on these hidden insights that their competitors DO.
What causations are you missing out on in your business?
The final stage of data Mastery is for companies that are innovating and modernizing.
At Praxis, we help clients with the most cutting edge resources to help them understand their business better, including natural language processing, machine learning and Artificial Intelligence in order to innovate.
To summarize, here are the recommended steps you can take to advance through each stage on your road to data mastery:
Data foundation- Tracking
No matter where your company is currently on this spectrum, these are action steps you should take to move you closer towards information optimization.
That is the definition of PRAXIS – the application of the knowledge you gain from your data.
Taking action from data, is the new competitive advantage. Here is your list of action steps for progressing:
Share this with your team
Collaborate to see where your business is right now
Follow the checklist for how to advance from each stage to the next
Assign appropriate team members each action step with a due date
Not taking action from data is like owning a race car and never putting fuel in it.
Your outputs are only as good as your inputs.
What compound interest is to your money, automation is to your time.
Companies that capitalize on causation will scale, those that don’t will fail.
Taking action from data, is the new competitive advantage
I’m Meaghan at Praxis Metrics, thank you for investing your time here with me today. Please connect with Praxis on Linkedin and Facebook for more resources to help you scale. We love to help companies like yours grow and achieve their goals faster, so please reach out to me if you have any specific questions about your unique business.
Good luck on your journey, We are looking forward to helping you scale!
Obviously a lot. Just in practicing medicine, doctors need to examine a multitude of data points; but then they also have to run a business on top of that. Every business has their own set of metrics and KPI’s that they have to track, but compounding that with the difficulty of running a medical practice can be too much. That’s where Encompass Health steps in. They help the doctor’s offload some of the office work so that they can focus on practicing medicine, and we help them in that quest.
How did Encompass Health get involved with Praxis Metrics?
Encompass Health was initially just using Domo for their data visualization, but they wanted to get more training on how to best utilize the program. Seeing as Encompass Health is still a small company, they couldn’t afford to dedicate an employee to learning the platform. Contracting with Praxis allowed them to have an outsourced data team available whenever they need, but at a fraction of the cost of an employee. This also allows them to take control of the platform and learn at their own pace, and then whenever they need help, Praxis can step in to help.
How did Praxis Metrics help?
Praxis helped them with the visualization of their data as well as the ETL (Extract, Transform, Load). The process of ETL is to take data that is formatted, reported, and measured differently in disparate systems and standardizing it so that it can be visualized together.
The team at Encompass knew what they wanted their data to look like, and then the team at Praxis was able to execute on that vision. We set up their data as an executive view, with the option to drill down into specifics. In the healthcare industry, most people focus on the executive level summary. From there, individuals may want to drill down into the details; so we set up their dashboards with that option. The Encompass team could set up the executive view, but the Praxis team also created a drill down path for them as well.
What benefits has Encompass Health seen?
Encompass Health knew that they wanted customization first and foremost. The dashboards that we built allowed them to do just that.
Another benefit was the outsourced data team; as they stated, Austin is a powerhouse of an employee. Austin knows data extremely well, and can create almost anything that the mind can conjure.
Being able to take their data on the go, and view it wherever they need to has also helped them tremendously.
Encompass Health has become data-rich, and now they will help their doctor’s become data rich as well. They plan to start rolling out more advanced features for their clinicians, helping them to make even smarter business decisions.
If you’d like to learn more about the dashboards discussed in this video, visit us here: https://bit.ly/2VYgKZq
Your data will always tell you a story; it just sometimes tells a story that you don’t want to hear. Often we find that people stop listening to their data when it gets hard, or right when the details are becoming the most important; but those are the times when you need to listen to the story that it’s telling you even more.
You need to take emotion out of your decision making process if you really want to become a data-driven company. Often the climate of the business has a huge impact on our lives, so it’s often difficult to separate your emotions from the decisions that you make, especially during the hard times. When the times are the toughest are generally when you need to be the most data-driven, and those are the hardest times to take emotion out of the equation; but if you do, it will help you to trust your decision-making process much more.
How do you remove emotion from the equation? The simplest way to remove emotion from the equation is to just let the numbers speak for themselves. No matter how hard things get, they will always get harder if you make the wrong decision.
It’s one thing to make the wrong decision because you went with a knee-jerk reaction; it’s a whole other beast to make the wrong decision because you had bad data. That’s why our next step is:
Step 2- Get your tracking in order.
You can’t make good decisions off of bad data. If your tracking is off, all of the insights that you get from that data are tainted.
One of the top 5 mistakes that businesses make is assuming that everything is tracking properly. Google Analytics is a very powerful, robust tool that helps businesses gain insights into their customers and their behaviors. It is also the number one most underutilized and error-prone tool used by small and medium businesses.
Analytics tools are notoriously difficult to set up properly, and unless you have an expert come in to set it up for you, or you invest the time to truly understand how to set it up properly, it can quickly turn from a bucket full of data to a bucket full of holes.
Many businesses know that their tracking is not correct, but they don’t know how to fix it; so they take the incomplete or inaccurate data that they have and they do their best with what they have.
The end goal of this step is to get you to the point where you have:
We’ll go through each of these goals individually:
Tracking pixels generally have a similar functionalities to cookies. However, as more and more users are blocking cookies using browser functions, cookies provide incomplete data, and are often blocked completely.
Tracking pixels area good alternative to cookies as they cannot be blocked by a normal browser currently. Pixels gather a vast array of user data and pass it along to analytics tools. Some of the most popular advertising platforms use pixels to track user behavior and conversions. In addition to the basic tracking functions, pixels can also track custom events, such as video plays, button clicks, or time spent on a page.
Custom Conversions/ Event Tracking:
As we discussed in advanced pixel tracking, you can track so much more than simply page views and conversions. There is no end to the number of behaviors that you can track on a page. We recommend setting up custom goals, conversions and events within your analytics properties and assigning values to each of these items. While someone may not have purchased through your site, they may have filled out a contact form, or given their email address. If you know the average conversion rate for clients on your email list, and the average order value for them, you can assign a value to each email signup.
It’s just like we always say, your output is only as good as your input. If you can get your tracking in order, you are more than halfway through the journey to become a data driven company.
Step 3- Automate your reporting
Once you have your tracking in order, and you know that you have accurate data; you can move on to the next step: automation
You’ll know you’re ready for this step if you have all the complex tracking in place, but you or your team spends a ton of time gathering valuable insights from different systems and compiling them together into google sheets or into excel and pivot tables.
What compound interest is to your money, automation is to your time.
Businesses that we work with get most excited by this step, because it’s where we begin to focus on scaling the business. Automation leads to a reduction in overhead, increase in productivity, and allows you and your team to focus on the analysis of the information, rather than the collection of data. Automation eliminates the human error component of reporting, further allowing you to have complete confidence in the data that you receive.
To scale your business and progress even more, the focus shifts to integrating your systems together so that they automatically transform the raw data into the insights you need to take action. This allows your team to focus on valuable actions rather than mundane data entry. In technical terms, this is called ETL (automatically extracting, transforming and loading your data into one place). For more information on this process, and how we use it with the companies that we work with, be sure to check out our post on data-driven mistakes even good ecommerce business owners make (and how to avoid them).
Step 4- Democratize the data
The final step that you need to take is to share this information with all the people on your team. You wouldn’t believe the value that democratizing your data can have on your organization. Sharing data allows people to bring their diverse backgrounds and viewpoints to the data to help interpret it.
By allowing your team to access the data, they can bring valuable insights to the table and different perspectives that you might not have seen. We call this the lift effect, and we have seen it happen many times across multiple companies and industries. We recently talked to one of our clients about the value that democratizing data has had for them. Be sure to check out our full interview with Organifi here.
Everyone has their own ideas about what it means to have a data-driven culture. We don’t believe that this list is exhaustive by any stretch of the imagination; but we do believe that if you follow these steps, your business will transform into a data-driven organization. If you follow the steps that we outlined here, we guarantee that you will see a change in your business.
If you have questions on any of these steps, or need help with implementation; we are here to help. We provide comprehensive analytics audits to help see where you may have issues with your data. If you struggle with automation, we have a series of pre-built dashboards that can automate your data for you. If none of those interest you, we can also build out custom dashboards to measure unique metrics for your business.
What is the lifetime value of a customer? How does that affect the way that you market your products and scale your business?
These are some of the questions that we had in mind when we went into our conversation with Jeremy Reeves on the Data Rich Podcast. Below is the video of the entire conversation, as well as a transcript of the highlights:
What does it mean to be data driven as it relates to customer LTV?
Being data driven boils down to being aware of the choices that you are making, and making the right choices by utilizing data.
An example of this would be if you are looking to roll out a new product, you need to know exactly how much you can spend to acquire a new customer. If you don’t have data to tell you that information, you are essentially guessing, and that can cause you to be limiting yourself in terms of growth if you’re not paying enough for new customers, or it can be driving you out of business if you’re spending too much to acquire those customers.
If you don’t know the metrics, you don’t know what decisions to make.
How soon in a business should you worry about LTV?
This varies from business to business, but comes down to how quickly you want to scale your business. If you are looking for explosive growth, then LTV is THE metric that you need to worry about. This will help you determine the cost per acquisition that you are willing to pay. In the example above, they realized that if they set their break-even point per customer at 3 months rather than immediate, they were able to pay 30% more per acquisition, which allowed them to jump from making 15 sales per day to making 300-400 sales per day.
By drilling into the numbers and truly understanding the value of their customers over time, their sales were able to increase by 2500%! When you view the true value of a customer over time, you can make decisions like this that help you to experience explosive growth as a company.
How do you maximize returns based off customer LTV?
The best way to maximize your returns is to get extremely granular with your data. Go beyond just looking at the generic LTV of all customers, and see the LTV of customers based off of their referral source, or check to see what other products they purchase after the initial purchase. The more that you can break down the data and individualize your targeting, the more you can glean insights into your consumers, and in turn maximize your returns.
What is the best way to track LTV?
This is the question that you really need to answer for your business. You need to determine how you want to define and track the value of your customers over time. This will be contingent on the systems that you are using, the types of products that you sell, and how you want to think about your products.
Going back to the previous point about getting as granular as possible, you can break down the LTV of your clients based off what their initial purchase was, by referrer,
When should you make changes to your budget based off the LTV calculation?
Unfortunately, just like the last question, this depends on your business. If your company has a long buying cycle, you should probably wait to increase your budget until you see the results from your efforts. If you are able to make back your budget based off the initial purchase, you can increase your budget immediately. By understanding when people are able to hit that break-even point in your business, you can know exactly when you should increase your spend.
How can I set up tracking to make sure that I am getting good data?
You need to make sure that your attributions are set up properly in Google Analytics, so that you can break out customer behavior by traffic source in order to see exactly what your spend should be for each source. Past that, it is highly recommended that you break them out into funnels or campaigns that you are using so that you can properly attribute the LTV to each of the campaigns that you run, as well as the sources.
This requires a great deal of work up front, but once you lay the foundation of good data it is much easier to continue down that path, and you know that you can trust your data.
What is the number one thing that all marketers should know about the LTV of their customers?
The obvious first thing that you need is to know the number. If you are not conscious of the LTV of your customers, you need to find out what that is. After you are aware of the average LTV across the company, you need to get more granular with it, and drill down into the LTV per product.
Once you have those numbers, you need to determine your business goals. If you are in a growth stage of your business, where you are trying to scale, don’t be afraid to break even up front. Be aware of how long it will take for you to start profiting, and make sure that you are comfortable with waiting for that; but once you have determined that, you need to move forward. The business that can afford to spend the most to acquire the customer wins every time.
Want to see what’s possible when you turn your data into growth?
We sat down with one of our long-time clients, Organifi, to talk about how their business has changed and grown since they became data rich. Below is the full video of our conversation, as well as some of the highlights:
Your output is only as good as your input.
There is a reason that we say this all of the time; as Louie described, Organifi was using dashboards before they became our client, but their dashboards were just linked to spreadsheets. People updated the spreadsheets on a daily basis (or at least they were supposed to), but their dashboard data relied on human input. We automated out their dashboards, eliminating the possibility of human error, and also guaranteeing the most up-to-date information.
This data has helped them to rapidly scale their business.
How has this data changed the way that they do business?
Organifi can now see the lifetime value of their customers broken out by the channel that they come from, or what they purchased when they became customers of Organifi. This allows the team to determine and adjust their ad spends across different platforms, and better determine which products to push. The best part of all of this? They know that their data is accurate. Since we removed the human element of their tracking, they now have complete confidence in their reporting.
The team at Organifi has daily huddles where they can review the key performance indicators for each of their departments. This reporting in front of the whole company allows for greater transparency across the company. This also increases the accountability of each individual department. As Louie describes in the video, this increased accountability has also led to an increase in friendly competition between the departments, creating a “lift-effect” for the company.
Louie also talked about how the democratization of data allows everyone in the company to feel like their efforts make a difference. Everyone from the C-suite to the entry-level employees sees the same data, and can see how every department contributes.
What data is fun to look at?
Louie’s favorite metric to look at is E-commerce spend vs revenue. This is his favorite because it allows him to see their ROAS in a visual way (as he puts it, the big spike with the little one beneath it).
Everyone has a metric that they love to look at, and a reason that they love it. For most, it generally has to do with revenue, since that impacts everyone in the company; but we want to know, do you have a favorite metric, and why?