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.
In this episode of the Data Rich show, AJ is joined by Kevin Brkal the president and founder of KNB Online Inc.
We talk through attribution models, ad spend, and how to protect your data through data ownership.
Check out our insights and conversation below:
Data- Amazing, but creepy
Kevin’s agency focuses on Facebook ads. The reason that they chose this as their platform is because of the Facebook audience network. Lots of different sites use the Facebook Ads network to sell ad space on their websites.
When it comes to the mobile web, any apps that collect real time data most likely use or sell that data. They can track your location and establish geo-fencing and geo-targeting to hyper target you as a consumer. It often freaks people out when they start to see ads for things that they think shouldn’t have a digital trail, but any number of apps on your phone could theoretically track that information on you.
As people get more and more creeped out by the things about them that are tracked, we see platforms cracking down on the things that can be tracked. The question that we naturally want to answer is how will this affect marketing.
Find a strategy that works for you
Before the internet, marketers still reached their target market. While we may not have access to as much information as before, you can still get mountains of data.
While browsers crack down on the data that marketers can access, no one is looking at location data being shared. Search engines also still sell randomized user data as well, so marketers shouldn’t panic just yet.
The primary victim of the data crackdown
Attribution modeling will get more difficult as browsers cut down on the amount of data that they share. This leaves marketers to rely more heavily on last-click attribution, or just saturate their markets with ads. The business who can afford to spend the most to acquire their customers always wins, but this may become even more important in the future.
Attribution is already a mess, but as browsers continue to limit the amount of data that you can gather on customers, it will only get worse. This change increases the confusion that ecommerce companies will have to deal with. Businesses just need to just gather as much data as possible to make an informed decision.
As we talked about previously, the best way to combat the confusion is to gather as much data as possible.
One of the best way to increase your data is to leverage UTMs. UTMs are free tools that everyone can use to increase the amount of data that you can gather. They allow you to create custom tracking parameters to gain better insights into your customers.
From there, you need to track your data in as many sources as possible. Facebook Pixels, Google Analytics, the back end of your ecommerce store; all of them track data differently. But if you have all of that data tracked, then on the back end a data company can extract the data and figure out the truth for you.
Another thing that you can do is alter the attribution models that you use in your tracking systems. Facebook defaults to a 28-day click window, and a 1-day view-through window. You can alter this window to better match your preferred attribution modeling.
In today’s marketing landscape, there is no limit to the number of touch points that you can have with your customer. The trouble that most businesses run into is deciding how they want to attribute back to the touch points across the journey.
Google Analytics defaults to a last-click attribution model. This means that the thing that drove them to your site the time that they converted gets complete credit for the sale. Facebook has an attribution window, in the which it claims full credit if a sale occurs in that window. The trick that marketers need to use is a blended model.
Adidas recently stopped their branding campaigns in favor of campaigns that seemed to be driving their sales, based off last click attribution models. They quickly discovered that the branding campaigns that they were running warmed their customers enough to click on the direct response campaign and purchase. Based off the data that they looked at, they thought that they made the right choice to cut the branding campaigns.
The most important thing that companies need to do when working with an agency is make sure that you’re owning your data. Whatever agency you work with, you need to make sure that they create the ads under your account and that they track with your pixel. The reason for this is that then you own that data. If you allow them to run the ads under their umbrella or with their pixel, then they own the data. In the event of a dissolution of the partnership, they could sell that data to your competitors.
Regardless of who you work with, it’s extremely important to own your data. Many ecommerce companies have started to move away from Amazon, because Amazon owns all of the data on its platform. As Kevin correctly pointed out, Amazon can take the data that they gather on your customers, and the things that they purchase from you. From there, they can recreate your product under their umbrella and force you out of your own market. It wouldn’t be the first time that they did.
Businesses have finally begun to recognize the value of data, as data has just surpassed oil as the most valuable resource on the planet. Businesses have begun to recognize the value of owning their data from top to bottom.
Take action from your data
Once you own your data, the next important thing to do is take action from it.
In order to know what actions to take, you need to know what your primary objective is. If you’re an ecommerce company, you likely want to increase sales. B2B companies likely want to increase leads. The important metrics that everyone should track are the cost per acquisition (CPA) or cost per lead (CPL). From there you want to calculate your return on ad spend (ROAS). If you’re looking at generating leads, it’s important to know how much it costs for you to turn a lead into a customer, or your conversion rates from leads to customers. Once you know that, you can find the lifetime value of those customers (LTV). If you have your LTV and your conversion rates, then you can reverse engineer your allowable CPL.
Don’t take too quick of action though
With all data, it’s important to find as many sources of validation as you can. In this hyper-connected world, it’s unfortunately easy to have skewed data; as this commercial points out:
Many analytics systems fail to recognize refreshes on thank you pages, which can dramatically skew your data. At Praxis, we have found that the best way to stop this is by creating a first party cookie that loads into the user’s browser the first time that they visit the thank you page. From there, you can update your tags to only fire in the event that the cookie is not present in the browser. Obviously, this still isn’t a perfect solution to the problem, but it can reduce the negative effects of over-attribution.
The most important metrics
Kevin has found ROAS to be the most important KPI in his business. Anyone who runs ads obviously wants to turn a profit on those ads, so it is very important to make sure that you track your ROAS.
Regardless of the metrics that you measure, the most important thing that you can do with data is validate. Track everything through multiple systems, don’t put your trust in any one. At the end of the day, these platforms want you to spend more money with them, so they will skew the data in their favor.
Data can be overwhelming at first, but it is your friend. Data will help your business scale and grow faster than anything else. AJ pointed out that you need a relationship with your data. The more time you spend with your data, the more in sync you can get with it. The better attuned you are to shifts in the data, the faster you can react to sudden changes or opportunities.
If you need help with Facebook advertising, Kevin is a great resource and can be reached at kevinbrkal.com
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.
In this week’s blog post, we wanted to showcase our appearance on the First $100K podcast with Joseph Warren. In this episode, they cover everything from lessons learned to current fears about business. Make sure to check it out with our insights below:
What do I really want?
Too often in our lives, we get caught up in the flow of things. We allow ourselves to just progress in our lives without taking the time to ask what it is that we’re truly looking for. By becoming intentional and taking the time to ask ourselves what we actually want, we can start being proactive about our decisions rather than just reactive.
AJ and Meaghan realized that the path that they started on no longer suited the lifestyle that they wanted. They ran a successful marketing agency, but they found that the business could not function without them. This made it impossible for them to live the lifestyle that they wanted, and didn’t fit with their long-term vision for the business.
They decided to ask themselves what had brought themselves to this point in their lives, and what things kept them from reaching their goals. In order to run this analysis though, they first had to define what they really wanted. After they defined what they wanted, they reverse engineered that into what they needed to do to achieve success.
What is stopping me from achieving my goals?
Meaghan and AJ found that they wanted time freedom. But when they looked at their situation, they found that their business was blocking them from that. Because the business was built around AJ and his expertise, he needed to be on every call and project. This made it impossible for them to properly scale the business properly, and cost them their time freedom. They started to analyze the business, and quickly realized that they had a problem with hiring. None of their hires could replace AJ, so he was stuck. In order to gain the freedom that they craved, they needed to start hiring smarter.
Creating a multiplier-
At this point, Meaghan and AJ realized that even though they owned their business, they were still stuck trading their time for money. Inevitably, you reach a plateau or a breaking point in that deal. They realized that they needed to break out of that cycle to live the lifestyle that they wanted. The only way to improve that exchange is to find a multiplier.
Multipliers come in a myriad of forms: employees, automation systems, processes, etc. A multiplier includes anything that can increase your output without requiring more input from you.
Tips and strategies for creating your first $100K-
Hire the right people
Getting the right people on your team will drive your first $100K, almost more than anything else. You can do almost anything with the right team around you. You have to remember though, the people who helped you get to $100K may not be the right people to help you get to your next $100K. For AJ and Meaghan, they hired whoever they could until they reached their first $100K. Once they broke through that initial barrier though, they decided that they could afford to select better employees. They went back and started replacing their mediocre team members with better team members, and this helped them rapidly scale the business.
Target your market
The next tip that they would suggest is focusing on the right customers. For Meaghan and AJ, they luckily already had some clients built in to this new business that they launched. They had some marketing clients that needed tracking and analytics services. This allowed them to hit the ground running, and then expand their offerings to suit the needs of their target market.
During this phase of finding their ideal clients, AJ and Meaghan established a mantra: easy and effortless. They wanted to target clients that would be easy to capture, easy to educate, and easy to serve. By following this focus, they quickly expanded their client base, allowing them to scale in other ways, as we previously discussed.
Over-deliver for them
By properly targeting their clients, they knew that Praxis could over-deliver to their clients, and that is their third tip. During the start-up phase, it’s imperative that you create raving fans for your product. In the early days, most of Praxis’ growth came from word of mouth referrals from business owners. Because Praxis delivered such value to their clients, they told everyone that they knew about their amazing work. This over-delivery keept their clients coming back for more work, and the referrals created a steady stream of new business for Praxis.
What was the biggest mistake?
The biggest mistake that Praxis made was also one of the keys to their growth early on. Unfortunately, Praxis just continued the practice for too long. After years of business, Praxis still struggled with scaling. They brought in great top line revenue, but very little of it made it to the bottom line. AJ and Meaghan decided to run a deep-dive on their expenses to figure out where this money went. They discovered that over-delivering to the clients made it impossible for them to scale.
Basically, when they drilled down into the numbers, they discovered that they wrote off tons of hours in order to provide better products for their customers. This meant that the client didn’t pay for those hours worked on their project, but Praxis did. This one thing ate up almost all of the profit from the business, and cost them more than half a million dollars annually.
Meaghan and AJ feared that if they stopped writing off the hours, that their clients would revolt against them and leave. However, they found that no one had a problem paying the extra money, because the finished product was worth it. They got stuck in the mindset of the entrepreneur, and thought that they still needed to prove themselves. But they discovered that they had already passed that phase of the business, and people trusted and valued them enough to pay the true price.
The unfortunate truth-
Too many businesses get trapped in this same mindset. While it is important to over-deliver to the client, you also need to make sure that you charge what you are worth. At the end of the day, you need to make sure that the relationship works for both parties, not just the client. Most of the time, your clients will understand. If you have priced your products properly, you shouldn’t need to discount them in order to maintain the relationship.
Why do so many entrepreneurs struggle to cross $100k?
Over 90% of entrepreneurs struggle to break through the $100K mark. AJ and Meaghan never felt like the business struggled to cross that threshold, but they found it difficult to reach $100K personally. Meaghan specifically wanted to pour all of the money back into the business, as she felt that she could make more by forgoing her pay and instead bringing on a new employee or expanding the business offerings. She learned over time though that if she didn’t take a paycheck herself, then she would hold that against her employees. If they made more than her, then she felt that they needed to work harder than her.
Once she started paying herself though, she discovered that she valued her time more. She no longer took on menial tasks within the business because her time now had a cost attached to it. This caused her to shift focus towards bringing in people that could do those tasks in her place.
At this point, the podcast shifted to a lightning round of questioning, so we included the questions and responses below:
What is the best thing about being an entrepreneur?
AJ loves the creative process. He loves the process of coming up with an idea, and then turning it into a plan and executing on it.
Meaghan loves working from anywhere, and not having a standard dress code for work.
What is the worst thing about being an entrepreneur?
Meaghan doesn’t like working 18 hour days. Especially when no one appreciates it.
What do AJ and Meaghan fear the most?
AJ fears not having Meaghan around.
Meaghan fears insecurity. This includes emotional and financial insecurity.
What did Meaghan and AJ spend too much time doing in the first year of business?
AJ feels like he spent too much time managing expectations, also doing things outside of his wheelhouse.
Meaghan also felt like they spent too much time outside of their strengths. They spent too much time putting the entire business on their shoulders and not bringing in specialists to help them out.
What secret fear do they have about people?
AJ loves people too much to be afraid of them. He loves to figure people out and help them to maximize their potential, so no fears from him.
Meaghan fears that people will let her down. She has high expectations of everyone, and has had a lot of people let her down.
What do they struggle with personally?
AJ is currently struggling with imposter syndrome. As the business grows and scales, he feels less and less involved in the company. This has caused a bit of an identity struggle within him about who he is to the company and where his role is.
Meaghan is struggling with her outlook. As a natural pessimist, she tends towards the negative very quickly. AJ always sees the potential for good, and she tends towards seeing the potential downside.
What do they wish they had learned sooner in business?
Better hiring skills. If they had mastered hiring earlier on, it would have saved them a lot of time and money.
To piggyback off of AJ’s answer, training as well. Training and coaching employees rather than being a taskmaster.
What 3 words would they choose to describe themselves?
Radiant, inspiring, and clear.
Disciplined, realistic, and prideful.
What 3 words would you use to describe yourself in the first year of business
Scattered, frustrated, and hopeful.
Naive, non-committed, and unfocused.
What is one bad habit that you want to break?
Sticking to the morning routine more consistently.
If you could come back to life after death and offer one piece of advice to your family, what would it be?
We’re down to the wire when it comes to Black Friday and Cyber Monday 2019. Because of the way that Thanksgiving fell this year, the holiday sales cycle is compressed and shortened. This compression has already had tremendous impacts on ecommerce businesses this month. Ecommerce companies across the spectrum are struggling to get traffic and conversions out of their standard ad spends.
In this post, we’ll walk through ways that you can leverage data to help you maximize your ROI and ROAS. While we’re focusing on Black Friday and Cyber Monday, these tips and this information is applicable year-round.
How to make sure that you maximize your ROI this Black Friday-
The first step to maximizing your returns is making sure that you have data.
That means getting your tracking in order. Lots of business owners and marketers put tracking off. It’s a common impulse.
Tracking takes time and it feels tedious to set up triggers and events for everything on your site; but no one can make up historical data. If you don’t set up your tracking until you’ve already been in business for 5 years, you will miss out on 5 years of data and insights.
Even waiting to start until after the holidays will cause you to miss out on potential insights into how you can better capture and serve your customers.
We recommend that everyone do a quick audit of their tracking systems to establish where they are now. Some of the things to check in this audit are:
Do your UTMs all track properly across your customer journey?
Are your UTMs organized in a way that makes sense and actually helps you better understand your customers?
Can you see right now where your traffic is coming from, and which traffic converts the best?
If you can’t answer yes to all of those questions, then you won’t be able to get nearly as much out of your Black Friday data.
As we talked about earlier, you can’t analyze what you don’t have. So if you don’t have your tracking set up before Black Friday and Cyber Monday, you won’t be able to know what you can do to improve your results next year.
Moving into UTMs, you NEED to make sure to track all of your marketing efforts with UTMs. They can help you track variations on ads, help with split testing, and give you clarity into what marketing efforts actually drive results for your business.
Step two to maximizing your returns is reviewing your data.
If you already have UTMs in place and feel confident in your tracking, then you can take the next few weeks to review your data. Look at what has worked for you in the past: analyze which emails have the best open and click-through rates, check which ads yield the highest ROAS, what buttons drive the highest cart values, etc.
Too often we get caught up in our plans for the future. We get locked in a cycle of what we want to test next, and we forget to look at what we’ve done in the past that worked. Those that fail to learn from the past are doomed to repeat it. If you don’t go back and review your data, you could potentially miss out on huge, easy wins for your business.
As we talked about earlier, Black Friday being pushed back a week has changed the face of the buying season. Many ecommerce companies are in full-blown panic mode right now because their year-over-year revenues are way down from last year.
We suggest that rather than making month-to-month or day-to-day comparisons, look at your data through the lense of days before Black Friday. So, if today was 5 days before Black Friday, you could compare it to 5 days before Black Friday last year. Then you can start to analyze what your marketing efforts looked like on that day last year, what worked, what KPI’s you saw success in, and how those impacted sales on Black Friday.
We recommend focusing on driving traffic to your site, and getting them browsing your products. Then you can leverage retargeting to reach them during your Black Friday sale and focus on driving them to purchase.
What metrics you can use to get a leg up this Black Friday and Cyber Monday
Now, we want to switch gears and talk about what metrics specifically you should analyze and track to make sure that you have the best Black Friday and Cyber Monday possible.
Average Order Value (AOV)-
This one seems basic, and it is, but we see ecommerce companies forget about this frequently during this time of the year.
Most companies focus on their profitability and the discount rates around this time of the year. That should be a top priority, but you also need to make sure that you have your upsell flows, recommended products, and bundles in order to make sure that your AOV doesn’t tank. While you may want to focus on client acquisition, you still need to make sure that these new customers provide value to your business.
This is one of the primary metrics that you should review from last year. Explore what bundles drove higher cart values, what products drove cross-sales, and what upsell flows performed best for your business.
Promo Code effectiveness-
This seems like a no-brainer, and hopefully you already have examined this data. Looking back at what discounts you ran last year and seeing what worked, what failed, and what fizzled will help inform you as to what you should do this year.
In addition to just looking at the surface-level of this metric, we recommend that you deep-dive into when your customers used your different codes, what time of day they purchased, what the AOV was based off discount code, and what was the average discount per code.
Black Friday and Cyber Monday are some of the worst possible times to run out of inventory. Obviously you can’t perfectly predict this year based off last year, but by examining your historical data and comparing that with this year’s demand, you can get a better feel for how much you need to order.
Many ecommerce companies neglect to factor staffing into their costs. During this time of increased demand, lots of businesses need to bring on extra help; but they fail to account for this increased cost in their cost of goods sold.
Not accounting for this can easily turn your sale from an asset to a liability. Typically, as you increase sales, you also increase the amount of customer service tickets that you receive. If you don’t have the bandwidth in place for that you may need to bring on additional support, but they may not get fully trained in time. Additionally, the increased wait time to have issues resolved can cost you sales.
If you don’t have a solid plan in place, issues can sneak up and turn your holiday into a nightmare.
Lifetime Value of Customers (LTV)-
One of the biggest dangers that businesses face during this holiday season is acquiring unprofitable customers. Many businesses run loss-leader deals in order to acquire new customers and think that they’ll make up the loss sometime down the line.
Without tracking the lifetime value of those customers over time, you’re stuck guessing about their profitability. We have dealt with clients who offered discounts in order to acquire new customers, believing that they would make it back over time, only to discover later that they had overestimated the value of those customers. They thought that these new customers drove their profitability, but as it turned out, they dragged down profitability.
In order to maximize the effectiveness of your Black Friday and Cyber Monday marketing efforts, you need to understand what these clients purchase initially, what they come back to purchase, and when they come back to purchase. If you understand those three things, you can tailor your marketing efforts to their natural buying tendencies and dramatically increase your effectiveness.
Going through last year’s data and then looking at this year’s plan and making sure that they align is the key to a successful Black Friday.
How to leverage pre-Black Friday sales to your advantage-
We have found that if you can give your clients a juicy enough discount code, you can entice them to spend their money with you even if they know that they’ll likely get a better discount later. Some of the larger retailers have decided to just launch their official Black Friday deals before the official holiday.
You could also promote your pre-Black Friday sale exclusively to your email list. This provides value to those who have signed up for the list, and could entice others to sign up.
We have also tested the tactic of offering a sale before the holiday by pitching it as a way for the customer to make sure that they got their orders on time. If they took advantage of this sale before the holiday rush, they could get a good deal, and also avoid the hassle of holiday shipping issues.
How real-time reporting can increase your ROI this Black Friday-
Tracking and reviewing your data make up the first two pillars of your data temple. The third pillar is automation.
In today’s world, every system tracks one specific thing, and it refuses to share that information with any other platform. Because nothing communicates, it falls to humans to aggregate and gather all of the data together. It can take days or even weeks for people to pull together the data, get it placed in the right location for analysis, and then take action from it.
Praxis Metrics specializes in automating the process of gathering the data from all of the different systems where it lives, cleaning it so that all of the metrics align properly, and then visualizing it in real-time.
This real-time reporting allows you to adjust and tweak your efforts much faster than if you relied on manual reporting. This decreased time to insights allows you to experiment and improve your marketing much faster, allowing you to drive immediate results, rather than having to wait a full year to improve your strategy.
The goal this Black Friday and Cyber Monday-
The goal of this entire process is to help you have the best Black Friday and Cyber Monday possible. If you have set up your tracking properly, you should know where your best customers come from and what efforts drove those customers to your ecommerce site. These insights will allow you to double down on the things that actually drive results, and cut the things that didn’t work for you. You can reallocate your budget from the things that didn’t drive results to the things that do drive results, allowing you to increase your ROI, and bringing in more money that you can then reinvest into the marketing efforts that are actually working.
How can you assess your data maturity to understand next steps?
We always start with an audit of where you stand. In order to understand your next step, you need to understand where you are.
Even if you have set up your tracking previously, we recommend an audit. As your website grows and you make additions and changes to it, you can easily break your tracking, or miss out on tracking valuable insights.
If you fall into stage one, your entire goal is to gather as much information as possible. You can do this through Google Analytics, UTMs, defining your Key Performance Indicators (KPIs), and above all else, create Standard Operating Procedures (SOPs). If you can standardize your naming conventions for UTMs, SKUs, etc., you can save yourself hours of cleanup down the line.
If you fall into stage two, your focus is on automation. What compound interest is to your money, automation is to your time. We have had clients cut the number of man-hours required to complete a data project from 10 hours per month to 1. Automation allows you to scale your efficiency and effectiveness across the board.
The focus of stage three is optimization. Everything before this point deals with historical data. Optimization leverages the wisdom and knowledge gained from the previous stages and applies it to your future endeavors. This allows you to predict outcomes from your actions. This stage is where the magic truly happens. Your efforts yield predictable, exponential results, allowing you to rapidly scale your business.
Stage four is the buzzword stage. This stage focuses on leveraging AI, machine learning, etc. These technologies allow you to improve your business at scale through incremental adjustments.
No matter where you fall on the data maturity spectrum, Praxis Metrics is here to help. We offer free data roadmaps and coaching, analytics audits, dashboarding solutions, etc. If you want to learn more about Praxis Metris, visit praxismetrics.com or drop a line here.
Meaghan was recently interviewed on Lena Elkin’s podcast, Unfiltered.
Check out the full episode below along with our insights on the most important points.
How did Meaghan get her start?
Meaghan grew up in a home that was not entrepreneurial at all. No one in her family had ever gone to college, so she was taught that management was the goal. If you could reach management, you had arrived.
She had her first taste of entrepreneurship in college selling encyclopedias door to door. This experience allowed her to become her own boss and manager her own “company”. This opened her eyes to how her own individual contributions affected her income. Through this experience, she learned the value of being 100% responsible for herself and her outcomes.
After that, she became a sales consultant, but still under an organization. During this time, she met AJ. AJ is an entrepreneur through and through. He started creating companies at age 10, so he opened her eyes to the possibilities of entrepreneurship.
One of the biggest transitions that she had to make was to shift her mindset from individual contributor to growing a company.
Luckily, her journey with data started much earlier.
Meaghan was the math nerd from an early age. She jokes that she had more math books than friends. Meaghan loved math and numbers because everything had a correct response. Everything was either right or wrong, and it was clear why.
She had planned to become a math teacher, but upon discovering her gift for sales, she decided to focus on hustling while she could and teach later in life.
The sales bottleneck
In all of Meaghan’s sales experience, she relied on her inputs to create outputs. She either knocked doors to get sales, or she cold-called businesses to get sales. Enter AJ.
AJ worked in marketing, and Meaghan wanted to learn more about what that meant. So she shadowed him working on a client. The client had set up a course that he wanted to sell, so AJ set up a sales funnel and landing pages, and then sent out an email to his list. They had 500,000 on that list, so they sat back and waited to see the responses. Within 8 hours, the campaign had cleared $1.2 million.
Upon seeing this, Meaghan knew that she needed to make the jump from sales to marketing. Because of her background in sales, she helped with copy and closing clients. Upon spending some time in the agency, she began to notice patterns in the data.
In her time working in sales, she would split test approaches and different scripts. Over time, she perfected her sales pitch. Upon making the switch to marketing, she realized that they did the exact same thing, just on a larger scale, and with more automation.
The marketing bottleneck
While running the agency with AJ, they had to report back to their clients on the progress of their campaigns. So they had a marketer who had to run reports for clients all day, every day. He wasn’t able to do anything else because they had to get this data to their clients.
So Meaghan started researching ways to automate their reporting. She found the solution in the world of data analytics and business intelligence. She found that many of these programs could automatically do what they had someone doing by hand. The programs could extract the data from all of the different sources, aggregate it, and even display it in an easy to interpret format.
Once they rolled out these reporting solutions to their clients, they naturally wanted more. They wanted more information on their business and wanted that same powerful reporting for everything. Ultimately, everything that Meaghan worked on led her down the path to Praxis.
AJ and Meaghan pivoted their marketing agency into a data analytics agency, and now help business owners and marketers understand their businesses better through data.
How to take advantage of your data
The first thing that you need to do to truly take advantage of your data is set your ego and emotions aside. As Meaghan talked about earlier, numbers allow you to see in black and white. Rather than focusing on how they make you feel, you can use that information to help you grow forward and progress.
The next thing that you need to do in order to truly take advantage of your data is a process called “ETL”. ETL stands for Extract, Transform, and Load. Essentially, you need to extract raw data from the back ends of your systems, then transform it to make sure that it accurately reflects what you want to measure, and then load it into a business intelligence or visualization tool.
Lots of solopreneurs and early stage entrepreneurs end up needing to learn sales and marketing in order to get their company off the ground. Learning data as well would likely push anyone over the edge.
That’s a big reason why Praxis shifted down-market. We used to work with larger companies, but we found that they needed answers to the same questions that the little guys did. Everyone wanted to know what worked, what didn’t work, where to spend more money, and where to cut spending in order to better optimize.
The best time to start thinking about integrating a BI or dashboarding tool is after you’ve already hit $250,000 in revenue. For businesses pre-$250,000 it’s best to focus on tracking. Too many businesses wait until they get big in order to worry about their data; but you can’t leverage data that you don’t have. Every business needs to set up tracking, and the earlier you set it up, the better.
Most businesses spend all of their time worrying about their copy and their look and feel, but they neglect their tracking. Google Analytics is one of the most underutilized and error-prone tools on the market.
We see lots of big companies that come to us with very little or no data available to them, looking for answers to their business questions, but they don’t have any data. We have to take them back to the beginning and help them set up their tracking, and then we can help them analyze the data as it comes in.
Data is sexy.
Lots of people view data as something that happened in the past, and therefore not something that can help them in their current situation; however, the true power of data is that it can help you see the patterns in the past, and then predict and shape the future.
As we covered earlier, it’s very important to get started as early as possible with this process. So now we want to cover how you can get started:
UTMs are a free tool that every business can and should use for all of their marketing. UTMs allow you to pass information through URLs in order to better track where your traffic comes from. Adding UTMs to your external links allows you to understand how your customers found you and what content they interacted with.
UTMs allow you to see much cleaner, more granular data about the performance of your marketing efforts. This allows you to get better insights, allowing you to decrease waste and double down on what works.
If you want to learn more about UTMs, we have a course that walks through how to build them and gives you tools to help you automate the creation of your UTMs. Here is the link to that course.
Holidays are almost here and getting ready for Black Friday and Cyber Monday is crucial.
In the latest episode of the Data Rich podcast, AJ Yager and Spencer Connell talked with Robert Rand about how you can prepare your eCommerce store for the holidays.
Check out the interview and our insights below:
Why is data important?
Everything in eCommerce is a blend of art and science. The numbers tell the story of how people feel about your art. Without going back and checking on the numbers, you’ll never know how your efforts actually panned out.
Many people don’t think about getting the right metrics and the right data in front of them, and that comprises half of the battle. Most of the biggest companies in the world rely and thrive based off of their data and the infrastructure that they’ve built around that data. Both Robert and the Praxis team derive a lot of value from helping other businesses harness the power of the data and leverage it into growth.
Every company today is a data company; they just don’t know it yet. The only way to properly scale in today’s environment is to know your numbers and leverage them into growth. That doesn’t mean that everyone needs to be a data expert, but it does mean that without data, the journey to a successful company is nearly impossible.
What opportunities does Black Friday/ Cyber Monday afford brands?
Every year Black Friday and Cyber Monday spending grows dramatically, and this year is no exception. Experts predict a 25% increase in spending year-over-year, with most of that spending taking place online. The days of stampedes of people rushing into stores have passed, and now even brick and mortar stores find themselves primarily as eCommerce businesses.
Brands now need to prepare their digital storefronts more than their physical storefronts for the stampedes.
How can eCommerce companies prepare their digital storefronts for the big end of the year sales rush?
You can run the best marketing campaigns ever created with the best automation capabilities ever devised, but if your website has issues converting web traffic into sales, you won’t achieve the ROI you’ve come to expect from many proven marketing strategies.
Without monitoring for site performance and issues, there can be all sorts of factors impacting your bottom line.
What are the top factors?
☑ Security: How healthy, safe, and secure is your website?
You never want to have a security or data breach, but during the holiday season a breach could obliterate your opportunities.
Every business should make sure that their eCommerce platform has the latest security patches downloaded and installed. It’s also important to make sure that your software and hosting is completely up-to-date. You need to make sure to calibrate and update firewalls as well. Ideally, you should have proactive monitoring in place to alert you to any suspicious activity.
The same way that you protect a physical store from people breaking in, you need to protect your digital store as well.
For example, in the event of a DDoS (Distributed Denial of Service) attack, you need to have CDNs (Content Delivery Networks) or Caching systems in place to ease the load on your hosting environment. For bigger merchants, you’ll want to have auto-scaling systems or host in a cloud environment like AWS that can spin up to deal with whatever gets thrown at it.
In addition to adding reactive layers to your security, you need to have pro-active layers as well to recognize and block suspicious traffic from reaching your hosting environment.
In the event that your security does fail, you need to have a short-list of the people that you can contact depending on the situation. It’s important to know that these people will be available to help as well, even over the holidays.
Doesn’t my eCommerce provider handle security?
Out of the box, no. Most eCommerce providers offer a layer of security and help to encrypt payment information and things like that, but they don’t protect you completely. You need to supplement that with your own security coverage. As the eCommerce owner, you have a responsibility to protect your passwords. Additionally, you have to take responsibility for the code of the site. Just because their base portion of the site is secure, doesn’t mean that your entire site is secure.
This same principle extends to any apps/extensions/modules that you may have added on to your site. Every app that you add has the possibility of introducing a security flaw into your site.
How can I protect my site?
Some of the best practices that you can implement include:
Least privileged access- give apps/employees/vendors only access to what they absolutely need in order to function properly.
Minimize the number of apps on your site- remove plugins from your site that don’t provide sufficient value. They can slow down your site, and do increase your security risks.
Proactive monitoring and alerts- set up alerts so that you can know in real-time when you have a problem.
Support action plan- make sure that if something goes wrong, you know who to contact.
Coding freeze- If your site is working currently, stop messing with it until after the holidays. This protects you from introducing new bugs or security holes into your site before the holiday.
☑ Scalability: Can you handle a growing amount of web traffic?
Many vendors offer this service, but JetRails specifically offers load testing. This allows them to simulate an influx of traffic to your site to see how it performs under pressure.
During the holiday season especially, this can mean the difference between success and failure. These tests allow you to see where you have structural issues with your site, and how you can combat them.
☑ Loading speed: Does your site load in under three seconds?
Many merchants know that site speed is important, but they don’t really invest in it. They don’t regularly check their site speed, they don’t invest into speeding up the site, and over time, site speed can cause a plethora of issues, especially on mobile. 53% of mobile users will leave a site if a page takes longer than 3 seconds to load.
You can optimize your load speed by looking at several things on your site. The first thing to look at when it comes to load speed is your content. Make sure that you have shrunk all of your images to the smallest file size possible without sacrificing quality.
When it comes to loading speed on your site, everything comes down to file sizes. If you can reduce the size of the information that you’re sending, then you can increase your load speed times. This applies to both images and the code that you have on your site.
It’s important to audit your theme to make sure that it still fits your needs as you update and change your site. Make sure that it properly and quickly loads the assets that you need it to.
Just because it was optimized before doesn’t mean that it is now.
Too many business professionals think that optimization is a one time endeavor. Unfortunately, every change that you make on your site can effect the loading speed of your site. That’s why it’s so important to do a periodic audit of your site’s optimization and loading speed, to make sure that everything performs as intended.
Does my web host have any effect on loading speed?
Unfortunately, yes. In addition to looking at the front-end loading of your site, you also need to look at how the back end of your site affects your load speed; specifically your web hosting.
JetRails tests a metric called “time to first byte”, which allows them to look at how quickly the server is able to provide the first byte of data to the browser. Some servers can take 2-3 seconds to get the first byte to the browser, which means that obviously something isn’t working on the back end of the site.
Fortunately, there are things that we can do to make sure that our web host gets the content delivered in a timely manner.
The first thing that we recommend is caching. This allows your server to essentially have all of the assets that it needs to pull together already put in one place, which decreases the load times and computing power required.
The next thing that you should utilize to help your web host is a content delivery network (CDN). A CDN allows you to save some of your unchanging assets onto different servers across the globe. This reduces the time that it takes to transmit the data to different locations across the globe, and it also allows you to have cached versions prepared and ready to send. This also reduces the load on your primary server, helping reduce the risk of a crash.
☑ Error monitoring: Spot and fix pages that aren’t loading
During the slow times on your website, it is valuable to have your web developers check your error logs and exceptions to see what errors could be lurking. We see a lot of people who wait until something breaks to fix it, but proactive maintenance can protect against a terrible issue. Specifically ramping up to this big holiday season, it’s important to make sure that you don’t have a problem that could potentially cost you customers.
☑ Shared resources: Is it time to adopt a dedicated server?
Long-term, it may make sense to move to a dedicated hosting environment. In shared hosting environments, you can’t control the actions of those sharing your space. If another site introduces a security breach to the server, it can affect your site. If someone else on the server has a major traffic spike, they can eat up all of the resources and slow down your site.
No one wants to spend more than they need to spend on anything; so it’s important to weigh out the pros and cons of each option for your business. You should also make sure that you revisit this discussion periodically as your business grows and develops. Just because it wasn’t worth it to migrate a few years ago doesn’t mean that it isn’t now.
☑ Uptime: How sure are you that you’ll be up 100% of the time?
Consumers have become less patient and more wary of sites that aren’t reliable in their eyes. If your site is down at the moment that the customer wanted to purchase, they’ll likely just move to a competitor to purchase.
Final thoughts and ways to take action-
Get a free load test from JetRails before the holidays. They’ll help you see if your site is ready for the Black Friday and Cyber Monday rush.
Proactively monitor your site, specifically the CTAs that we mentioned. Make sure that you’re checking in with both your developers, designers, and your web host to make sure that you’re site performs optimally across the board.
At the end of the day it comes down to picking the right vendors, trusting them, and sleeping well at night.
– Speed Test: Test your Time to First Byte (TTFB) and make loading speed optimization recommendations
– Security Scan: Scan your Magento website for publicly visible security vulnerabilities
– Load Test: Review with you to see if you’d benefit from a free load test
“Black Friday pulled in $6.22 billion in online sales [last year], up 23.6 percent from [the previous year] and setting a new high, according to Adobe Analytics, which tracks transactions for 80 of the top 100 internet retailers in the U.S. like Walmart and Amazon. Those figures arrived as many retailers have pushed big digital deals, days in advance of the holiday weekend.
The Friday after Thanksgiving [last] year was also the first day in history to see more than $2 billion in sales stemming from smartphones, said Adobe. The group found 33.5 percent of e-commerce sales Friday came from mobile devices, compared with 29.1 percent in 2017.
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.