How to monetize your data

How to monetize your data

The most valuable commodity on earth

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.

Data Maturity Spectrum
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 Maturity Spectrum Example

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

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: https://praxismetrics.com/success-stories/digitalmarketer/

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: https://praxismetrics.com/success-stories/danette-may/

External Monetization

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.

Metrics Mapping

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.

Metrics Mapping Process

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.

Dashboarding

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/

Next Steps

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 call to get a personalized data roadmap for your company from a data expert: https://praxismetrics.com/strategy/schedule/

LTV business scaling

What is customer lifetime value, and how does it impact my business?

What does LTV mean, and how does it impact my business?

LTV stands for customer lifetime value, and measuring it can revolutionize your business.

Most businesses determine their ad spend based off their return on investment from said ad spend. Unfortunately though, many people calculate the return on ad spend (ROAS) exclusively based off the initial order value. If you calculate your ROAS exclusively based off initial purchase value, you are most likely missing out on explosive growth, just like our client Danette May. See the video below to hear more about their story:

As you can see from that video, knowing the true lifetime value of their customers made all of the difference for them. They couldn’t scale that funnel reliably without increasing their budget; but they thought that they couldn’t increase the budget on the funnel and still have an allowable ROAS. They had made all of these calculations based off the initial order value though. By widening their scope and tracking the lifetime value of those customers, they realized that they could still get an allowable ROAS even if they increased their budget.

Upon increasing their ad spend, they were able to scale up that funnel tremendously and they went from 15 sales per day to over 200 sales per day in less than a month. Since this video was recorded, they went as high as 600 sales per day and are now averaging about 300 sales per day. That is the power of knowing your true customer lifetime value.

How does LTV impact finance?

While LTV in and of itself can completely change the way that you view customer journey’s and their acquisition costs, the true power of customer LTV comes when you combine it with a few other metrics. Once you know the true value of your customers, the next thing that you need to know is the true cost of goods sold on what you sell. To get the true cost of goods sold for your products, you need to roll in everything, legitimately everything. You need to break down the cost of every employee, all of your overhead, every cost that your business has needs to be tied into this metric.

Once you know the true LTV of your clients, and your true cost of goods sold (COGS), you can now start to look at how much money you make off each client and each product that you sell. You may find that on some funnels you’re not profitable off the initial purchase, but that the clients come back and repurchase multiple times over several months, making that customer profitable overall. From there, the finance team can determine acceptable timetables for profitability. Some businesses have funnels that they know will not turn a profit for several months, but they know that it will be profitable within a certain acceptable time frame for them as well.

Once you know the acceptable profitability time frame, you can begin to work out an acceptable cost per acquisition, which leads us into our next section:

How does LTV impact marketing?

Now that you know the path to profitability and the timeline for it; you can begin to look at how much you can acceptably spend on advertising costs. By studying your cost per acquisition (CPA), you can understand how much ad spend you will need in order to get one person to convert. From there, you can rework this into your established cost of goods sold, and look at your timeline for profitability. We recommend that you find the absolute maximum allowable CPA, and then make sure that you stay underneath that threshold.

The next step in your journey is to get even more granular in how you measure your customer lifetime value. Since your allowable acquisition cost is based off the lifetime value of your clients, it makes sense to break out the lifetime value based off where they came from as well.

In this next video, we show you exactly what that looks like.

As shown in the video, clients who come from different referral sources behave differently. They may be interested in different things based off the type of content that drove them to your site. This will affect the items that they buy, and in turn, their lifetime value as your customer. You can also take this analysis even further by segmenting your customer LTV based off the initial item that they purchased.

How can I start tracking the LTV of my customers?

The hardest part of finding the true LTV of your customers is extracting all of the data from all of the disparate systems. The average small business uses at least nine different systems to track different things, though many have more than that. In order to get a clear picture on the true LTV of all of your customers, you need to gather all of that data. This is a tedious, difficult process known as ETL (Extract, Transform, Load).

The first step of ETL is data extraction. It takes a lot of time to extract data from all of the disparate systems, but it’s rather simple to do. From there, you need to make sure that all of the data meshes together properly. This leads us into the transformation stage.

Transforming data requires a lot of time and mental energy to complete. Each system tracks things differently, so you have to go through and realign the data to make sure that it matches properly between the different tracking systems.

The last stage is the simplest stage and, generally speaking, the one that everyone jumps to. The load stage consists of taking your new, clean data and loading it into a visualization tool so that you can see all of the information that you have gathered in one place.

Many people jump straight to the load phase and get a data visualization tool without having the previous two steps, and that leaves them with a pretty dashboard that doesn’t tell them anything new. The process of ETL is VITAL for you to find your true LTV and of paramount importance for you to propel your business forward.

If you need help with this, we have helped countless businesses go through this process. Simply fill out this form, and we can talk about the unique needs of your business and how we can help you turn your data into growth: https://praxismetrics.com/talk-to-a-data-expert/

How dashboards can double your revenue

Could you be one smart data-driven decision away from doubling or tripling revenue?

How can data visualization help my business?

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

Encompass Health Data

How Encompass Health became data rich

What does data have to do with medicine?

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.

What’s next?

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

The importance of knowing the lifetime value of your customers

Data-Driven Conversations: The Importance of Knowing The Lifetime Value of Your Customers

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.

If you have any questions about dashboards, tracking, analytics, or if you want custom dashboards built for your business then talk to one of our data experts.

Organifi dashboard data team

How Organifi became data rich

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?

Data-driven mistakes even good ecommerce business owners make (and how to avoid them)

Data-driven mistakes even good ecommerce business owners make (and how to avoid them).

Have you struggled with data discrepancies? Had a hard time figuring out what metrics you should actually track? Tried to use a dashboard service and hated it?

If any of those things apply to you, we feel your pain. This video helps to break down some of the most common mistakes that we have run into across the board with multiple ecommerce businesses, and how to avoid and fix them. If you don’t have the time to sit through the video, or don’t have headphones handy, never fear: we have provided a breakdown of the video below.

Mistake #1: Not automating data extraction

  • Most companies have a HUGE issue with this; they have someone assigned to extract data from multiple data aggregates and put it all together in one place.
  • This causes several problems for businesses, the first being the human error side of things; humans make mistakes constantly, and with a task like data aggregation it’s very easy to misplace a decimal point or to switch two numbers around, which may not seem like a huge deal, but if you take action on the insights gleaned from that data it can lead to catastrophe.
  • The second problem is that humans are expensive. Generally the person in charge of this kind of task is a marketer, and their time is much better spent analyzing data rather than aggregating it; marketers find actionable insights from the data, but very rarely do they have the necessary training to clean data and ensure its accuracy.

Mistake #2: Believing that a dashboard is the solution to your data problems

  • Dashboards are excellent tools for data visualization and data aggregation, but they will not solve any issues that you have with the underlying data.
  • The second issue that people often run into with dashboards is actually connecting the data from the various sources to the dashboard. Many of these data visualization companies talk about how easy their technology is to implement, but going back to the first point, you need to understand how to take all of the different data formats and naming conventions and standardize them across the board so that you can actually get actionable data that you can trust.

Mistake #3: Not making your data actionable

  • According to a Google survey 97% of websites collect data from their customers, but less than 30% actually use that data to make decisions in their business.
  • Many companies get so bogged down with metrics and get lost in the weeds of everything that is measured that they lose sight of their actual goals. It is best to narrow the view down to 7 or 8 actionable metrics  to focus on in the near term, i.e. increasing revenue or decreasing costs, and then once you have those under control, you can begin to add new metrics that you want to measure to further optimize the business.
  • The last part of making sure that your data is actionable is making sure that there is someone assigned to each of the core metrics that you decide to measure. That allows the person to focus on that metric, so they know exactly why that metric went up, down, or sideways, and can explain to the team exactly what happened so that you can replicate that behavior again or avoid it in the future.

Mistake #4: Not democratizing data

  • Many organizations have one nerd who analyzes all of the data and then transmits that data to the team, but that nerd doesn’t know what they don’t know. This flows back to the first mistake that many businesses make, by trusting too much in humans who are extremely prone to errors.
  • Everyone has different backgrounds and experience, so when they look 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.

Mistake #5: Not focusing on the bottom line

  • This is very similar to not making data actionable, but it is very important to cover as well.
  • Determining the right metrics to measure for your business starts with your big goal: driving more revenue. You need to ask yourself, “what are the primary drivers of revenue for my company?”.
  • After you have determined what the primary revenue drivers are for your company, you need to ask the logical questions as to how you can get more from those customers; that may be, “how do I keep them subscribed to my service for longer?” or “How can I increase repeat purchases?” or even “How do I increase the average order size on my site?”.
  • For each of those questions, you can find one metric that will help you to measure the effectiveness of your efforts. By then focusing on that single metric to measure your results, you can experiment to find what works for your customers.

Mistake #6: Worrying about the chicken vs the egg

  • Many business owners think that they don’t need to start truly tracking these key metrics until they already have success to replicate; this could not be further from the truth.
  • Cleaning and tracking data, especially in the early stages, helps you avoid costly mistakes and also helps you expand rapidly. Businesses that track their data early on can outspend and outmaneuver their competition because they know exactly the type of returns to expect from their investment, allowing them to aggressively expand and claim market share.

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