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.
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 guest appearance on the Perpetual Traffic podcast, AJ and Meaghan talk about how to use your data to optimize your ad spend, and rapidly scale your business.
They cover everything from getting your tracking in order, all the way up to creating customized dashboards and leveraging complex machine learning and AI.
Enjoy the episode and our insights below.
The struggle today-
Many marketers feel that they aren’t getting the most accurate data inside of the ad platforms. Unfortunately, they are completely correct. Some marketers go so far as to purchase a cheap dashboarding tool in order to help them bring all of their metrics together into one platform in order to help them with this issue. Unfortunately, this will not solve the problem for them at all.
Why do we suddenly have this struggle with data? What drove us to this point?
In our opinion, the problem stems from an overabundance of data. Never in the history of the world has so much data been available to us. Even in the last 20-30 years, large-scale data projects were reserved exclusively for enterprise-level companies. But now, every company has access to “big data”; despite this, many still have the mentality that their business doesn’t have the same access to data, and therefore the same opportunities and responsibilities, as the larger organizations.
Because these smaller businesses fail to leverage the data available to them, they often find themselves utilizing incomplete or dirty data. If they utilized all of the tools and tracking options available to them, they would have a much more complete and accurate picture of what’s happening.
The opportunity today-
Similar to the dot-com boom of the late 90’s, we’re seeing a “data boom” today. Those that have embraced data and created strategic initiatives around data are already separating themselves from their competition. Taking action from data is the new competitive advantage.
Those who capitalize on data have the opportunity to outpace and out-scale their competitors. John Wanamaker said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”. Those who eliminate waste in their budget open themselves to amazing opportunities. By doubling or quadrupling down on the things that work, they can drive exponential growth.
How you can capitalize on this opportunity-
Ask the right questions-
We firmly believe in the Socratic method. Asking questions helps you find deeper truths. The trick is finding the right questions to ask that will propel your business forward.
We found that the best way to find these questions is through a process called “metrics mapping”. The diagram below walks through an example:
Metrics Mapping starts with the big goals of your organization. This could include doubling your revenue year over year, increasing sales of a certain product by 30%, etc. From there, we want to drill down to the questions that you need to answer in order to meet that goal. If you want to double your revenue, then why don’t you? What questions do you need to answer in order to hit your goal?
Once you have the questions that you need to answer, it’s time to figure out what numbers can help you answer that question. In the example above, we need to know how to increase conversions and revenue from the website. In order to figure out how to do that, we need to figure out conversion rates, LTV, CPA, and profitability.
Once we have asked the right questions and gathered the necessary data, we need to:
Get granular with it-
Averages are inherently evil. Averages by definition mash together your highs and your lows and give you one number to work with. In order to properly scale your business, you need to know what creates the highs and what creates the lows. Once you know that, you can scrap the things that bring in the lows and double down on the highs.
Going back to the previous example; once we’ve gathered the numbers, we can strategize our next move. Perhaps we need to update our nurture sequence to increase return purchases. We may have a funnel step that causes dramatic drop-off that we can eliminate.
By getting granular in our analysis, we can discover a myriad of opportunities.
What metrics should every business look at?
Every business suffers from “terminal uniqueness”. While every business has certain things that they specifically need to track, there are a host of metrics that every business should know.
The obvious metrics that fall into this category are ad spend, return on ad spend, etc. In addition to these, businesses should also look at cost of goods sold (COGS), shipping expenses, and overhead. Many businesses forget to factor these costs when they look at what their allowable cost per acquisition can be.
This allows you to look at your return on ad spend through the lens of profitability, rather than just revenue generated.
What is the biggest problem businesses have with reporting?
Over-attribution. We see this issue with almost every client that we work with. Facebook, Google, and every other ad platform utilizes different attribution models. Generally, the platform will leverage an attribution model that favors them, and makes them look the best.
So Facebook utilizes an attribution window, meaning that if someone clicks on your ad, and then returns to your site within 28 days, they will claim that they produced 100% of the revenue from that client. Google defaults to last-touch attribution modeling, meaning that wherever that user came from when they made the purchase receives 100% credit for the revenue of that client. Other platforms count view-through conversions combined with an attribution window, meaning that if they saw your ad and then purchased within a certain time frame, that platform claims credit for that sale.
This scenario can lead to multiple ad platforms claiming that they are responsible for the exact same sale.
How do we combat this issue?
If you’re interested in learning more on this subject, we have a separate blog post on ways that every business can work through the over-attribution problem here.
In addition to those tips, our biggest suggestion for fixing this issue is getting a multi-source business intelligence tool. By extracting data from the back end of each of the ad systems, you can piece together a client’s journey and create your own attribution models. This allows you to see your true customer journey, rather than just a simple metric provided to you by a biased platform.
Unfortunately, even that solution relies heavily on the tracking that you have in place. If your tracking hasn’t been set up properly, then you have to rely on the data reported by these platforms, rather than leveraging and creating your own.
Your output is only as good as your inputs-
It doesn’t matter how much you spend on your powerful tools, they still rely on the data that you give to them. If your tracking isn’t set up properly, it’s impossible for a dashboard to correct that for you.
Powerful insights require great data. And unfortunately, good data requires great tracking.
Good news though, if you can get your tracking nailed down properly, then everything else glides into place. The old adage of “measure twice, cut once” applies to data as much as carpentry.
Going back to the metrics mapping process, we want to help you find the “source of truth” for every metric that you measure.
The “source of truth”-
Every metric should have a place where the definitive answer lives. If you want to know how much revenue you’ve brought in over the last month, you can check your bank account, or Stripe, or Paypal. If you want to know how long visitors from Instagram stay on your website, Google Analytics could help you find that answer.
Each data platform specializes in different data points, and we want to get the best data from the best sources.
Where to begin?
We recommend that every business start with the projects that will move the needle for the business. This generally means starting with sales and marketing initiatives, as they generate revenue for the rest of the business.
We have been shocked at how many issues businesses solve by getting their data set up properly for sales and marketing. Also, by leading with these departments, we can generally start to uncover holes in other parts of the business. If we see a spike in cancellations that coincides with customer survey emails, we know that we clearly have something to fix there.
It’s important to remember with every data initiative that it’s a journey. As much as we wish that we could fix every data problem overnight, it takes time to solve these issues and answer these questions. From there, we need to take action from the insights that we gained, and then we can see the results.
Leverage your uniqueness into growth-
As we stated earlier, every business suffers from terminal uniqueness. While this can complicate projects, that is also the place where you can see the greatest results.
By leveraging your uniqueness in the things that you track, you can get extremely granular, and explode your business in ways that others can’t.
One of our clients, Fancy Sprinkles, found amazing insights by tracking what no one else bothered to track.
Fancy Sprinkles, which does exactly what their name sounds like, gets most of their leads from Instagram. They decided to go back through every post that they had ever done and manually put into a spreadsheet the variables of the post. They tracked whether the product was shot indoors or outdoors, close or at a distance, color palettes, everything.
When they overlaid this data with their social media engagement rates over time, they found amazing insights. During October, they assumed that they should post something orange and black to capitalize on the holiday. But after consulting their data, they quickly realized that those colors got the worst engagement in October. The data told them that they should use purple and green, outdoors, and close-up. Their engagement skyrocketed because of these insights.
Tracking may require an up-front investment. Fancy Sprinkles needed interns to work for hours to catalog all of that data, but once they had the historical data, it became much easier to simply input those data points on every post that they made.
When should people seek help with their data?
As soon as it gets annoying or frustrating.
This may seem simplistic, but it doesn’t make sense for you to abandon your superpowers only to beat your head against a wall.
Your company hired you because of your skillset, and if data doesn’t fall into that skillset, it’s better to outsource that than to take away time and energy from the things that you do best.
What should businesses have in place before consulting with Praxis?
We built Praxis to meet companies wherever they are on the data maturity spectrum.
If you already have your tracking in order and want to move on to scaling your business and gleaning better insights, then we offer pre-built dashboards that can help you start leveraging your data into growth.
In this guest appearance on Mike Dillard’s Self Made Man podcast, AJ and Meaghan talk about how to rapidly scale your business using data and dashboards.
They cover everything from the data maturity spectrum to metrics mapping, tracking, UTMs, and how to combine these things for rapid growth in your business.
Check out the full episode below along with our summary of key takeaways.
How did Praxis get started?
Prior to starting Praxis, AJ and Meaghan created a data-driven digital marketing agency. They quickly found though that reporting on their marketing efforts was taking more time that actually implementing their strategies. Because of this, they began researching automated solutions to the reporting problem. Once they finally created a solution, they found that more people needed that solution than needed marketing help.
They decided to pivot and become an outsourced data agency, and Praxis Metrics was born.
Initially they courted enterprise-level clients because those clients were they only ones seeking out “big data” at the time. However, as time passed, they realized that they gained more satisfaction from helping SMBs achieve their potential through data. So they began to provide the same powerful insights and dashboards that they had built for the enterprise clients to smaller businesses.
What are the biggest takeaways from working with such a diverse group of clients?
SMB business owners need the same questions answered as the enterprise companies. While they may look at them through different lenses and different granularity, the questions remain the same.
The number one question that every client asks is, “how much can I spend to acquire my customers?”. Generally, the next questions asked are: “how much are those customers worth over time?” and “where and what do they purchase from me?”.
These questions all stem from the same desire: understanding your core customers, and how to best serve them.
It all boils down to what is and isn’t working in your business right now.
What are some of the biggest differences in SMBs and enterprise companies?
Enterprise companies recognize how much data they have, and the value of that data. SMBs often downplay the amount and value of the data that they already have.
Most SMBs don’t realize that even just having timestamps of when your customers purchase provides valuable insights to the business. This lets you know the times when your purchasers will be most receptive to your messages and most likely to purchase your products.
What difficulties do businesses face with their data?
Trusting your data is the key to gaining good insights. If you don’t trust your data, then the prettiest dashboard in the world will not help you.
You need to have the confidence to take action from your data; otherwise it’s like having gasoline but no car. You won’t get anywhere with that.
We’ve seen a multitude of dashboard companies that sell businesses on the visuals of their dashboards alone, but without fixing the underlying data issues, they end up providing very little value to their customers.
Many SMBs say that they simply don’t have the time to get their data in order; but we preach the opposite. The best time to set up your tracking and make sure that you gather clean, accurate data is before you have too much of it. As your organization scales and grows, the amount of clean-up required in order to get your data in order scales as well. If you make a concerted effort in the beginning to get clean, accurate data that you can trust, your business will scale faster. And when the time comes to transition into dashboards and advanced analytics, your data will be ready and actionable, saving you valuable time and money.
Every business has the time to sit down and set up standard operating procedures (SOPs) for their business. Setting down SOPs is especially important when it comes to UTMs. If you can lay down the groundwork early on for standardized tracking, you can gain amazing insights on how to communicate effectively with your clients.
UTMs will tell you what types of content your customers like to engage with, it will tell you the specific mediums that they like to engage with your business on, and it will help you eliminate the issue of over-attribution in your tracking. If you want to learn more about over-attribution, and how that affects businesses, visit Praxis Metrics – How to win the attribution war to read more.
How do we lay the foundation for the future?
Even if you don’t have the time to analyze the data yet, it’s imperative that you begin tracking your customers and their behavior. You can’t retroactively gather data from your customers. When it gets to the point that you want to begin retargeting campaigns, or analyzing your customer behaviors, if you didn’t set up your tracking you won’t have any information to go off.
When they begin advertising, many businesses start with a shotgun approach. They distribute their spend equally across the most popular platforms without knowing which one will drive the best results for their business. If you track your customer behaviors over time, they will show you where they like to engage with you. You can know whether you get the highest traffic from Facebook or Instagram or Linkedin.
What are some of the data success stories that Praxis has seen?
Danette May wanted to see the true lifetime value of their customers to see if they could scale a funnel. They knew that the funnel converted well with retargeting, but they had a hard time getting the same response from cold traffic. They had an idea of the LTV of their customers, but they wanted to verify.
We found that their customers actually had a much higher LTV than they thought. This allowed them to increase their allowable cost per acquisition (CPA) by $5. This change caused them to take an initial loss on the first product sold, but they also knew that within 30 days, these clients would return and spend much more on other products.
This change drove them from 15 sales per day on this product to more than 350 sales per day in less than two weeks. Within a month, they were selling more than 600 units per day.
If you’d like to learn more about Danette May’s journey and how this information helped them transform their business, we have an entire case study on them here.
We built a social media dashboard for Fancy Sprinkles that allowed them to drill down to see what kinds of posts received the most engagements over time. By tagging all of their posts with series of metadata: I.E. indoor vs outdoor shot, colors used, theme, etc.
Because of this metadata, they found that during Halloween the top performing posts contained purple or green, were shot outdoors, and had close-ups of the products. Naturally, this ran completely counter to everyone’s instincts, but it allowed them to provide their audience with content that they actually wanted to engage with. Because they had this data, they outpaced their competitors in engagement and attention.
What are some of the data failure stories that Praxis has seen?
We’ve had clients who utilized free shipping discounts in order to better compete with Amazon. These clients assumed that this would inspire higher customer loyalty, and create repeat customers. Unfortunately, when we cleaned and examined their data, we found that this wasn’t the case at all.
This assumption was costing them dearly over time, preventing them from properly scaling, and could have driven them out of business if it had gone on for too long.
The key to success is listening to your data.
The most viewed person on Facebook was a magician who simply did magic tricks in front of his webcam in a coffee shop. He managed to scale his brand and following by tracking the videos that performed best and then replicating the factors in those posts over time.
Data doesn’t have to include machine learning, or advanced AI algorithms. A simple excel sheet that analyzes data points can drive more success than multi-million dollar solutions.
If you don’t analyze your data to see what works and what doesn’t; your competitors will analyze that data, and eventually overtake you because of your failure to capitalize. Data has the power to topple huge organizations like Barnes and Nobles or Blockbuster, and the pace of change is only accelerating.
Who does Praxis work with, and how can they prepare?
We have historically worked with enterprise companies; so we can work with larger organizations, but our passion is working with SMBs and helping them rapidly scale their businesses.
We have brought the “big data” insights to the SMB market by finding the common threads between every implementation that we have done for these enterprise companies. By finding the common questions that everyone has, we have built out plug-and-play dashboards that can help answer those questions. Because these dashboards require very little ramp-up or custom coding, we can offer them for a much lower price than normal, and roll them out much faster.
These dashboards answer some of the fundamental business questions that every business needs to know: what is the LTV of my customers, how are my subscription services trending over time, what products drive the most revenue and value, etc. We extract this data from multiple sources, ensuring that you get the most accurate and valuable data.
Our pricing ranges from $500-$1500 per month for platform costs, and then we just charge hourly for any work to build out the dashboards and connect to data sources.
We meet our clients wherever they are on the data maturity spectrum. A lot of our clients come to us and they need help getting their tracking in order before they move onto dashboards. We offer services to help with that. No matter what your data needs are, we can help you get from where you currently are to where you want to be.
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.
Your data may be the most valuable asset in your organization. The question that you need to answer is, “Are you getting the value out of it?”
In our guest appearance on the JetRails podcast, we cover everything from what metrics are actually important to growing ecommerce businesses, to how to make sure that you’re prepared against the upcoming data privacy changes. Check out the episode and our insights below:
What does Praxis Metrics do?
Praxis is an outsourced data team. We specialize in helping businesses gather, store, validate, and visualize their data. As data becomes more and more valuable, we help remove the strain of having to extract that value. Our goal is to help you understand your data in a way that makes it actionable, scalable, and valuable.
Many businesses think that they can’t compete with the big businesses with their “big data”, but as with all things, data intelligence has funneled down to the SMB market. This shift allows any business to take control of their data from inception and use it to rapidly scale.
Why did Praxis start?
Prior to starting Praxis, AJ and Meaghan created a digital marketing agency. They quickly found though that reporting on their marketing efforts was taking more time that actually implementing their strategies. Because of this, they began researching automated solutions to the reporting problem. Once they finally created a solution, they found that more people needed that solution than needed marketing help.
They decided to pivot and become an outsourced data agency, and Praxis Metrics was born.
What is the solution they created?
In creating their automated reporting system, Meaghan and AJ found ways to pull in data from all of the platforms and data silos of a business, allowing businesses to see all of their data gathered and aggregated in one place. A “command center” of sorts. This “command center” helps solve many common issues that ecommerce companies regularly face.
Where does the name “Praxis Metrics” come from?
The term “Praxis” comes from Aristotle’s foundational truths. He believed that there were three main constructs of man: Theory- which is thinking about things, Theoria- which takes the information that you thought about in theory and combining them together to create knowledge, and then there is Praxis- which is the practical application of the knowledge and wisdom that you gained by combining your theories and knowledge together.
The process of Praxis is simple: data leads to information. Information can be turned into knowledge. Knowledge then transitions into wisdom. And taking action from that wisdom is praxis.
Data never solves a company’s problems. Data simply points out facts. You need to interpret those facts and find the driving force. Once you understand the driving forces, you can take action to impact those forces. Your actions are the only thing that will change your business. The practical application (praxis) of your wisdom will help you scale your business; not your data.
The goal of Praxis Metrics is to give businesses data that they can take action from. We want for everyone to leverage their data into action that helps them grow their business.
Every metric should have an action tied to it. Metrics without action tied to them are just vanity metrics.
How can I take strategic action from my data?
We start every client journey with a process called “metrics mapping”. Metrics mapping allows us to figure out what data you actually need to gather in order to reach praxis.
Pictured below is an example of the process of metrics mapping:
Metrics mapping starts with the goals that your business wants to achieve. In this example, this company wanted to double their revenue year over year. Once you have your goals in mind, you need to start asking the questions that will lead you to that goal. In this case, they need to increase conversions on their website in order to reach their goal. The question that they need to answer is, “how?”.
Once we know the questions that we need answers to, we know the metrics that we need to pull. We’ll begin pulling the metrics that help us answer the question: conversion rates, customer LTV, acquisition costs, and profitability.
From there, we need to find the “source of truth” for each of these metrics. The source of truth is the place where we can find the most accurate data. For financial data, this can be your bank account, Stripe, or Paypal. For traffic data, it could be Google Analytics, or the back end of your website. The point of this stage is to find the most accurate data source to pull from.
The rest of the steps would be carried out with the help of the Praxis team as we help you build out your dashboards.
How do I justify spending money on data?
It’s important to remember that data is an investment, not a cost center. Data recently surpassed oil as the most valuable resource on the planet, so any investment that you make into harvesting, leveraging, and improving your data should return massive dividends if implemented properly.
There’s a reason that data is now recognized as “king”. It has the power to create and destroy massive corporations, swing elections, and generate untold wealth for those who leverage it properly. If you know why something happened and your competitor doesn’t, you can pivot and adjust in order to take advantage of their ignorance.
Taking action from data is the new competitive advantage.
Companies that capitalize on data will scale, those who do not will fail. Speaking about the hurricanes, they mentioned that Walmart and Target were receiving huge shipments of Pop-Tarts, as they know that they are a staple during hurricanes.
Many businesses think that big data is reserved for enterprise-level companies; but tools have gotten cheaper, talent has gotten more affordable, and data has become more plentiful. One of the goals of Praxis is to bring those big, enterprise-level insights down to the SMB market and help them see hockey-stick growth.
Before you begin investing in your data though, it’s important that you know where you should invest your money. That is where the data maturity spectrum comes into play.
What is the data maturity spectrum?
The data maturity spectrum helps you identify where you are, and what your current data priorities should be.
The Foundation Stage-
In the foundation stage, everything revolves around tracking. You can’t analyze data if you don’t have data; so you need to make sure that you gather the data that you need in this stage.
Many companies ignore this step until they’re looking to move to the next stage. Unfortunately, by that time they’ve lost out on all of their historical data. We see many businesses come to us that want to build out amazing dashboards, but we discover that they haven’t tracked the data until this point. That means that they have lost out on years of data that could provide crucial context to the data that they gather from here forward.
Too many businesses want to get started, and push to start selling before they set up their tracking; but they need to realize that you cannot retroactively track. Any changes that you make to your tracking only adds data moving forward, and any data that you missed out on previously is lost.
Revenues do not determine your place on the data maturity scale, the only thing that matters on this scale is how well you handle your data.
What are the questions that you will have in the future?
You need to think on what things you may want to know in the future, and start tracking those things today. It may seem tedious right now, but in the future, it may drive your success.
Typically, the cost of marketing far outweighs the cost of taking the time to track these things. Tracking can inform and optimize your marketing budget, allowing greater success than previously imaginable.
What are the metrics and behaviors that allow for rapid scaling?
Phase two of the data maturity spectrum is automation. What compound interest is to your money, automation is to your time.
Automation increases efficiency, accuracy, and profitability of organizations. Automation is one of the primary drivers of rapid scaling and growth.
Customer Lifetime Value-
Understanding the lifetime value of your customers is one of the keys to rapidly scaling. The business that can afford to spend more on their customers will win every time. Understanding the value of your customers over time allows you to predict break-even points and therefore allows you to determine higher acceptable acquisition costs than those who base their spend exclusively off initial order value.
Why do averages suck?
By definition, averages pull in all of your data, the highs and the lows, and gives you one number. You don’t want to base your decisions off just one number though. The 80/20 rule applies to almost everything in life, and business is no exception. An average will hide the 80% of things that do nothing for your business behind the 20% of things that actually drive your results. We want to know what falls into the 20% category so that we can eliminate the 80% scale the 20% that works! Averages keep you growing at a steady pace; we want to deliver explosive, hockey-stick growth.
Too many businesses treat all of their customers the same way; whether they came in and spent a dollar, or a thousand. In order to scale though, you need to invest time and effort into your customers in proportion to the value that they bring to your organization.
Once you know where your most valuable customers come from, and how to properly target them, you can essentially print money for your business.
What should ecommerce companies know about their business?
Ecommerce companies should know what technology stacks they use in their business, and how those technologies handle data.
Amazon is a wonderful example of this. In the last couple of months, they have completely changed their terms of service (ToS) to restrict the data that merchants can access. Amazon collects a vast amount of data on the customers that come to your store and purchase, but they will now only allow you to see certain parts of that data. The worst part is that this is not unique to Amazon. Platforms across the web and world are cracking down on the data that they share with third parties. Because of this, you NEED to know how the companies that you work with handle data.
What should you do to protect against data loss?
You need to make sure that you either own the data completely, or that you have a backup of the data stored off of these platforms. In the podcast, we discuss how these platforms are your “frenemy”. They may seem nice, but the relationship can turn on a dime; so you need a backup plan.
As data becomes more and more scarce and consolidated within platforms, the value of that data will increase dramatically. For that reason, it’s imperative that you take ownership over your data and protect it from outside sources that would limit your access to it.
What sort of subscription metrics should ecommerce companies look at?
We see so many companies come to us and ask what their average subscription length is. As we already discussed, averages are evil.
Instead, we build a chart that shows how many cancellations they have per day. If you have an average, it will tell you that your average subscription length is 60 days; this chart will show you that 30% of your cancellations occurred between day 3 and 7, so you can take action during that time period to reduce that churn.
Everyone wants to increase the average, but the average in and of itself doesn’t help with that. You need granular detail in order to actually make an impact.
What are the next steps?
The first step is to start investing in your data. No matter where you fall on the data maturity spectrum, it’s important to start investing time, energy, or money into advancing your data.
For this blog post, we wanted to revisit a guest episode that we did with the Vision Tech Team. This episode was filmed at the end of 2018, and focused on the changes that we saw in the data landscape in 2018, as well as predictions for 2019.
We found this episode particularly relevant given the changes in the data landscape that we detailed in last week’s post (which you can find here).
Enjoy this short podcast episode, and our insights below.
Insights from 2018:
The data landscape changed rapidly, making it very difficult to predict what different platforms would do.
Infusionsoft became much more open with their data in 2018, while Facebook began to clamp down on what data they would allow access to.
Businesses began to understand the value of data, and started to understand it’s importance.
Similar to the dot-com boom, businesses that fail to take advantage of their data started falling behind in the market.
Data overload started coming to a head. Businesses started needing to figure out what data actually drives results.
Trust in data became an issue. Data validation became a necessary part of data projects.
Data visualization became the new buzzword.
Everyone became obsessed with visualizing their data.
This often came at the expense of actually driving new insights, as they would simply slap graphs on the same data.
Automation started to spread
In the beginning, nobody tracked anything.
Then, businesses started tracking, but the data was stuck in silos.
From there, data nerds started creating complex pivot tables and Excel sheets to bring the data together.
Now, automation became feasible, and started taking over. This removed the need for manual reporting, and made the visualizations better.
Going back to data overload, tracking exploded in 2018.
You started being able to track anything that you wanted, and this lead many companies to overload on data.
For those that actually leveraged this data, it caused explosive growth.
Chatbots exploded onto the scene.
Chatbots began to expand their footprint, with very promising results.
Businesses began realizing the value of data democratization.
Rather than having just one data nerd knowing everything about your data, businesses began to share data with all employees.
By opening up data to the entire organization, you can gain insights that you previously would have missed out on.
This allows organizations to leverage the combined brain-power of their entire team, rather than just the select few.
Predictions for 2019:
Increased competition for data.
As more companies realize the value of data, more and more companies will start competing for it.
As data becomes more ubiquitous, companies will get better and better at targeting and marketing. This will drive inefficient organizations into the ground, leaving only the best to survive.
Data overload to the max.
As more data becomes available, businesses will need to start deciding what metrics actually matter to them.
Most businesses will need to hone in on the handful of metrics that actually drive results (80/20).
Those that capitalize on this principle will thrive in 2019
Increased transparency and accountability.
As more companies move towards data democratization, we will see a shift towards increased accountability across organizations. This will create cultures that thrive on extreme accountability.
Since everyone has access to the data, it will become much more difficult for low performers to hide behind the work of others.
Looking back on 2018, things seem so much simpler. They only worried about compliance with GDPR. In 2019, we have a host of regulations on the horizon to worry about, decreased access to data and information, and platforms throttling data.
Looking forward to 2020, we’re likely to see an acceleration of the changes from 2019. We expect more data regulations to come into effect, and as a result of this, we expect a decrease in marketing efficiency.
One of the things that every business should start doing is gathering data into a data warehouse. This protects you from the whims of the larger platforms, and gives you complete ownership over your data. By gathering your knowledge and wisdom into your own database, you insulate yourself from the storm that is brewing on the horizon.
Praxis specializes in data, so we can help you take ownership over your data, create back-ups, and help you understand your data better than ever before. You can learn more about our products and offerings here. If you have immediate questions, you can contact a Praxis Metrics data expert directly.
The data landscape rapidly changes and shifts, but a flurry of recent announcements will shaken the core of how we measure and track customers.
What is happening?
Basically, until now we’ve been living in the wild west of data, but after a wave of data scandals a new sheriff has come to town. And this sheriff is changing all of the rules. The new priority for data is privacy first, marketers second. These new rules are coming through legislation, and the gods of the internet. We’ll explore what’s happening in both groups, and what happens next.
It all started with GDPR, but now consumer data legislation is popping up around the globe. In the US, the California Consumer Privacy Act just officially passed (and will go into effect in 2020); meanwhile, similar regulations are developing in Brazil and India as well.
What do these laws entail?
General Data Protection Regulation (GDPR)-
GDPR is a law passed by the EU in 2016, and began enforcement in 2018. The stated goals of the law are to: harmonize data privacy laws across Europe, protect and empower all EU citizens data privacy, and reshape the way organizations across the region approach data privacy. It does this by levying heavy fines against any business that is found in violation of the regulations. This applies to all companies processing the personal data of data subjects residing in the Union, regardless of the company’s location.
California Consumer Privacy Act (CCPA)-
The CCPA will allow consumers to force companies to tell them what personal information they have collected. It also lets consumers force companies to delete that data or to forbid them from sharing it with third parties. This law aims to target larger businesses, and only applies to businesses that earn more than $25 million in gross revenue, businesses with data on more than 50,000 consumers, or firms that make more than 50% of their revenue selling consumer data (I.E. data brokers).
While this law only applies to customers who live in the state of California, 17 other states are currently exploring similar legislation. It’s likely that most companies will just adopt these practices across the board.
Both Google Analytics and Adobe Analytics use a default 30-day conversion window, allowing you to see the impact of every touch that impacted a conversion in that time frame. Those attribution models on Safari browsers will now only collect data on the last seven days prior to conversion, deleting any data collected before that point.
For remarketing, marketers now only have seven days to programmatically target Safari visitors. After that, their data will be deleted, along with the ability to retarget them.
Other effects from this change include: cross-device visitor tracking becoming unreliable, and a dramatic uptick in unique visitor counts. Visitors who span multiple devices and have a buying journey more than seven days will look like new visitors when they finally return, skewing the data. Additionally, since they now look like new visitors every seven days, new visitor counts will skyrocket.
Mozilla rolled out similar features to its popular internet browser, Firefox, earlier this year. They recently rolled out an “Enhanced Tracking Protection” feature, which blocks all third-party cookies by default. They also began blocking over 2,500 tracking domains, many of which control multiple cookies, and plan to “update and improve this list over time”.
Chrome will add a browser extension that will showcase the names of the AdTech providers on each page and the personalization factors associated with each cookie. They also plan to provide user-level cookie control for third-party cookies.
What can we do?
First party cookies
Moving from third-party tracking cookies to first-party cookies will help protect against these updates and changes.
Most of the changes implemented by the tech companies target third-party cookies, but none of them target first-party cookies yet. This allows you to continue tracking your customer journey without interference.
This change also provides a number of fringe benefits, including: ownership of the data, reduced likelihood of blocking, and better storage and utilization opportunities.
Owning your data insulates you from changes or updates to any future terms and conditions. It also allows you to store the data indefinitely.
In order to implement this, you’ll need to develop the cookies and have a data-warehouse to store the information collected.
It should be noted with this solution that since you own the data, you assume 100% responsibility for it. This includes compliance with the privacy laws previously discussed, as well as the protection of the data.
Tracking pixels have managed to avoid much scrutiny yet, and therefore they have escaped the proverbial regulatory hammer so far.
Pixels transmit their data directly to a server, rather than storing data in the browser. This makes the pixel extremely useful, as the user cannot delete the data by clearing their cache.
As regulation ramps up, we predict that most tracking will transition from cookies to pixels, and the data produced by these pixels will move to large data-warehouses for storage. Similar to a first-party cookie, the data gathered from pixels will become the responsibility of the pixel owner.
What comes next?
It is clear that the old way of collecting data is officially dead. Privacy and consumer protections are here to stay.
The solutions that we presented here only serve to fix the issues created by these updates to browsers, they will not help avoid any of the new legal regulations. The internet is entering a new age, and every company will have to grow and adapt to this new ecosystem.