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 wanted to visit a topic that we haven’t really covered here on our blog before, so this week, we’re focusing on how to use data in your life. In this episode of the Stay Grounded Podcast, we’ll cover how to use data to improve your health, love, and overall wellness.
Check out the full podcast episode below as well as our insights.
How did the data-driven journey start for Meaghan and AJ?
Meaghan likes to joke that she was born with a spreadsheet in her hand. Her parents were computer nerds, so she grew up in a very analytical household. She used spreadsheets to map out her homework and assignments in school, and in college she created a weighted spreadsheet to decide what kind of TV she should buy for herself.
AJ on the other hand, focused on intuition and feelings. He tended to go more with his gut instincts, and then use data to examine the outcomes of those decisions. AJ’s grandfather taught him at an early age to always learn something new and develop himself, so he read voraciously and learned from other’s wisdom. AJ’s father was an engineer, so he learned how to be detail oriented from his dad, and then his mother was more of the social butterfly. AJ found a way to merge all of the best attributes from each of those influences in order to maximize his capabilities.
AJ’s dad helped him to see the importance of data early on, as they used data to track KPIs from across the farm. Meaghan wanted to teach calculus from an early age, so data came pretty naturally to her.
Their perspective on data
Despite what many people think, data is not something to be feared. Data is just another term for information. The more information that you have at your disposal, the more knowledge you have. The more knowledge you accumulate, the more likely that you can turn that knowledge into wisdom. Data doesn’t belong in some dark corner. Data affects and impacts every portion of our lives. By leveraging data, you can better understand your health and spirituality; it can help you plan out travels. Data helps you to spot patterns and trends. Once you see the patterns and trends, you can start to drill down into the why. Once you understand the principles that explain why and how things happen, you can begin to harness that to create the outcomes that you want.
The trick to becoming data driven is learning how to ask questions. Once you learn how to ask the right questions and find data to answer those questions, you can find new questions to deepen your understanding even further. Anyone can become data-driven, regardless of their background. People who failed math class can find truth in data. The secret to data is simply asking questions, seeking out the answers, and then taking action from it.
How do AJ and Meaghan balance data with intuition?
This is technically a trick question, because intuition is entirely based off data. While many view intuition as a gut feeling or a hunch, intuition actually relies on data, but your brain has processed the data in a manner that you didn’t notice, so you don’t recognize all of the data that went into that feeling. Intuition developed within us since the age of the cavemen. If you think about it practically, the cavemen who recognized danger the fastest survived, while those who took too long to process that information probably got eaten. Those who survived passed this trait on to their offspring, and we carry that with us today.
How do you deal with outdated information that can feed your intuition?
The key to removing outdated information is exposing yourself to more information. The more information that you can get, the more likely that you can replace outdated or incomplete information with better, updated information. You can do this through travel, exposure to different ideas, cultures, norms, etc. The more data that you can gather, the more likely you are to have accurate data.
How do Meaghan and AJ find the data points that actually move the needle?
For businesses, we have a process that we go through called Metrics Mapping. This helps businesses find the metrics that will actually move the needle for them.
As shown in the image above, the process of Metrics Mapping starts with your business goals and objectives. In this example, the business wants to double their year-over-year revenue.
Once you know what you want to accomplish, you need to ask what questions you have about how you’ll reach that goal. In our example, they need to know what sources get them the best conversion rates on the site.
From there, you need to think through what metrics can help answer the questions that you came up with. In this case, the business needs to know their conversion rates for different funnels, their total traffic and where it came from, the results of their various split tests, and their ROI for each advertising medium.
Once you know what metrics you need, it’s time to find the source of truth for each of those metrics. The source of truth is the place where you can get the most accurate information on that metric. In the case of our example, traffic and traffic sources would come from Google Analytics (GA), Shopify could help us understand the funnel conversion rates and the ROI, etc.
The rest of the metrics mapping process can then be carried out from there to help you better visualize and interpret the data.
As an individual, you need to start this process by understanding your values. From there, it’s important to understand your personal data. You need to find the data points that matter for you as an individual.
If health is important to you, then you need to get as much information on that as you can. Get your blood and genetics tested for markers to see what things can drive the most impact for your body. Everyone has a different makeup, so it’s important to understand what does and doesn’t work for us personally, rather than following a trend or influencer.
The key to moving the needle is to create a feasibility quadrant. This graph (pictured below) allows you to map out the different options available to you in terms of difficulty and likely value. By creating this graph, you can prioritize your actions on things that provide the most benefit at the lowest cost to you. After that, we recommend focusing on the other things that were considered highly valuable, but difficult to achieve. As you have completed the low hanging fruit, hopefully, the other high-value prospects have shifted to become more feasible. From there, you can move on to the things that provide less results, but are still simple to do.
How do you find the right questions to ask?
The easiest place to get started is to ask yourself where you are now. Start to analyze where you stand currently, and figure out the areas of your life where you want to do better, and where you want more. The main resources that we have in our lives are time, energy, and money. If you can find where you currently use those items, you can assess if those match your life priorities. If they don’t, then you have your questions lined up for you. “What do I want to change?” “How can I change it?” “Where to I want to get to?”. From there, you map out your steps on the feasibility quadrant and start working on it.
The trick to this whole process is attaching everything to a higher purpose of what you want in life. If you can tie your goals to a larger purpose, that will help you during the tough times. Once you have found the things that you want to accomplish, rate how happy you are with your current state. From there, you can find the things that you want to improve upon and then follow the paths laid out above.
Why is it so difficult to be honest with ourselves?
Meaghan and AJ’s theory on why it’s difficult to be honest with ourselves is because it’s painful. No one wants to admit to themselves that they have areas that they need to improve. That wounds the ego. Everyone has a version of themselves built up in their own head. Other people have other versions or variations of you built in their heads. Receiving feedback contrary to the image of yourself that you have built up in your head is difficult. Especially if that feedback is coming from yourself. But the only way to grow properly is to find the areas that you need to improve and then work towards a goal.
Meaghan has found that the best way for her to find the true version of herself is to look at her calendar and her bank account. Where she spends her time and her money tell her what she actually prioritizes.
Too often we create a vision of ourselves in our lives and in our business, and then only pay attention to things that fit that vision of ourselves or our business.
What areas of life to AJ and Meaghan recommend optimizing?
Many people don’t view love as something that you can quantify. Meaghan and AJ live to disprove that theory. They track multiple facets of their relationship in order to make sure that they each get the most out of it as possible.
The primary things that they decided to focus on were: growing apart, money problems, and sex.
In order to prevent growing apart, they studied each other’s love languages. This allows them to express affection and love in a way that the other will best receive it. Across their relationship, they correlations across the times when they fought. This correlation helped them realize that the reason that they were fighting was because AJ wasn’t getting enough of his love languages. Meaghan rectified this by adding in reminders on her phone to go and give AJ love according to his love languages every day.
How you do one thing, is how you do everything. Life is messy, things run together. So the habits that you establish in your relationship and with your health can translate into the way that you run your business. The same issues that we talked about earlier with honesty can impact you in business. However, this isn’t always the case. People can be extremely successful in certain aspects of business where they fail in their normal lives.
How can you stay grounded in life?
AJ uses his mornings to ground himself. He starts by writing in a gratitude journal, then meditates, and then drinks some water. If he dives right into the business side of things without taking this time in the morning, the day gets away from him.
Meaghan uses travel to keep herself grounded. She and AJ plan out times during their year when they will be on the road. They’re not vacationing, just traveling and working remotely. That helps Meaghan to feel connected and new.
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.
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.
Data recently surpassed oil as the most valuable commodity in the world. The question that we need to ask ourselves is “Why?”; why is data so valuable, and are we making sure that we are getting the maximum value out of our data.
Why is data so valuable?
Data in itself is not particularly valuable. Data is simply a single point of information. The value of data is the actions that you are able to take a a result of the data.
As an example of this, knowing that it is raining does nothing for you in itself. It is simply a point of data. When you begin to merge related points of data together, you get information. By extrapolating your information into patterns, you get knowledge.
Data, information, and knowledge are all powerful tools, but they only help you understand things in hindsight. Taking that knowledge of patterns and using it as a model for the future allows you to gain wisdom. But that wisdom in itself does nothing for you without taking action from it, which is Praxis, or the practical application of wisdom.
Data is like a race car. It has limitless potential, but it requires you to put fuel into it before it realizes it’s value. Data requires analysis and action in order to create any value for your company. This brings us to the question of:
How do I make sure that I’m maximizing the value of my data?
There are two ways to make sure that you are getting value out of your data, internal monetization and external monetization.
Internal monetization refers to utilizing your data to glean insights to help your company. This can be things like improving your marketing efforts, managing customer experience, or management of your supply chain and equipment maintenance.
Most companies use the internal monetization of data to identify areas of inefficiency. Our client, Digital Marketer, was one of these. We helped them discover a structural issue with their site that was causing a huge SEO issue for them. Upon discovering the issue, they implemented a fix and saw a 50% increase in their traffic. You can read more about that story here: Praxis Metrics Case Study – Digital Marketer
Another way to monetize internally is to leverage data to expand your product and service offerings. Our client, Danette May, found themselves in a similar position to this. They had been trying to expand a funnel that they had built to offer it to more clients, but they found that they couldn’t increase their ad spend to reach this new market and maintain profitability on the product. They were about to abandon this idea when they came to Praxis to try to figure out what their lifetime customer value was; we helped them discover that their LTV for that funnel was much higher than they initially thought. This allowed them to increase their allowable cost per acquisition by $5, which caused them to experience explosive growth, and now that funnel brings in millions in revenue per year. You can read more about their story here: Praxis Metrics Case Study – Danette May
Another way to take advantage of your data is to monetize it externally. This can include selling the data that you have on your customers, creating mutually beneficial partnerships with other data-driven firms, and creating new subsidiaries or divisions within your company to take advantage of insights that you have gained. Selling and trading data with other companies is growing more challenging, as data rules and regulations are becoming much stricter across the globe, but these type of partnerships can be extremely lucrative for both parties if done properly.
How can I start monetizing my data?
The most important thing that you need to do before trying to monetize your data is to make sure that your data is accurate and “clean”. Attempting to make decisions off of bad data is like trying to drive that race car, but with a filthy windshield that you can’t see through.
Once you have confidence in your data, the next thing you need to do is start to figure out what numbers are actually important to you an your business. We recommend a process called “Metrics Mapping”. Metrics Mapping helps you to understand exactly what you should be tracking, and what actions you should be taking based off of your numbers.
Metrics Mapping starts with determining your business goals and objectives. So if your goal is to double your revenue by 2021, then what questions do you need answered in order to get there? An example question would be “How do we increase the revenue from our website?”. From there, you can determine the metrics that would help answer that question. “How many conversions are we getting per day/month?” “What is our average order value?” “What are our repurchase rates?” “Where do we get our highest converting traffic?” would all be good questions that can help lead you to the metrics that you need to be tracking.
Once you know what you want to track, the next step is to figure out where your “source of truth” is for each of these metrics. Revenue per day/month should be tracked by your accounts (Paypal, Stripe, bank), average order value should be tracked through your sales system, highest converting traffic can be found in Google Analytics, etc. Once you have your “source of truth” selected for each of the metrics that you need to track, you know where you need to check in to see your progress.
Once you know your metrics and where they live, you need to assign someone to manage them. Even if it’s yourself, it’s critical that someone be specifically responsible for these metrics. This person needs to keep an eye on the metrics and know exactly what’s going on with them at any given time. Whether improving or worsening, this person should be aware of why they’re changing.
Once you have your metrics mapped out, the next thing that you should do is start aggregating and visualizing your data in business intelligence dashboards. These dashboards will help you track your important metrics over time, and at a glance.
At Praxis, we prefer dashboards that go beyond just simple visualizations. We build dashboards that merge multiple sources of data in order to create new, reliable data sets. Our dashboards perform complex analysis and calculations to help you not only understand what has happened in your business, but also help you shape the future of your company.
We’ve built everything from “command centers” where executives and investors can log in to see all of the key metrics that they need, to drill-downs that allow you to see the performance of each of your ads. Through our experience creating these dashboards for our many clients, we have perfected their creation and roll-out. We have more information about these dashboards and what they can do for your business here: https://praxismetrics.com/dashboards/ltv-dashboards/
This article contains a roadmap for data monetization. This may seem overwhelming, but we can help you wherever you are in your journey. We offer services for tracking, dashboarding, and even metrics mapping. All you need to do is follow this link to schedule a free Praxis Metrics strategy call to get a personalized data roadmap for your company from a Praxis Metrics data expert.