How to turn your data into explosive sales growth
The co-founders of Praxis Metrics, AJ Yager and Meaghan Connell, recently went on the Brand Secrets and Strategies Podcast with Daniel Lohman. It was a great podcast episode that we wanted to share here.
Check out the full episode along with our insights below:
What is Praxis Metrics?
Praxis is a data analytics agency. Essentially, they help companies that are scaling but that don’t yet have the resources to build out a full IT or Business Intelligence team. Praxis helps them to leverage their data to scale, at a fraction of the regular price. Once the businesses have scaled to the point of having the resources to hire a team, Praxis moves to support them with the backlog. This allows businesses to remain adaptable and agile, even as they scale.
So how did Praxis get started?
Praxis Metrics started as a department within a marketing agency. Meaghan and AJ ran a successful marketing agency, but found that one of their best employees had to spend all of his time creating reports for clients. They starting researching ways that they could automate their reporting, and stumbled into the world of business intelligence.
They rolled out their reporting solution to their clients, and the clients immediately started asking if they could roll it out for their whole business. AJ and Meaghan decided to launch Praxis as the “data division” of their marketing agency; but the data division expanded so quickly that they had to decide which business they wanted to focus on. They found that businesses desperately needed data services, so they decided to pivot into that. The rest, as they say, is history.
Every company a data company
If you’ve followed Praxis for any length of time, you’ve probably already heard that data recently became the most valuable resource on the planet. In today’s competitive market, your competitive advantage often comes from the insights that you have on your customers. The more data that you have on your customers, the greater an advantage that you have.
Small businesses often have a treasure trove of data, but don’t know how to access it. Most businesses use a myriad of systems, none of which communicate with one another. This causes data-silos, which small businesses rarely have the time to dig through in order to capture valuable insights.
In today’s business landscape, lots of businesses are encouraged to focus on raising money. They’re told that the best way to scale is to raise money, then raise more money, and then some more money. While they focus on raising money, they’re supposed to hand the operations of their company over to an agency.
Dan believes that it’s much more important for business owners to understand their business inside and out. They need to know what drives sales, the pitfalls and struggles of the business, and the key factors to success. Because the landscape today is so competitive, you need to know the ins and outs of your business and your customers.
The challenge of today
The business landscape constantly evolves and changes; now more than ever. The only way to prevent getting left behind now is to develop an omni-channel presence. It used to be that you could stick strictly to wholesale, or retail, or ecommerce; but now you need to talk to your consumer everywhere. In today’s digital economy, even businesses that run exclusively brick-and-mortar stores need to advertise their products and services online. And not just online, but everywhere online.
When advertising online, especially in an omni-channel fashion, you need to make sure that you’re tracking your efforts effectively. That means that you have to have UTMs set up for all of your marketing efforts, your attribution models fine tuned, and your KPIs well defined.
Data is a big reason for the sudden push to become omni-channel. In a traditional wholesale business, you sell your products to the retail stores, and that concludes the transaction for you. The retailer collects all of the data on who purchases your products, what other products they purchase,and how often they purchase. Because everyone has started to recognize the value of data, traditional wholesalers now want to make sure that they also gather this data. That’s why we see so many businesses pivoting into the B2C and ecommerce models. This transition allows them to also gather data on their clients, and reduces their reliance on the retailers.
A rising tide lifts all ships
Meaghan points out in the video that Praxis has clients that will run 6-figure ad buys in specific geographic areas in order to drive people to their retailers. While we recommend owning as much of your data as possible, you can still find ways to gather consumer data and strengthen your business relationships. These businesses are able to gather data on the people most likely to interact with their ads; while simultaneously driving more traffic to their partner’s store.
This creates what we like to refer to as the “Lift-effect” or “expanding the pie”. The lift-effect is when everyone wins based off one smart decision. Rather than creating a zero-sum situation where the only way for one group to win is by taking from another, you can create scenarios in which everyone benefits. You should check out our real-world example of this from Organifi.
The cost of data
With all of the free tracking tools available, you can get a massive amount of data with very minimal investment. Some people maintain the mindset of yesteryear that data and big data is reserved for large, enterprise companies; but today everyone has massive data in their cell phones. You can easily gain a treasure trove of insights on every visitor to your site with almost no up-front costs, other than time.
Additionally, you can get creative with your data gathering. We had one client who created a massive database for their social media posts. They simply went through all of their previous social media posts and tagged them with meta-data on the location of the image, type of shot, color of the product, etc. By creating this database, they tracked what types of posts were most effective across different seasons. This allowed them to dramatically increase the effectiveness of their social media marketing.
Syndicated marketing data can still be extremely expensive; however you can still get massive amounts of public data for very cheap or even free. For example, Walmart knows that when hurricanes are reported, they see a spike in strawberry Pop-tarts sold. While Walmart tracked the sales of the Pop-tarts, it wasn’t until they joined that data with the public weather data that they saw the correlation.
Data as an investment
Most of what Praxis does for clients is education. We have to change the way that people think about their data. Too many people either live in fear of the data, or they view it as a cost center. In reality, it’s an asset. You wouldn’t view a gold vein as a cost center just because you had to mine it in order to get the value out of it.
Praxis has yet to have a client that couldn’t turn their data into exponential growth. There more information that you have, the better you can run your business, target and acquire customers, and increase your profitability. Many businesses think that data isn’t sexy or fun; but it may be the most sexy and fun part of a business. The best way to scale your business is through data.
Praxis specializes in turning the raw, boring numbers into the sexy insights that can help transform businesses into powerhouses. We do this by delivering metrics that actually drive results rather than vanity metrics. The best way to identify the metrics that can drive your business forward is through a process called “Metrics Mapping”.
As you can see, the process of metrics mapping starts with establishing your goals. From there, you need to figure out what questions you need to answer in order to hit that goal. In this example, we need to know how to increase conversions for the site.
From there, we drill down to see what numbers will help you answer that question. In this example, we need to know conversion rates, customer LTV, our acquisition costs, and profitability by channel. These numbers will help us figure out how much we can spend to acquire new customers, where we should spend that money, and how soon we can expect to see returns on our ad spend.
The next step of metrics mapping is determining the “source of truth” for each of those metrics. The source of truth is the place where the most accurate information on that metric will live. For financial data, that would be your bank account or your payment processor. For traffic source data, Google Analytics is your best bet.
From there, we focus on a process called ETL. ETL stands for extract, transform, and load. We extract the data from the many sources where it lives; transform it by making sure that everything is tracking the same information, and that they’re all on the same scale. From there, we load the data into a data visualization tool.
By following that process, we’re able to take data from raw numbers into insights that allow businesses to scale off their data. This allows businesses to change the way that they behave, decrease their waste, and increase their revenues.
Move beyond what happened, and into why
Once you have a solid understanding of what has happened in your business, you can start moving into the why. This is the most important shift that a business can make. Once you gain a solid understanding of your customers and their behaviors, you can start to look into why they react the way that they do. Once you understand that, you can start to move away from looking to the past, and start looking to the future.
This is the goal of all of your data projects. We want to get you to the point where you know that if you do x, it will yield y. At that point, you can start printing money.
Predictive analytics don’t happen overnight. You need to have an extremely robust data set in order to make accurate predictions. That means that your tracking and data storage need to be put together properly so that your insights are accurate.
The waste business
Praxis is in the waste business. We work with brands to help them eliminate waste and increase their revenues. Too many businesses only focus on the top-line revenue and increasing that. They don’t look into the ways that they can boost the bottom-line profitability without increasing their spending. Praxis helps businesses find the 80% of things that aren’t driving results for the business. Once they cut that waste, they can redirect that waste to the 20% of things that are driving their revenues.
Just doing that can drive exponential scaling. We’ve seen clients explode off just that information alone. Whoever can spend the most to acquire a customer will win every time. You can see how just this information helped Danette May transform their business.
Optimization vs elimination
So many businesses focus on doing more of what’s working; not enough focus on the elimination of waste. If you can reduce your overhead or reduce your COGS, you can increase your profitability across the board.
Praxis Metrics ran through this issue a few years ago. We were stuck working in the business rather than on the business. Thankfully, AJ and Meaghan set aside 2 weeks every year to review the data for the company. We were operating at a 3% profit margin, despite the fact that we had glowing customer testimonials and good top-line revenue.
They looked into the company to figure out what was eating up our margins, and discovered that Praxis was marking too many hours as non-billable to the client. This allowed us to deliver amazing results to the client, but the company was unable to profit off our amazing work. As soon as we found this out and started to focus on charging for the hours that we worked, we went from a 3% profit margin to a 30% profit margin in 3 months.
Every business is just one data-driven decision away from exponential growth. You just need to find the number that will drive the results that you’re looking for.
Don’t cut your ham
Dan gave a great anecdote about a radio announcer who visited his son’t house for dinner. The daughter-in-law cut the ends of the ham before cooking it, so the announcer asked her why she did that. She responded that her mother always did that before cutting ham. The mother happened to be there and responded that she did that so that the ham would fit into her small pan.
Too often we do things just because that’s the way that it’s always been done. By getting deep into your data, you can find the areas that you have sold yourself short, or cost yourself opportunities.
One way that we can proverbially cut the ham is in the amount of data that we collect. Too many businesses just settle for basic tracking items. As we discussed earlier, we had one client create their own database of the different styles of social posts that they use. Another one of our clients used data in their branding commercials. This client wanted to track the effectiveness of humor in ads and when they needed to place the humor in order to maximize the effect.
They ran split tests on the different variants of the ad to see which was the most effective with time tags of when they used different types of humor. They then overlaid this data with watch times, click through rates, and purchase behaviors in order to see how humor impacted their consumers.
Talk to your customers
One thing that every brand can work on is making sure that they are talking to their customers and not at them. Often times, marketers get wrapped up in the story that they want to tell; but it’s important to remember that your product is not the hero of the story. Your customer is the hero of their story; you are just the guide, leading them to a better life.
In order to lead them, you need to make sure that your message is extremely clear. You need to tell them exactly what they need to do in order to get the most out of your products and services. Give them explicit directions on their next steps. You want to make their life as easy as possible, so guide them on the things that they should do and the things that they need to do in order to get the most out of your product.
Where to start
The first thing that every business needs to do is figure out where they stand and where they want to go. You need to run an audit of your systems and processes as they currently stand and then outline where you want them to be. That will fill in your goals section of your metrics mapping journey.
Once you know where you are and where you want to go, the next step is simply asking how you’re going to get there. Figure out the action steps that you need to take now and map out the journey that you want to take. Once you know your journey, you should ask for help where you need it.
So many professionals feel like if they ask for help they have somehow failed. That is not the case. It’s much worse to settle for what you think is possible than to ask for help and achieve the impossible.
Find your tribe
The first thing that you need to do is figure out who you want to target. Who are the customers that won’t just use your product, but that love your product, use it frequently, and will recommend it? You need to find the commonalities between those consumers, figure out the persona, and then figure out how to talk to and engage them. If you can nail that down, then you’re well on your way to success.
This podcast was very dense in ideas and action steps that you can take. If you need help taking action on any of the things that we covered here, we would love to help. If you fill out this form, we can help you figure out where you are, where you want to go, and help you set up that map.