One of the most frustrating aspects of marketing right now is over-attribution when comparing Facebook reports to Google reports.
This occurs when you log into Facebook and it tells you it earned you $100,000 in a period, then Google says it earned you $100,000 in that same period, but you only received $125,000 worth of orders during that same time period.
This, unfortunately, is the new norm in the attribution war. Both Facebook and Google want your advertising money to go to them, so when it comes to tracking and reporting, there are a few things you have to understand:
Even though the two platforms integrate with each other, each is entirely separate. They have different goals, definitions, standards, and abilities for tracking.
Each platform only owns their own data. That means, when you go into the reporting aspects of Google Ads or Facebook, you will have mathematically biased information. Each platform only sees one variable (their ads) as an impact on your sales. However, there are always multiple variables involved—multi-channel marketing, public relations, organic posts… even the weather and political climate can impact your sales.
So, when you log in and see varying information, they’re not trying to lie, they’re just presenting their side of the story.
Everyone knows that there are three sides to any story. Each person has their version, and then there’s the truth, which is somewhere in the middle. So, when it comes to Facebook and Google reporting, neither is lying, but also neither is showing you the entire picture because they both are inherently biased. Facebook, for example, counts any conversion that has seen an ad on their platform and then converts as a “view-through” conversion; and Google uses last-click attribution by default in their reporting because that favors them.
Then how do I get data that I can trust?
There are two steps to get accurate reporting on your marketing efforts in your systems.
Get as much information as possible. Information is simply multiple points of data brought together to allow you to see patterns and gain answers to questions, like:
How much overlap do we have in reporting?
Are there clients that have been exposed to multiple marketing efforts?
If so, are we tying together their customer journey with accurate tracking efforts?
What are all the possible impacts on our sales?
How have they impacted sales before?
Are there correlations?
How are you going to answer these questions to get the insights you desire? You must have the data in order to be able to analyze the data to get insight.
That means, tracking is the first and primary component of accuracy in your reporting:
Are you tracking your client’s journey?
As we discussed earlier, Google uses last-touch attribution to assign credit to conversions. This slants credit towards Google, as by the end of a customer’s journey they tend to be aware of your brand, and therefore more likely to search for your name and click on a search ad or organic search result.
Google Analytics has many attribution models that you can try out to see which one works best for you. From position based (Which assigns 40% of the conversion value to the first and last touch, and then distributes the remaining 20% across all other touch points) to time decay (which assigns credit based off how close to the conversion date it was), it’s important to make a conscious choice of which attribution model you want to use. Each attribution model has its pro’s and con’s, but by staying aware of how the model affects your reporting, you can reduce bias in your reports.
Are you using pixels?
Tracking pixels have exploded in popularity. Many popular advertising platforms now use tracking pixels in order to track conversions and user interactions with the ads. Pixels provide amazing reporting because you can install them almost anywhere, from emails to landing pages, and, as of now, they can’t be disabled by a browser.
Pixels can help you gain greater understanding over how users interact with your advertisements and your website. Providing granular data about user’s behavior based off the platforms that they visit your site from.
Do you have unique identifiers for your clients that allow you to see their customer journey?
Specifically, you need a way to assign a user-id to your clients so that you can track their behaviors across devices. If you don’t have this set up, then when a user changes devices, you will lose all of the data from their initial visit. This can lead to incomplete customer journey’s and skew your attribution data.
Do you have organized UTMs setup?
The very best solution for the attribution problem is to utilize UTMs in all of your marketing efforts. UTMs allow you to tell Google Analytics exactly how you would like to categorize your traffic. Every external link that directs to your site should have UTM parameters appended to them in order to help assign credit to the proper source. You can even add in campaign data in order to track which of your campaigns drives the best traffic to your site.
UTMs can be one of the most powerful tools available to marketers, or they can be their downfall. UTMs need to be standardized and utilized consistently, or they will make the data even more convoluted and confusing. You need to implement standardized rules for your UTM usage across the organization in order to make sure that your data remains as accurate and clean as possible.
If you don’t already have these things in place, that is your top priority.
By organizing your tracking efforts, you can start gathering the data you will need in the future. If you need help with your tracking, visit the Praxis Metrics – Google Analytics Audit service page to read about how we can help you get your tracking in order.
Once you have tracking in place, you can typically manually create Excel reports that give you a much more accurate depiction of your marketing efforts (including lift effects and other variables). However, over time, that becomes tedious and time consuming and allows for too much human error.
The next logical step is to automate via ETL (extracting, transforming, and loading the information from these systems into a singular place) and then to visualize the combined, clean data with a dashboard.
This enables you to eliminate wasted time, effort, and give you insights in a quick and digestible manner. This process can be very intense and require the help of a data scientist.
Fortunately, we specialize in exactly this type of process and can help you revolutionize your data reporting. If you’d like to learn more about how we can help you with ETL and visualization, visit us here.
Bonus #3: Democratize your data
This one may seem out of the blue, but it can change the way that your entire organization interacts with data.
Democratizing data means providing access to data to everyone in your company. Not just information that pertains to their specific corner of the business, but the business as a whole. We have clients who have walls of TVs dedicated to displaying their data for the entire company. Everyone from entry-level employees to C-suite officers has access to the same data.
You may be asking yourself, “How on earth would that help my business?” Everyone has different backgrounds and experience, so when one person looks at a metric they will see one thing and come up with an action item based off their experience; but if you bring in another set of eyes, that person may see something totally different and come to a different conclusion. Democratizing data and making it accessible to more people will lead to greater insights and more options for ways to proceed.
Accountants can be creative, and marketing people can help solve operational issues. Democratizing your data can help you gain a myriad of insights and give you an edge over your competition.
You have tons of data; but data alone will not grow your business. It’s the insights from the data that will inform your team on how to grow. Companies that focus on causation will scale. Those that don’t, will fail.
What does LTV mean, and how does it impact my business?
LTV stands for customer lifetime value, and measuring it can revolutionize your business.
Most businesses determine their ad spend based off their return on investment from said ad spend. Unfortunately though, many people calculate the return on ad spend (ROAS) exclusively based off the initial order value. If you calculate your ROAS exclusively based off initial purchase value, you are most likely missing out on explosive growth, just like our client Danette May. See the video below to hear more about their story:
As you can see from that video, knowing the true lifetime value of their customers made all of the difference for them. They couldn’t scale that funnel reliably without increasing their budget; but they thought that they couldn’t increase the budget on the funnel and still have an allowable ROAS. They had made all of these calculations based off the initial order value though. By widening their scope and tracking the lifetime value of those customers, they realized that they could still get an allowable ROAS even if they increased their budget.
Upon increasing their ad spend, they were able to scale up that funnel tremendously and they went from 15 sales per day to over 200 sales per day in less than a month. Since this video was recorded, they went as high as 600 sales per day and are now averaging about 300 sales per day. That is the power of knowing your true customer lifetime value.
How does LTV impact finance?
While LTV in and of itself can completely change the way that you view customer journey’s and their acquisition costs, the true power of customer LTV comes when you combine it with a few other metrics. Once you know the true value of your customers, the next thing that you need to know is the true cost of goods sold on what you sell. To get the true cost of goods sold for your products, you need to roll in everything, legitimately everything. You need to break down the cost of every employee, all of your overhead, every cost that your business has needs to be tied into this metric.
Once you know the true LTV of your clients, and your true cost of goods sold (COGS), you can now start to look at how much money you make off each client and each product that you sell. You may find that on some funnels you’re not profitable off the initial purchase, but that the clients come back and repurchase multiple times over several months, making that customer profitable overall. From there, the finance team can determine acceptable timetables for profitability. Some businesses have funnels that they know will not turn a profit for several months, but they know that it will be profitable within a certain acceptable time frame for them as well.
Once you know the acceptable profitability time frame, you can begin to work out an acceptable cost per acquisition, which leads us into our next section:
How does LTV impact marketing?
Now that you know the path to profitability and the timeline for it; you can begin to look at how much you can acceptably spend on advertising costs. By studying your cost per acquisition (CPA), you can understand how much ad spend you will need in order to get one person to convert. From there, you can rework this into your established cost of goods sold, and look at your timeline for profitability. We recommend that you find the absolute maximum allowable CPA, and then make sure that you stay underneath that threshold.
The next step in your journey is to get even more granular in how you measure your customer lifetime value. Since your allowable acquisition cost is based off the lifetime value of your clients, it makes sense to break out the lifetime value based off where they came from as well.
In this next video, we show you exactly what that looks like.
As shown in the video, clients who come from different referral sources behave differently. They may be interested in different things based off the type of content that drove them to your site. This will affect the items that they buy, and in turn, their lifetime value as your customer. You can also take this analysis even further by segmenting your customer LTV based off the initial item that they purchased.
How can I start tracking the LTV of my customers?
The hardest part of finding the true LTV of your customers is extracting all of the data from all of the disparate systems. The average small business uses at least nine different systems to track different things, though many have more than that. In order to get a clear picture on the true LTV of all of your customers, you need to gather all of that data. This is a tedious, difficult process known as ETL (Extract, Transform, Load).
The first step of ETL is data extraction. It takes a lot of time to extract data from all of the disparate systems, but it’s rather simple to do. From there, you need to make sure that all of the data meshes together properly. This leads us into the transformation stage.
Transforming data requires a lot of time and mental energy to complete. Each system tracks things differently, so you have to go through and realign the data to make sure that it matches properly between the different tracking systems.
The last stage is the simplest stage and, generally speaking, the one that everyone jumps to. The load stage consists of taking your new, clean data and loading it into a visualization tool so that you can see all of the information that you have gathered in one place.
Many people jump straight to the load phase and get a data visualization tool without having the previous two steps, and that leaves them with a pretty dashboard that doesn’t tell them anything new. The process of ETL is VITAL for you to find your true LTV and of paramount importance for you to propel your business forward.
If you need help with this, we have helped countless businesses go through this process. Simply fill out the Praxis Metrics free data strategy session form, and we can talk about the unique needs of your business and how we can help you turn your data into growth.
Everyone talks about it, but nobody really knows how to do it. Everyone thinks that everybody else is doing it though, so they pretend that they are doing it too.
– Dan Ariely
Now that we have your attention, we can get into the meat of the content. This lecture was initially presented to a group of financial marketers, but it’s applicable to businesses in any sector.
Why do I need to know the lifetime value of my customers?
Lifetime Value (LTV) may be one of the most important metrics that a business can measure. Everything from cash-flow to ad spend relies almost exclusively on this number. If you know the lifetime value of your customers by source, and you know the amount of margin that you need to make off that customer, then finding the maximum acceptable Cost per Acquisition (CPA) is a simple equation. Likewise, with cash-flow calculations. If you know when customers who purchase item A will likely return to purchase item B, then you can forecast your revenues pretty accurately.
Our client Danette May has the perfect example of these pieces coming together. They had a funnel that wasn’t converting to the level that they needed it to, and they were about to cut it. They came to Praxis Metrics to find out what their average LTV was for customers who came through the funnel. We supplied them with that data, and armed with that new information, they found that they could afford to spend more on acquiring those customers than they previously thought.
By increasing their acceptable CPA by just $5, they increased from 15 sales per day to 350 sales per day within two weeks. The trend continued upward to hit 615 units per day off this single funnel. With an average value per order of roughly $97, they now make more than $30,000 per day in sales. Across the year this funnel alone accounts for more than $10,000,000. If you would like to hear more about their story, you can see more of what they have to say here: https://praxismetrics.com/success-stories/danette-may/
How can you get a leg up in your business?
There is more noise and competition for clients than ever before. Anyone with a laptop and an internet connection can now start a business and possibly disrupt entire industries. How do you compete in a landscape like this? Information.
Information is at the heart of most of the problems faced by businesses today. Either you wander around blindly because you have too little information; or you have too much information stored in information silos. These silos may contain valuable insights, but since they don’t communicate with the other systems, you have to rely on humans to extract the valuable information and make it usable.
Taking action from data is the new competitive advantage.
The only difference between a successful online marketer and a failure is that the successful marketer knows why they were successful and can replicate that success.
Data does not solve problems.
Data is never the solution to a problem, data merely guides you to information. Information leads to knowledge. Knowledge transforms into wisdom, and wisdom when applied to your actions, creates Praxis.
The major dividing line in this system is the transition from knowledge to wisdom. Everything that comes before wisdom is based off past observations, and makes no statements on the future. Wisdom allows you to make predictions about things to come. Praxis requires taking those predictions and then doing something about it to better your life.
Not taking action from data is like owning a race car, but then never putting fuel into it.
Data contains the what. Information tells you the when or the where. Knowledge teaches you how. Wisdom guides you to why. Praxis is the actions that you take based off the data, information, knowledge, and wisdom that you gain.
Where do I begin?
Your outputs are only as good as your inputs.
Therefore, you need to begin by tracking your data. This forms the base of everything that you build later, so you need to make sure that your tracking is in order.
Meaghan and AJ provide a personal example of taking data all the way through Praxis beginning at 19:10 if you are interested in hearing more about that.
The initial phase of your journey is all about getting clean, accurate data. The number one mistake that small to medium businesses make is that they are not using UTM’s in all of their marketing efforts, and they don’t have their Google Analytics set up properly.
What the devil is a UTM, and why does it matter?
You can track your marketing campaigns uniformly across most analytics tools utilizing UTM parameters. UTMs work with Google Analytics and many other tracking tools.
UTM is an abbreviation for “Urchin Tracking Module”. “Urchin” came from one of the very best website analytics tools that used on-page scripts to collect visitor data.
Like a lot of great web software, Google eventually acquired Urchin.
A UTM has five variants of URL parameters used by marketers to track the effectiveness of online marketing campaigns across traffic sources and publishing media. UTMs contain an encoded suffix that you append to a URL (A URL being a website link). The suffix is generally quite long and is made up of various ‘parameters.’
Each parameter provides specific information about the link in question. And by stringing parameters together, you can track your online marketing campaigns with a tremendous amount of detail and granularity.
UTM’s are one of the most powerful tools that you have in your analytics arsenal, but they can also be very daunting to get started with. We have written several blog posts on the subject matter, which can help you understand them much better. You can read more of those here:
and we even set up a course that will teach you from start to finish how to create UTM’s and even has a spreadsheet that will automatically create them for you here: https://datarich.thinkific.com/
After UTM’s, what’s next?
Once you have control of your UTM parameters, you need to start a process called Metrics Mapping. Metrics Mapping allows you to gain clarity on what metrics you should track, and what those metrics do for your business.
Metrics Mapping starts with your business goals. You need to know where you want to go before you can create a map to get there.
From there, you need to figure out what questions you have to answer in order to accomplish that goal. You could ask questions like, “Where do my sales come from?”, or “How many sales have I averaged over the last 30 days?”.
Once you have the questions that you need to answer, you need to find the metrics that answer those questions for you. You need to hunt down where the most accurate information on the topic lives, and then work to connect all of the most accurate data sources together.
Once we have pulled all of the data together, you have to validate the data to make sure that it is accurate.
After you have all of your accurate data in one place, you can apply formulas and filters to make sure that it’s showing you just what you’re looking for, and then it’s time to plug that data into a data-visualization tool.
OK, I am done with tracking, everything looks good. What now?
Congratulations on making it through the tracking stage! You’re now ready to move into the fun stage: automation.
What compound interest is to your money, automation is to your time.
Automation takes your business to the next level, it allows you to scale your business in ways that most people don’t even imagine. By removing manual reporting and human errors, you not only save your company money, but time. Automation allows you to free up some of the smartest people in your organization to do what they do best rather than fetching data and compiling reports.
The automation stage allows your team to no longer have to look at raw data, but now they can look at actionable KPI’s that they can easily glean insights from. The automation stage rapidly progresses people out of the information and knowledge stages and allows you to begin to focus on the wisdom and Praxis stages exclusively. That is one of the primary reasons that companies who get to this point are able to rapidly scale and expand their business.
Businesses that reach automation can focus on what they do best and let machines do the rest.
That covers the first two steps of data maturity.
The action steps that you need to take in order to get past these stages are:
All that it takes to scale your business is the proper data. In the following video and blog post, we’ll take you through how to take advantage of the information that you already have and use it to scale your business, no matter the industry.
Data, Information, Knowledge, Wisdom, and Praxis
Let’s simplify and redefine your views and definition of data. Data is simply the path to information. And information is your road map to knowledge, knowledge guides you to wisdom, which ultimately leads you PRAXIS, which is the ACTION you should take based on the knowledge and wisdom you have.
Data is simply events or outcomes, information is when you understand the relationships between those isolated events, knowledge is understanding the patterns- looking at trends over time and correlations in what is and is not working over time, wisdom is understanding the underlying principles and CAUSES, while PRAXIS is the action you take once you have that wisdom.
Data is an event or outcome without any context or true value by itself. Something like: IT IS RAINING. In and of itself, that would not be a revolutionary.
Information, however, is being able to connected multiple pieces of data together to see correlations and relationships: “the temperature dropped 15° and then it started raining”
Knowledge is then understanding the patterns between the variables: “Knowing that when humidity is high and temperature drops, the atmosphere is often not able to hold the pressure and so it rains”
Then wisdom is where we able to stop looking at the past, and we are now able to extrapolate and forecast what WILL happen rather than what HAS ALREADY happened: “UNDERSTANDING ALL INTERACTIONS BETWEEN EVAPORATION, TEMPERATURE CHANGES, AIR CURRENTS, AND BEING ABLE TO PREDICT RAIN NEXT WEEK”
Lastly, Praxis is the practical application of all this wisdom in order to get positive results: It’s being able to predict that it will rain on your vacation next week, and that you need to pack boots and an umbrella to prepare for your trip.
The ultimate goal and outcome we are looking for is a result of the actions we take based on the wisdom we extrapolated from the raw data.
So here is a quick side note for you: “Not taking action from data is like owning a race car and never putting fuel in it” There is a ton of data available to you, but data itself will not grow your business. Data itself will not give you the results that you want, The knowledge you gain from data will help guide you and your team to make the best informed decisions on what actions they should and should not take throughout the day.
So let’s simplify this one last time before moving on to your action steps and road map to scaling.
Data is WHAT HAPPENED in your business, information is understanding the relationship between WHAT happened and WHERE and WHEN it happened, knowledge is understanding the patterns that tell you HOW that happened, wisdom is understanding the principles and mechanics of WHY that happened, which leads you to be able to predict when it might happen again in the future, and at each stage in this journey, Praxis is taking ACTION based on the data, information, knowledge and wisdom you’ve gathered.
Becoming Data Rich
By taking those actions, you are getting NEW valuable data. This is the path that the leaders in your industry are taking, this is what helps them grow and scale, it tells them exactly what is and isn’t working, and how to increase their revenues and profits… this is THE PATH ….. To becoming DATA RICH
Now you understand the road map on how to use data to scale. Up to this point in history, BIG DATA was only accessible to enterprise mega giants because collecting data and hiring data scientists for extracting and analyzing data could cost millions in Technology and Human Resources.
However, nowadays millions of rows of DATA can be found in our cell phones, in the back end of our email systems, and tracking on our websites, so raw data is now accessible to any small business owner.
So the question is, how can you take the raw data that is already available to you and use it gain knowledge and insight to scale your revenues and increase your profits?
That’s what we will be covering in the next part of this blog, what ACTIONS TO TAKE, no matter WHERE YOU ARE on the spectrum, to move to the next stage of data maturity.
Becoming Data Mature
So let’s start at the beginning: your outputs are only as good as your inputs. The foundation for growth is first HAVING data. When small companies come to us and ask us how to scale, they typically do not have a foundation for success.
Data Foundation Stage
Here are some quick questions to ask yourself to see if your company is in the data foundation stage:
Do you have tracking in place at all stages of your customer’s journey? Including a basic Google Analytics set up? Are you not using advanced tracking like UTMs, Custom Conversions, event tracking or pixels?
Do you know what KPIs your team should be monitoring? Do you have standard operating procedures that everyone follows for naming conventions in your systems?
Are you or your team members MANUALLY creating excel or google sheets for your reporting because it’s all stored in a bunch of different technologies and is disparate? Or are you simply logging into each of your systems to look at the native reports?
If you answered YES to most of these questions, then you are in the FOUNDATION stage.
Your main action step in order to become more mature is to focus on TRACKING and MONITORING.
Remember, your outputs are only as good as your inputs, so we need you to HAVE data first. That’s the foundation for you to be able to scale. In order to progress, you need to:
Implement tracking procedures in GA and UTMs
Define what metrics are important for you and your team to know
Implement SOPs to make sure the data is clean and consistent
Even if you don’t have the resources right now to do anything with this data, you need to start GATHERING it so that later, when you can afford to look back for patterns and hidden areas of opportunity, you have something to review… you can’t RETROACTIVELY pull data if the data wasn’t being tracked… so PLEASE, make sure you do this now… you will thank yourself later.
Once that foundation of data collection exists, you can move on to the next phase: Automation
You’ll know if you are in this stage if you have all the complex tracking in place, but you or your team is spending a ton of time gathering valuable insights from a bunch of different systems and compiling them together into google sheets or into excel and pivot tables.
Let’s chat about this for a second:
What compound interest is to your money, automation is to your time
It’s exponential leverage to scale It’s reduction in overhead, it’s focus on what’s important – the ANALYSIS of the information, rather than the collection of data.
To advance higher and to scale, the focus is on integrating your systems together so that they automatically transform the raw data into the insights you need to take action. This allows your team to focus on valuable actions rather than mundane data entry. In technical terms, this is called ETL (automatically extracting, transforming and loading your data into one place).
In addition, setting up this automation lays the foundation for visualized reports or DASHBOARDS. Dashboards allow you to quickly see the highs and lows of your business, and let you quickly see patterns and anomalies of success, as well as those areas of wasted time, money and valuable resources.
Finally, it also allows you to share this information with all the people on your team. You wouldn’t believe the value that democratizing your data can have on your organization… sharing this data allows your team to bring valuable insights to the table and different perspectives that you might not have seen. We call this the LIFT EFFECT.
So once you have the foundation of all your data tracking, and after that data has been gathered to one place, and you have automated reporting in dashboards,
THEN you can focus on optimization and analyzing really fun CAUSATIONS between your internal data and EXTERNAL factors…
For those of you who aren’t TOTAL nerds like I am, let’s define this because there is an extremely important principle in statistics that states: CORRELATION does not imply CAUSATION.
As a simple example: Polio rates and Ice Cream sales from 1949. Although they are CORRELATED, that does NOT mean that Ice Cream is the CAUSE of polio. It is very simple to see here, but how many of you make these assumptions in your business when you see trends or relationships like this?
The more data you have, the more accurate picture you can paint among it’s relationships. The more data points you have, the better you can tell which one is most accurate.
You have a ton of INTERNAL data, but there is ALSO a ton of incredible PUBLIC data that you can integrate with in order to gain a more robust understanding of your business, your ideal customers, and their purchasing behaviors.
Imagine knowing that when temperatures rise above 75º, your return on ad spend for your Sunscreen company increases by 15%… or imagine KNOWING that your customers with the highest lifetime values have certain demographics or political affiliations? Or that you have the best sales when certain economic factors align?
Here at Praxis, we have found:
COMPANIES THAT CAPITALIZE ON CAUSATION WILL SCALE:
THOSE THAT DON’T WILL FAIL
Here is a real life example of this in use: Walmart sees a 7x increase in strawberry pop-tart sales when hurricanes are reported off the coast of Florida or Texas. Imagine being a competitive grocery store and not having enough pop-tarts in stock. You would suffer an incredible opportunity cost of potentially millions of dollars.
Can you imagine how many small to mid sized companies are put out of business because they don’t see these patterns? Because they don’t capitalize on these hidden insights that their competitors DO.
What causations are you missing out on in your business?
The final stage of data Mastery is for companies that are innovating and modernizing.
At Praxis, we help clients with the most cutting edge resources to help them understand their business better, including natural language processing, machine learning and Artificial Intelligence in order to innovate.
To summarize, here are the recommended steps you can take to advance through each stage on your road to data mastery:
Data foundation- Tracking
No matter where your company is currently on this spectrum, these are action steps you should take to move you closer towards information optimization.
That is the definition of PRAXIS – the application of the knowledge you gain from your data.
Taking action from data, is the new competitive advantage. Here is your list of action steps for progressing:
Share this with your team
Collaborate to see where your business is right now
Follow the checklist for how to advance from each stage to the next
Assign appropriate team members each action step with a due date
Not taking action from data is like owning a race car and never putting fuel in it.
Your outputs are only as good as your inputs.
What compound interest is to your money, automation is to your time.
Companies that capitalize on causation will scale, those that don’t will fail.
Taking action from data, is the new competitive advantage
I’m Meaghan at Praxis Metrics, thank you for investing your time here with me today. Please connect with Praxis on Linkedin and Facebook for more resources to help you scale. We love to help companies like yours grow and achieve their goals faster, so please reach out to me if you have any specific questions about your unique business.
Good luck on your journey, We are looking forward to helping you scale!
If you are doing business online and want to know how to accurately track return on investment from your online marketing efforts, then you are in the right place!
Whether you are a seasoned pro or just getting started this training is for you. I am going to show you how to overcome the #1 Mistake 90% of Companies Make When Tracking Revenue and the best part is you can get started right away!
I am AJ Yager, Chief Growth Officer and Co-founder of PraxisMetrics, a business intelligence agency that helps you escape spreadsheet hell, eliminate wasted resources, and get you accurate data you can trust to make better decisions! From tracking to dashboards, we help you scale faster.
We have worked with companies from e-commerce to retail, digital publishing, SAAS, manufacturers, VC Firms, mega churches and investment firms.
I am really excited to share this content with you today but first I want to kick this off with a quote you may or may not have heard before:
This is a very famous saying in business by the one and only Peter Drucker.
“You can’t manage what you don’t measure!” – this is very important to understand, especially when marketing online.
Tracking or “measuring” is the foundation of everything in your business and will allow you to make better accurate decisions. My intention here is to help make sure that you understand this and avoid becoming part of the 90% of companies that keep making this mistake. I want you to grow exponentially from your data and tracking efforts.
So remember, Marketing without data is like driving with your eyes closed.
Ok, let’s dig in.
What you’ll learn-
By the time this video is done, you’ll understand:
The biggest mistakes when it comes to tracking
Removing the guesswork from ROI (Return on Investment)
Exactly what UTM’s are and how they can take your marketing data to the next level
Where (and how) to get Started
Why proper data tracking is critical to your business (and what valuable insights that data can provide)
How to build a UTM link and the most effective way to utilize them
The biggest mistakes when it comes to tracking-
One of the biggest mistakes we see too often is assuming that everything is tracking properly.
What I mean is that most companies and you may be included in this, think that everything is tracking correctly in all of the different tech systems that run their business; this is NOT TRUE.
Here is why: Simply put, many technologies have software limitations. Out of the box software set-up isn’t complete or isn’t robust enough. and many times there is such a learning curve that the person in charge of it didn’t finish setting up to track everything properly.
SOPs not established or practiced by all team members and you may be missing platforms in your tech stack.
Finally, you may be lacking cross platform UIDs , which are Unique Identifiers that help connect pieces of information in one system to another.
The point is, you simply can’t afford to invest in these technologies, if you don’t take the time to make sure they are set up to track the right data/information for your business.
The #1 most under-utilized and error prone tool we see is Google Analytics; it is very powerful when set up correctly and best of all a FREE tool that should be in your arsenal.
When it comes to Google analytics, most marketing teams don’t set it up correctly to begin with because it takes a google professional or lots of time to research; or they do get it set up but then forget about it; or worst of all, they don’t validate or test to make sure everything is tracking correctly.
They may try to use Google Analytics as a dashboard to visualize their data. There are some cool reports in GA, but it really isn’t an easy way to digest information.
Last but not least, most people simply think GA is too complicated so they don’t even try… which is totally understandable.
Now this video training isn’t focused on teaching you how to set these tools up, there are plenty of free resources out on the web for that or you can contact our team at praxismetrics.com and they can help you out.
Removing the guesswork from ROI (Return on Investment)-
Ok so now that we have covered that mistake and had a quick overview of Google Analytics, let’s talk about ROI…
The best way to start off is to reminisce back to 2005 when Google Adwords was launched. it completely changed marketing and advertising as we know it.
Google Adwords had conversion tracking which removed the guesswork from ROI. It allowed marketers and business owners to pay for online advertisements, know the exact cost of each ad click, AND know whether or not a particular ad click resulted in a sale.
It was game changing … From that moment forward began the demise of most traditional forms of advertising. And it wasn’t that online ads with conversion tracking were better marketing, it was just the simple fact that you could calculate your exact ROI that mattered.
But if you could track your ROI accurately with AdWords, why not other online marketing activities?
Social media posts?
These are all digital forms of marketing you SHOULD be tracking.
The reality is most marketers either don’t know how to do it or are too lazy to set up the systems required to do the tracking correctly. Fortunately, there’s just one tactic you need to know about to track most of your online marketing activities and own your niche.
We’ll also look at how you can apply this approach to a variety of marketing channels and how you can use various analytics tools to drive insights from your data.
As I mentioned earlier, after watching this video you’ll know how to calculate the ROI of an online marketing campaign with precision, so that you can double down on your wins and quickly cut your losses.
Now let’s talk about Why Modern Marketing Makes ROI Calculations Difficult. You’d think it’d be easy to track the ROI of an online marketing campaign, there’s a digital “paper trail” for every click, tap, and dollar earned…right? You would think that Advertisers and online marketers already have this stuff figured by now, right?
It turns out, that’s not exactly the case. And when you dig deeper, you quickly learn that calculating ROI isn’t as easy as it seems; which is a shame, because ROI used to be really easy to calculate.
But Let’s take a minute to make sure we understand the basic ROI calculation: If I spend $100,000 and I make $300,000, I can calculate easily, that I’ve made a 200% return.
Money out minus money in. That’s your typical ROI calculation. But ROI equations just aren’t that simple anymore. Especially when you consider all the marketing channels offered these days.
You’re not just going to do one form of online marketing, like just content marketing. You’re probably already doing SEO, video marketing, and affiliate marketing. You may even throw in some Facebook advertising as well. You’ll likely even give influencer marketing a try. And you should!
With modern online marketing, we have to be able to prove a return on investment for each one of those individual channels, you can’t just bundle everything into one neat figure.
If you’re spending $100 across 3 different marketing channels and you’re generating $200 – it doesn’t mean all marketing channels are ROI positive.
It could just be that one of them is dramatically over delivering, while the rest are losing you money. But if you’re not tracking marketing channels individually, you won’t be able to work out whether this is the case or not. You won’t know which steps you need to take to improve your marketing ROI.
This brings us to the #1 Mistake 90% of Companies Make When Tracking Revenue : Not using UTMs for all online marketing efforts.
Exactly what UTM’s are and how they can take your marketing data to the next level-
With all that being said, now we’re going to focus on a specific tracking model that’ll work with any number of marketing channels and analytics tools: Content marketing, social media, Instagram campaigns, emails, newsletters, drip campaigns, etc. whatever it is.
No matter what channel you’re focusing on and what analytics tool you’re using, this tactic will help you work out how people are reaching your website.
This approach works with every single analytics tool, which means that all of your analytics tools will be able to use this approach to collect data. Just remember, we MUST be able to prove an ROI from all of our channels.
UTMs – The Tracking Tweak That’ll Work for Anything and Everything-
UTM parameters (or UTMs for short) are the only way that you can track your marketing campaigns uniformly across most analytics tools. UTMs work with Google Analytics and many other tracking tools.
UTM is an abbreviation for “Urchin Tracking Module”. And “Urchin” happened to be one of the very best website analytics tools that used on-page scripts to collect visitor data.
Like a lot of great web software, Urchin was eventually acquired by Google.
A UTM is made up of five variants of URL parameters used by marketers to track the effectiveness of online marketing campaigns across traffic sources and publishing media. It is simply an encoded suffix that you append to a URL (A URL being a website link). The suffix can be quite long and is made up of various ‘parameters.’
Each parameter provides specific information about the link in question. And by stringing parameters together, you can track your online marketing campaigns with a tremendous amount of detail and granularity.
This might not seem like a big deal, but it’s one of the most powerful ways to track your marketing, your sales, or any activity you’re doing online.
For a real life example, I have an email campaign from an affiliate of ours named Justin Goff. All the links within that email used specific UTM parameters so that we could measure the effectiveness of that email campaign once the traffic from that email hits the website.
Let’s get into the nitty-gritty of how UTMs work by examining our example URL that has a UTM appended to it.
Initially, this URL might look really complicated, but once you understand the various parts, you’ll find it’s not too difficult to understand. All in all, this example URL tells us 6 different things:
The campaign source
The campaign medium
The campaign name
The campaign content
The campaign term
Let’s drill down into more detail:
URL – The website that’s running the campaign
Campaign Source – Where the clicks come from (ex: search engine, specific website, newsletter #202, etc.)
Campaign Medium – How the link was presented to them (in a search engine result, pay-per-click ad, email, etc.)
Campaign Name – The marketing campaign the link belongs to (traditionally, marketing is done in a succession of campaigns, “Black Friday 2018” would be a campaign)
Campaign Content – The specific part of a marketing campaign got them to take action (Optional. Good for testing different ad copy or A/B testing two different emails.)
Campaign Term – The keyword used in a pay-per-click advertisement that generated the click and subsequent visit or what specific words were clicked on in an email (also optional)
This breakdown could possibly make your eyes glaze over the first time around. So stick with me.
This example URL tells us 5 different things.
The campaign source: JustinGoff
The campaign medium: email+send+LTVdashboard
The campaign name: JustinGoff
The campaign content: JustinGoffEmail
The campaign term: N/A
And honestly, there are many ways to design a system of parameters that work for your organization. The trick is sitting down and designing it – and sticking to that design from here on out. We’ll get into more on that later.
The Website URL-
The Website URL is simply the site we’re tracking.
A word of caution: The above URL is an ‘HTTPS’ URL. Before you start creating UTMs, determine whether or not your website is secure. If it’s secure, then all your URLs will be “HTTPS” by default. If they are not, then your website is not secure (HTTP). Whether your website should be secure or not is a whole other discussion for a different video.
The important thing is whether or not your website redirects from HTTP to HTTPS. If it does, that’s a good thing, but you’re going to want to make sure that you build all your URLs and respective UTMs as secure links. Otherwise, when the redirect happens, the URL might be stripped of the UTMs and this can have a negative impact on your ability to track data.
The Source Parameter-
This parameter is identifying the traffic source sending clicks your way. In the case of the example URL shown, the source is JustinGoff. The parameter happens to be designed for an affiliate of ours, but the source website is the same whether it’s organic traffic, affiliate or paid traffic.
In the particular case of Google AdWords, we sometimes recommend making the source “AdWords” because it will make it easier for you to analyze your analytics reporting later on. If you’re just going to stick to using AdWords as your only online marketing channel, then setting your source to “Google” is fine.
If I posted this link to Facebook, the URL would have Facebook (facebook.com) as the source.
Here’s an example of the different ‘source’ parameters you can use.
The Medium Parameter-
This, in essence, is how the person got to the website in question. Or in what medium the link was presented to them.
Let’s say you’re spending money on cost-per-click ads (CPC for short). The CPC ad then becomes the medium. In our example here it is email.
Here are some more examples of mediums:
The Campaign Parameter-
Campaign name generally refers to your overall marketing focus that day, week, month, season, etc. This nomenclature is derived from the fact that traditional marketing is thought of in terms of campaigns. – something that the world should know about or even an idea your marketing team would like to test.
Let’s say you’re having a summer sale. Every link you create related to that campaign should have the campaign name “summer-sale-2019.” If you have a new product release, the campaign name could be something like ‘vitamin-drink-special-2019.’
A slight word of caution: There are two routes to go down when naming your campaigns. For seasonal campaigns, you might want to be somewhat specific and use a date based format like “summer-sale-2019”.
However, for a webinar series, you might want to keep it simple like “praxis-webinar-series” and not use a date based convention.
The reason why is because when you go back to review your data in your analytics tools, it can be helpful to see ongoing campaigns in one reporting batch instead of having them spliced up into smaller campaigns.
Going back to the Summer Sale example, you could be posting the summer sale on Facebook, Twitter, Pinterest, and even on LinkedIn. You might send out emails promoting this sale. You may even publish different pieces of blog content for it as well.
Any method you use to promote this sale online, it will all be grouped under the same campaign.
Having strict campaign names is important because it allows you to segment your data in Google Analytics via campaign names (and in other analytics tools). You can then easily assess the success of a specific campaign and gather insights for future campaigns. Most importantly, you can begin to understand the ROI of your marketing campaigns!
The Content Parameter-
This parameter identifies the specific content or written copy used in a campaign that led to someone clicking on your link and engaging with your brand.
The obvious benefit here is that it allows you to identify which copy is performing best for an individual campaign. Any conversion rate expert will tell you that testing copy alone can have the biggest performance insights when it comes to improving future marketing campaigns.
Additionally, the content parameter is helpful if you’re running a webpage A/B test. If you’re sending out multiple emails for a specific campaign, the content parameter can help you figure out which email converted better.
Suppose you send out two different emails, for the same campaign, each of which has a unique subject line. We could use the parameter ‘utm_content=a’ for all links within one email and the parameter ‘utm_content=b’ for all the links in the other email. In doing so, we can see which one of those subject lines drove the most conversions for a particular campaign. In my case here we just used JustinGoffEmail which was repetitive but it our own system.
Here are some examples of ‘content’ parameters.
Email subject lines
control or variation
It’s worth mentioning that this parameter isn’t mandatory, but in certain circumstances, it’s definitely worth using. The above example, representing such a circumstance.
The Term Parameter-
The term parameter, again, isn’t mandatory. But it can be helpful in a number of circumstances – notably PPC (pay-per-click / cost-per-click) campaigns. This parameter can help you understand the word somebody queried which in turned served your online ad to them. In most cases, it relates to the keyword used for a specific advertising campaign.
This is helpful if you’re running a advertising campaign. When people click an ad and come back to your website, you can actually see which keywords are driving the most conversions. This scenario is probably the purest and most ideal tracking process when it comes calculating accurate online marketing ROI there is – so use them!
As mentioned, using utm_term isn’t mandatory. But by having it there, you can make use of even more segmentation and be even more specific with the marketing campaigns you’re running.
For example, you may have several links within an email that you’re promoting. By identifying each link within the email with its own unique utm_term parameter, you can know which link received the most click-throughs. You’d simply make the utm_term parameter the specific link text you’re tracking.
In our situation we didn’t use the TERM parameter so I left it blank.
Important Note regarding Revenue vs. Vanity Metrics-
There are a lot of marketers in charge of email marketing campaigns that’ll say — “hey, I got a 34 percent open rate. I got a 52 percent click-through rate. This email did amazing!!”
If one of my team members in the marketing department said that in my business – I’d look at them and be extremely concerned.
Yes, I do want to know how many people opened the email and I do want to know how many people clicked on the email… but let’s be real, we are in business to make money and deliver great value to our customers, so we MOSTLY care about how many people purchased. How effective was this campaign!?
If I can’t connect email clicks back to actual purchases, that’s a problem. If I can’t connect email clicks back to monthly recurring revenue, I’m even more concerned.
If you take one thing from this video, let it be this: Make sure you’re using UTMs to measure important business metrics so you can know the actual return on investment from your online marketing activities. Don’t get caught up in vanity metrics.
How to build a UTM link and the most effective way to utilize them-
At a quick glance, UTMs look really complicated; so complicated in fact, that you might be worried about how you’re going to go about creating them. Fortunately, they’re not that hard to create.
For starters, Google has their own built in tool you can use. There are also some other tools we suggest which you can go check out at praxismetrics.com/tracking-tools
Back to the Google URL builder…. This tool is really easy to use and all you have to do is put your chosen parameters in the relevant fields. Notice all the elements that we talked about are all here ready for you to fill out.
Links that use UTM codes can look pretty messy. UTM links also reveal a lot of information about your marketing, this can mean competitors have access to vital campaign data. Some customers can also be wary of links that are long and complicated. Because of this, it’s a good idea to hide the UTM parameters.
We can do this using a link shortener like Bit.ly. And goo.gl
This is a really simple tool you can use to shorten your URLs. Bit.ly also provides click tracking, which provides further data on your campaigns. Here’s a simple example of how Bit.ly works:
Once you put a link through Bit.ly, you’ll notice that the links a lot shorter and neater. This is all possible without harming the UTM parameters and your ability to track UTM data within analytics tools.
One of the most often asked questions is… How do you make sure to stay organized so everyone uses the same UTM tagging system?
This is a common problem. Especially if you’re on a team of several people and everyone is working on a specific campaign.
Let’s look at a classic example of where this becomes a problem: Valentines campaigns. Valentines campaigns are wonderful at driving marketing managers insane. It’s an annual marketing campaign and of course you’re going to want to use UTMs to track your ROI and performance.
Then the inevitable happens: One team member spells the full word “valentines” out for the campaign parameter. Another team member spells it “Valentines”. Another team member spells it “vday”. So you’d have:
utm_campaign=valentines utm_campaign=Valentines utm_campaign=vday All of these would appear as separate UTMs. Meaning the campaign data would be segmented into three different campaigns by your analytics tools. Don’t let this happen.
How do you prevent this?-
What we recommend is to build out an organized spreadsheet that your team uses and follows carefully!
Remember, your output is only as good as your input! – this is where your tracking SOPs really matters!
The end result is reporting or seeing your data in dashboards: Your dashboards and reporting will NOT BE ACCURATE Your dashboards and reporting will NOT BE CLEAR
When you shouldn’t use UTMs-
There’s one specific case where you should never, EVER use UTMs: when creating internal links on your website.
Most website analytic tools like Google Analytics are designed to help you understand what’s happening on your website by default. There is no need for you to code up unique UTMs to help you understand what’s going on.
If you start using UTMs to link to various parts of your website, you can artificially multiply session counts and trigger all kinds of negative elements that will corrupt your analytics reporting.
Alright well we have covered a lot of ground so far, now it’s time to wrap up and give you actions to go and do!
UTMs are the only way you can know the true ROI of your online marketing activities. If you’re doing business online, you have no choice but to use them.
And you should be really grateful that UTMs exist! It’s a blessing to be able to finally get this critical information. It doesn’t cost anything really, it’s just a matter of taking the time to create a UTM system that works for you. It can be challenging to design a perfect UTM system that will work for your organization right out of the box. It’s an iterative process.
You may make some mistakes along the way in order to figure out a system that works well for you. It may take hours looking over your analytics reports and dashboards for you to finally see what conventions make sense for your monthly reporting.
There’s no way around this reality other than getting your hands dirty. So go do it!
We recommend getting a whiteboard and begin mapping out your UTM system with your team. Determine your sources, mediums, how you want to use the content and term parameters.
Ask yourself, how do you want to incorporate UTMs for running A/B tests? Do you want to use utm_term for specific text within emails?
This will help collaboration will help you chisel out a great ROI tracking system that you can use for years to come.
Get started now and use a UTM link with your next post or in your next email and test it out!
UTMs Can Take Your Marketing to the Next Level-
All channels and all analytics tools work with UTMs.
When you start doing this you’ll have better data on your marketing campaigns. You can then use this data to track the return on investment for any of your marketing campaigns.
Without UTMs, it’s going to be a lot harder to make definitive claims about your marketing campaigns, I know that for a fact.
Sure, you’ll make some mistakes at first, but once you get the hang of things, you’ll wonder what the heck you were doing before using UTMs.
If you’re interested in learning more about UTM’s and how to build them, we have a wonderful course (https://datarich.thinkific.com/) that will teach you exactly how to create and utilize UTM’s in your marketing efforts.
Again my name is AJ Yager at PraxisMetrics.com and thank you for investing your time here with me today. Please connect with me on Linkedin and Facebook for more resources to help you scale. We love to help companies like yours grow and achieve their goals faster, so please reach out to me at my email as well if you have any specific questions.
What is the lifetime value of a customer? How does that affect the way that you market your products and scale your business?
These are some of the questions that we had in mind when we went into our conversation with Jeremy Reeves on the Data Rich Podcast. Below is the video of the entire conversation, as well as a transcript of the highlights:
What does it mean to be data driven as it relates to customer LTV?
Being data driven boils down to being aware of the choices that you are making, and making the right choices by utilizing data.
An example of this would be if you are looking to roll out a new product, you need to know exactly how much you can spend to acquire a new customer. If you don’t have data to tell you that information, you are essentially guessing, and that can cause you to be limiting yourself in terms of growth if you’re not paying enough for new customers, or it can be driving you out of business if you’re spending too much to acquire those customers.
If you don’t know the metrics, you don’t know what decisions to make.
How soon in a business should you worry about LTV?
This varies from business to business, but comes down to how quickly you want to scale your business. If you are looking for explosive growth, then LTV is THE metric that you need to worry about. This will help you determine the cost per acquisition that you are willing to pay. In the example above, they realized that if they set their break-even point per customer at 3 months rather than immediate, they were able to pay 30% more per acquisition, which allowed them to jump from making 15 sales per day to making 300-400 sales per day.
By drilling into the numbers and truly understanding the value of their customers over time, their sales were able to increase by 2500%! When you view the true value of a customer over time, you can make decisions like this that help you to experience explosive growth as a company.
How do you maximize returns based off customer LTV?
The best way to maximize your returns is to get extremely granular with your data. Go beyond just looking at the generic LTV of all customers, and see the LTV of customers based off of their referral source, or check to see what other products they purchase after the initial purchase. The more that you can break down the data and individualize your targeting, the more you can glean insights into your consumers, and in turn maximize your returns.
What is the best way to track LTV?
This is the question that you really need to answer for your business. You need to determine how you want to define and track the value of your customers over time. This will be contingent on the systems that you are using, the types of products that you sell, and how you want to think about your products.
Going back to the previous point about getting as granular as possible, you can break down the LTV of your clients based off what their initial purchase was, by referrer,
When should you make changes to your budget based off the LTV calculation?
Unfortunately, just like the last question, this depends on your business. If your company has a long buying cycle, you should probably wait to increase your budget until you see the results from your efforts. If you are able to make back your budget based off the initial purchase, you can increase your budget immediately. By understanding when people are able to hit that break-even point in your business, you can know exactly when you should increase your spend.
How can I set up tracking to make sure that I am getting good data?
You need to make sure that your attributions are set up properly in Google Analytics, so that you can break out customer behavior by traffic source in order to see exactly what your spend should be for each source. Past that, it is highly recommended that you break them out into funnels or campaigns that you are using so that you can properly attribute the LTV to each of the campaigns that you run, as well as the sources.
This requires a great deal of work up front, but once you lay the foundation of good data it is much easier to continue down that path, and you know that you can trust your data.
What is the number one thing that all marketers should know about the LTV of their customers?
The obvious first thing that you need is to know the number. If you are not conscious of the LTV of your customers, you need to find out what that is. After you are aware of the average LTV across the company, you need to get more granular with it, and drill down into the LTV per product.
Once you have those numbers, you need to determine your business goals. If you are in a growth stage of your business, where you are trying to scale, don’t be afraid to break even up front. Be aware of how long it will take for you to start profiting, and make sure that you are comfortable with waiting for that; but once you have determined that, you need to move forward. The business that can afford to spend the most to acquire the customer wins every time.
If you have any questions about dashboards, tracking, analytics, or if you want custom dashboards built for your business then talk to one of our Praxis Metrics data experts.
Have you struggled with data discrepancies? Had a hard time figuring out what metrics you should actually track? Tried to use a dashboard service and hated it?
If any of those things apply to you, we feel your pain. This video helps to break down some of the most common data mistakes that we run into with ecommerce businesses, and how to avoid and fix them. If you don’t have the time to sit through the video, or don’t have headphones handy, never fear: we have provided a breakdown of the video below.
Mistake #1: Not automating data extraction
Most companies have a HUGE issue with this; they have someone assigned to extract data from multiple data aggregates and put it all together in one place.
This causes several problems for businesses, the first being the human error side of things; humans make mistakes constantly, and with a task like data aggregation it’s very easy to misplace a decimal point or to switch two numbers around, which may not seem like a huge deal, but if you take action on the insights gleaned from that data it can lead to catastrophe.
The second problem is that humans are expensive. Generally the person in charge of this kind of task is a marketer, and their time is much better spent analyzing data rather than aggregating it; marketers find actionable insights from the data, but very rarely do they have the necessary training to clean data and ensure its accuracy.
Mistake #2: Believing that a dashboard is the solution to your data problems
Dashboards are excellent tools for data visualization and data aggregation, but they will not solve any issues that you have with the underlying data.
The second issue that people often run into with dashboards is actually connecting the data from the various sources to the dashboard. Many of these data visualization companies talk about how easy their technology is to implement, but going back to the first point, you need to understand how to take all of the different data formats and naming conventions and standardize them across the board so that you can actually get actionable data that you can trust.
Mistake #3: Not making your data actionable
According to a Google survey 97% of websites collect data from their customers, but less than 30% actually use that data to make decisions in their business.
Many companies get so bogged down with metrics and get lost in the weeds of everything that is measured that they lose sight of their actual goals. It is best to narrow the view down to 7 or 8 actionable metrics to focus on in the near term, i.e. increasing revenue or decreasing costs, and then once you have those under control, you can begin to add new metrics that you want to measure to further optimize the business.
The last part of making sure that your data is actionable is making sure that there is someone assigned to each of the core metrics that you decide to measure. That allows the person to focus on that metric, so they know exactly why that metric went up, down, or sideways, and can explain to the team exactly what happened so that you can replicate that behavior again or avoid it in the future.
Mistake #4: Not democratizing data
Many organizations have one nerd who analyzes all of the data and then transmits that data to the team, but that nerd doesn’t know what they don’t know. This flows back to the first mistake that many businesses make, by trusting too much in humans who are extremely prone to errors.
Everyone has different backgrounds and experience, so when they look at a metric they will see one thing and come up with an action item based off their experience; but if you bring in another set of eyes, that person may see something totally different and come to a different conclusion. Democratizing data and making it accessible to more people will lead to greater insights and more options for ways to proceed.
Mistake #5: Not focusing on the bottom line
This is very similar to not making data actionable, but it is very important to cover as well.
Determining the right metrics to measure for your business starts with your big goal: driving more revenue. You need to ask yourself, “what are the primary drivers of revenue for my company?”.
After you have determined what the primary revenue drivers are for your company, you need to ask the logical questions as to how you can get more from those customers; that may be, “how do I keep them subscribed to my service for longer?” or “How can I increase repeat purchases?” or even “How do I increase the average order size on my site?”.
For each of those questions, you can find one metric that will help you to measure the effectiveness of your efforts. By then focusing on that single metric to measure your results, you can experiment to find what works for your customers.
Mistake #6: Worrying about the chicken vs the egg
Many business owners think that they don’t need to start truly tracking these key metrics until they already have success to replicate; this could not be further from the truth.
Cleaning and tracking data, especially in the early stages, helps you avoid costly mistakes and also helps you expand rapidly. Businesses that track their data early on can outspend and outmaneuver their competition because they know exactly the type of returns to expect from their investment, allowing them to aggressively expand and claim market share.
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