What can your data do for you?
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.
If you need help diagnosing where you fall on the data maturity spectrum, or how to get to the next level, we can help you discover where you fall on the data maturity spectrum, and build a custom data roadmap for your business. Click here to schedule your free appointment.