AJ and Meaghan recently appeared on the Nice Guys on Business Podcast. It was an awesome conversation that covered everything from tracking and gathering data all the way to how to use data to improve relationships.
Check out the full episode below along with our insights:
What is data, and how does it affect business?
A lot of people glaze over when they hear “data talk” coming at them. That is a natural response to something that seems very complicated and difficult to understand. For that reason, we want to simplify data and point out that data is just points of information.
Data isn’t just ones and zeros or spreadsheets; data is about helping you make better decisions in your business. Throughout history, people have looked up to their wise elders to help them make decisions. The wise elders were the ones who had the most data and information to draw on. Nothing has changed today; the smartest people and companies leverage data the best.
Data is everywhere and can be used for almost everything
As we move more and more of our lives into the digital world, we create more and more data. As businesses have started aggregating and analyzing that data, some have developed the ability to see into the future.
They actually haven’t; but sometimes it feels like that. From Target accurately predicting that women were pregnant before they knew, to Amazon knowing exactly what you want to buy next; companies that use data properly can hyper-target their customers at exactly the right moment.
Analytics, metrics, and KPIs -Is that data?
Yes and no; analytics and metrics are just names for different types of data; and KPIs are specific metrics of data.
When it comes to data, the first thing you have to do with data is track it. Most businesses have some tracking and data under their belts, the problem is that they have too much of it. That is where KPIs come into play. KPIs, or key performance indicators help businesses narrow in on the metrics that make the biggest difference for them.
So while all three of those things take part in the data ecosystem; data is just information.
I now understand data, now how do I use it in my business?
The Nice Guys focus primarily on sales, so we focused our answer on sales organizations; but the principles apply to all businesses.
No matter what your data initiative, the end goal is always to get someone to convert. For sales organizations, that means that you want more sales. In order to get more sales, you need to figure out what drives your sales.
Obviously, getting more leads should increase your sales; but leads are not created equal. You need to figure out what lead sources drive the best leads to your sales people, which sales people work best with which type of clients, what impact your marketing efforts have on the leads, etc.
Do I need to do all of that analysis myself?
Not at all. Becoming a data expert or data scientist should not be high on any business owner’s priority list. Praxis can help perform the heavy lifting, preparing and distilling the information down to the insights that you need to make changes in your business.
The last thing that we want to do is add more to your plate; so we work with business owners and marketers up front to determine what insights and data will help their organization the most. We start with metrics that can help you make decisions immediately to help your business.
Find the things that you need to track, not the things that other people tell you to track. Data does not have intrinsic value. Data is only useful in that it can provide insight into what actions you should take. If you don’t take action from the data, then it is not valuable to you.
Praxis helps you reduce waste
At Praxis, we like to say that we’re in the waste business. Our goal is to help other businesses reduce wasted time, effort, and money. Most waste in business comes from averages.
Averages are inherently evil because they mash together your highs and your lows and spit out one number. In order to reduce waste, you need to eliminate the lows and redirect those resources to the highs. That is the secret to scaling a business. By transitioning resources from underperforming areas to areas of overperformance, you can push your entire business into hyperdrive.
The fastest and easiest way to scale a business is to eliminate the things that aren’t working and shift those resources to the things that are working.
While running through that process of trimming the fat, you will find that your business and processes naturally simplify along the way. As you eliminate wasted time, energy, and money; you’ll naturally have more of all of those things.
Data is the key to rapid scaling
We live in dynamic times; in the past, businesses could rest on their laurels and remain successful. In today’s business landscape, industries can be disrupted by someone with a laptop. Businesses that don’t remain agile cannot compete with companies that shift and adapt.
The best way to know how and when to adapt is through data. Taking action from your data is the new competitive advantage. Those that capitalize on their data will scale, and those that don’t will fail. There are a myriad of case studies that almost anyone can cite of agile, data-driven companies taking on and toppling the incumbent industry leaders.
One of our favorite sayings is that every company today is a data company. If you’re not analyzing and taking action from your data, your competitor’s will, and they will eventually overtake you.
How does the lifetime value of customers impact my business?
As we talked about earlier, averages are evil. This goes doubly for the lifetime value (LTV) of your customers. We find that many businesses track the average LTV of their customers and think that they’re set with that.
One thing that we always ask clients before we build out any dashboards or metrics is what they’ll do with the information once they have it. If you knew today that your average customer subscribes to your product or service for 5 months, what would you do with that information?
Would you contact every client right around the 5 month mark in order to try to keep them on with you?
The problem with that is that by the 5 month mark, you’ve already lost half of your clients. And those that stuck around probably weren’t looking to cancel right at the 5 month mark.
In order to make the data truly actionable, you need to know when individuals purchase or leave. You need to know what affects those individual’s purchasing decisions, and then try to impact them on an individual level.
Meaghan and AJ were invited to speak with Alex Brown, founder of Ecommerce Rockstars. They cover everything from data foundations to predictive analytics, so don’t miss out! Check out the full interview and our insights below:
Data shouldn’t be scary
When businesses think about data, most of them think of massive data warehouses with AI and machine learning algorithms. While that may be something to strive for, that’s not data. Data is simply information. Every business has information; now more than ever.
Praxis wants to help businesses find ways to leverage the data that they already have to make better decisions. We always say that we’re in the waste business. We help eliminate wasted time, effort, and money.
The goal of any data project should be to answer your business questions. We want to help businesses answer the questions that will help them scale. Whether your ecommerce business is just getting started, or if you’ve been in business for a few years; this can help you figure out what next steps to take and how to grow your company.
The roadmap to data mastery
While the end goal may be to run massive data projects and collect granular data on every customer’s spending habits; we need to start at the beginning. The more information you have, the better decisions you can make; that means that the less data you have, the worse decisions you make.
That’s why Praxis built out the data maturity spectrum, to help businesses figure out where they stand, and then what to do next.
The data infancy stage
Most companies start in data infancy. They don’t have time or means to dedicate to data and analytics projects; so they put it off. We characterize this stage with a general “spray and pray” type of attitude. Businesses in this stage generally are just throwing ideas at the wall in order to see what sticks.
As they start to see what sticks, and what works and doesn’t work; they begin to lay the foundation for their data strategy. This moves them into the data foundation stage.
The data foundation stage
As businesses start to gather reports and notice patterns, they start to grow their data maturity. In the foundation phase, businesses start to track the cause and effects of their actions. Generally this involves manual reporting, pulling data from disparate sources into spreadsheets, and using complicated pivot tables to analyze the data.
We call this stage “spreadsheet hell”. Businesses in this stage generally have some automations when it comes to their reporting; but they often rely heavily on human input and data aggregation.
The data foundation stage is generally the phase in which businesses start to see explosive growth. Because they track what works and doesn’t work, they’re able to start replicating efforts and successes. In order to continue growing at the same rate, they’ll need to move up the scale of data maturity to the data optimization stage.
The data optimization stage
In the data optimization stage, businesses focus on automation. During this stage, businesses move away from manual reporting and begin to create automatic ETL processes. ETL stands for Extract, Transform, and Load. The idea behind this process is to extract the data from the different “sources of truth”. The source of truth is the place where the most accurate data on whatever you want to measure lives. For example, in the case of financial data, the source of truth would be your payment processor or bank account. For Source/Medium data, the best place to get that data would be Google Analytics.
Next, we need to transform the data as needed. Transformation of the data entails taking all of the data from your disparate sources, joining it and then cleaning it to make sure that it’s all tracking uniformly and the data is formatted properly.
From there, we load the data into a data visualization tool so that you can easily analyze and leverage your data into growth.
The end goal
The end goal of this entire process is getting you data that you can take action on. Data for the sake of data won’t do anything for your business; you need to take action from it. Having data and not taking action from it is like having an expensive race car and then never putting gas in it.
Going with the race car analogy, if you want the car to perform optimally, you need to put only the highest quality gasoline in the car. Your output is only as good as your inputs. The same is true with data; in order to get amazing insights from your data, you need to have clean data coming into your systems.
If you don’t know how to make sure that everything tracks properly, we recommend using a process called “Metrics Mapping”.
The process of metrics mapping is actually pretty simple, and helps you gain clarity in what you need to track and how to use the data once you have it.
You start metrics mapping by defining your goals. As you can see in the example below, this company wanted to double their revenue year over year.
From there, you need to figure out what questions you need answered in order to attain that goal. In this case, they need to know how to increase the conversions on their website.
Once you know the questions that you need to answer, it’s time to figure out what metrics can help you answer those questions. In this case, they decided that the metrics that would help them the most would be the conversion rates for each of their funnel stages, customer LTV, allowable CPAs, and channel profitability.
From there, you need to decide on a source of truth for each of those metrics. You can find funnel stage conversion rates through Google Analytics goals, enhanced ecommerce tracking, or event tracking. Lifetime values would be through your ecommerce platform. You would need to calculate allowable CPAs for your business based off your margins, COGS, and LTV. And finally, you can find channel profitability by tracking your CPAs, LTV, and COGS.
From there, you want to validate the data across as many sources as possible and make sure that your sources of truth align. Then you can begin the process of applying your calculations and loading it into a data visualization tool.
If you’re not able to track any of these metrics, then you can know exactly where you need to focus your tracking and figure out a platform that will help you track those metrics.
Lead with revenue
Every data project should help you make more money. If you’re running a data project to get a metric that is “nice to have” or “nice to know” then you’re likely wasting your time, energy, and money.
As we talked about before, you need an action tied to your data. If something changes, you need to know what you’ll do, and who will do it. Once you have action tied to metrics, it becomes much easier to determine the value of that metric. For example, if you can get a 10% increase in the lifetime value of your customers, you can easily calculate out the value of that kind of change for your business.
The key when determining KPIs is figuring out which ones are the most feasible and deliver the maximum impact. As shown in the chart below, we want to focus on the things that drive the highest business value and are the easiest things to implement for your business.
The key is to make sure that you don’t work on data projects just because you can. Those belong in the bottom right quadrant and should be treated as the second to lowest priority for the organization.
The beauty of this chart and this process is that as you implement your data projects and improve your data processes, you can increase the feasibility of future projects.
The big data secret
The biggest secret when it comes to data projects is that no matter the size of the company, everyone wants the same information. They want to know how to decrease their waste and increase their bottom line. The easiest way to do that is to ask the right questions, you can just run down the rest of the metrics mapping process.
Too many SMBs think that they don’t have enough data to compete at scale with large companies, but today everyone’s cell phones have big data. We had a client that had 4 million rows of data stored in the back end of his payment processor; and that was just a couple months worth of data.
Almost every tool the businesses use store data, and every data point can help deliver valuable insights. We have found that most small businesses have a treasure trove of data available to them, but they don’t realize it.
Every company is a data company
If you’re not looking at your data and finding ways to better optimize your company, your competitors likely are. We have seen massive giants fall by the wayside because they failed to take appropriate action off their data.
The time to start taking action off your data is now. At very least, start setting up your tracking, or aggregating data. Even if you’re not ready to use it yet, you’ll be grateful to have it when you are ready to tackle big data projects.
Another great place to get started is with your North Star Metrics. These are metrics that all other metrics rely on. For Airbnb, their North Star metric is nights booked on the site. The more nights they have booked, the better their overall business does. For Facebook, they look at active daily users; this allows them to keep their finger on the pulse of usage of the site and retention over time.
You may not have time to run down and figure out all of the KPIs that impact your business; but you can figure out the one. Take the time to figure out your North Star Metric, and start tracking that. You can start to map out the trends, look for causation, figure out what drives it up and down. This is an easy way to get started with a data project, and helps establish value for future data projects.
You don’t have to reinvent the wheel
Dashboards and data visualization tools have been a hot topic as of late. Lots of businesses jump in to the world of data visualization and end up getting an expensive platform that ends up just displaying data that was readily available on other platforms, or they get a powerful business intelligence tools that they can’t fully utilize.
If you are looking to grow your business, get more leads, simplify, or create more freedom, then you’re going to want to continue. AJ and Meaghan recently went on the Growth to Freedom podcast with Dan Kuschell to talk about data, automation, health, and relationships.
Check out the full podcast here, and out insights below.
Data for entrepreneurs
Most entrepreneurs think of themselves as left-brain individuals. They rely on intuition and instinct to help them make their decisions. Meaghan and AJ used to think this way as well, but someone helped redefine that for them. While talking to a mentor, Meaghan mentioned that she was the down-in-the-weeds person and AJ was intuitive and head-in-the-clouds. As an illustration, she talked about how she relied on data and AJ went with his gut.
This mentor quickly pointed out to Meaghan that intuition didn’t work the way that she described it. Intuition occurs when the brain processes data and recognizes patterns faster than we can perceive. That means that even those that think that they aren’t in tune with data really are.
Often these intuitive people think that they just get lucky, or they’ve just got good gut instincts; but in reality, they just connected data points in the back of their mind without recognizing it.
Data is just individual points of information, but it’s not useful like that. The value of data comes when you connect those data points together and find a pattern or correlation. When people say that they’re naturally intuitive, they have an ability to create those connections in their mind without even noticing.
The importance of LTV
We’ve talked a lot about customer lifetime value and how it important it is for organizations to track. What we want to make clear is the importance of not just using an average as your measurement for LTV. We always say that averages are truly evil because they don’t give you an actionable insight. Knowing a single, static number doesn’t do much for a business; the point is to take action from it. Businesses don’t just want to know what the number is, they want to impact it, to change it, and to increase it.
You need to examine LTV over time. Your business is constantly in flux, and so the value of your customers naturally will vary as well. What was the LTV of your customers last month, or one year ago, or even two years ago? You need to have multiple data points in order to create a trend or pattern. Once you have that trend or pattern, you can find the causes for the fluctuations, and then you can capitalize on the things that caused the upswings and eliminate the things that caused the decreases.
In order to do that, you have to get granular with your LTV. You need to know where your highest LTV clients come from, what they purchase, when they repurchase, etc. And on the other side of the coin, you want to know where the lowest value clients come from, what they purchase, etc. If you can double down on getting the high end clients and stop spending money on lower-value clients then you can dramatically increase the overall LTV of your clients.
Reduce waste to increase results
If you’re using an average and taking action off of that, you’re creating a massive amount of waste. Because averages mush together the highs and lows, if you just double down on everything, then you end up doubling down on some things that don’t work. That creates massive amounts of waste.
The best way to reduce and avoid waste is to get granular with your data. Rather than taking a shotgun approach, you need to take a precision, surgical approach. By taking the precision approach to your data, you can hyper-focus your efforts on the things that work, and eliminate the things that don’t.
Avoid wasting time and effort with a dashboard
Most businesses start looking at dashboards, and they don’t even know where to start; so they start with what they know, or what they’ve read. They look at dashboards for specific KPIs or specific metrics. They forget to look deeper into the why of the dashboard.
At Praxis, we don’t build out a metric without both us and the client understanding the “why” of the metric. That’s why we start all of our data projects with a process called metrics mapping. Metrics mapping is a process that helps you make sure that you’re only tracking things that are actually valuable to your organization.
The process of metrics mapping starts with establishing your high-level goals. What does your business want to accomplish? As you can see in the example below, this business wanted to double their overall YoY revenue.
The next step in the process is to determine what questions you have that you need to answer in order to reach your goal. Do you need to know how to increase customer retention by 30%? Do you need to figure out how to double your average order value? In this example, we’ll stick with how to increase conversion rates on the site.
From there, you need to figure out what metrics you can use to answer that question. In this example, the client needed to know the conversion rates for the different stages of their funnel. Additionally, they needed to know their customer LTV, allowable CPA, and finally their profitability by channel.
Once you know the metrics that you need to measure to answer your questions, it’s time to determine the “source of truth” for each of those metrics. The source of truth is the place where you can find the most accurate information. So, for financial metrics, we would recommend using a payment processor, or bank account. For source data, Google Analytics works best.
From there, you want to validate your data across sources and then plug it into a dashboard.
Focus on the needle-movers
Before you can understand how to scale your business, you need to understand lead indicators and lag indicators. Lag indicators are the easiest and most common things that people measure. They measure what happened after the fact. Examples of lag indicators are revenue, total sales, etc. Leading indicators are the actions taken that drive the results. These could be things like emails sent, phone calls made, ad spend, etc. These are the efforts that drove the lag indicators for the company.
When it comes to metrics, we divide them into 3 classes. Descriptive, prescriptive, and predictive. Descriptive analytics tell you what happened in the past, prescriptive analytics help tell you what you should and shouldn’t do, and predictive analytics tell you outcomes to expect when you implement the prescriptive analytics.
Each of those classes of data can be thought of as a phase of data maturity. In order to get to machine learning and AI, you need to have descriptive analytics that tell you what happened. From there, you can start to merge your data together and combine metrics in complex calculations to help you understand what to do next. Finally, you can move on to allowing computers to extrapolate models and forecasts based off the information that you have already gathered and tracked.
The most advanced AI can’t create models without data to rely on. That’s why it’s important to make sure that at every phase you have everything set up and tracking properly before you move on.
Leverage attribution to your advantage
Unfortunately, attribution will always be a war-zone. Every platform will leverage the model that makes them look the best, and there isn’t one attribution model that works best.
The easiest attribution model for the most businesses is last-touch. Since Google Analytics defaults to that as well, it’s generally the baseline for most companies. The ideal attribution model is one that can tell you what the best first-touch campaigns are (the ones that generate the most interest and awareness for your business), then the ones that tell you what the ideal middle-touch points are, and finally the best last-touch campaigns. That would allow you to optimize your ad spend across those campaigns and create a fully optimized customer journey.
Unfortunately, at the moment, such a model doesn’t exist. The best way to create such a model for yourself would be to use attribution comparison tools to compare each model and find the ideal journey yourself. This relies heavily on accurate tracking though; every podcast appearance needs to have a UTM link in the show notes, every email campaign needs to be tagged, and your website needs to have all of the tracking installed properly. If any of those fail to work properly, then the entire model can fall apart.
The un-sexy part of data
We’ve covered the best parts of data, turning your data into insights, and insights into revenue; but all of that requires the un-sexy, foundation. In order to get 6-pack abs, you have to sweat and look janky at the gym.
Tracking is the gym section of data. We have to pump some serious data iron in the back-end before your data is beach-ready. You need to make sure that you have UTMs attached to every single customer touch-point; additionally, those UTMs should ideally be standardized. You need to have every page and every funnel on your website tagged and tracked. You need to have event, goal, and ecommerce tracking in place to make sure that you’re tracking funnel steps properly.
Once you have all of that set up, you have to validate the data to make sure that everything fires correctly, with no duplicates or missing pieces of data.
Choosing a data platform
There are hundreds of data visualization tools on the market. The problem is that most of them are just visualization tools; and not business intelligence tools. Business intelligence tools can connect multiple sources of data together, whereas most of the platforms today are just single-source dashboards. While it may be helpful to see your data visualized, the best insights come when you can combine multiple sources of data together.
As we talked about with the foundation stages earlier, the first thing that you need to do is make sure that your tracking is set up correctly. Once you get your tracking set up, the next thing that you want to do is standardize your tracking. Make sure that all of the parameters are aligned so that you can get clean, standardized data across your platforms. Once you have that taken care of, the next step to take is automation.
Most of our clients come to us in between standardization and automation stages, in what we call “spreadsheet hell”. In that stage, you have tracking and data set up, and you’re trying to get all of the data together in one place; that lends itself to spreadsheets, and generally that turns into lots of spreadsheets. Once you hit that point, it’s generally time to start migrating to a dashboard solution.
Get creative with your data
As we’ve stated a few times, data can and should be sexy. One of the ways to make it sexy is to leverage it in creative ways. Meaghan and AJ decided that they wanted to quantify love and figure out how to optimize their love life. Once they started tracking the data on their relationship, they found gaps that were causing fights between them. Upon realizing this, they quickly made adjustments and now get more out of their relationship.
One of our clients, Fancy Sprinkles, had another example of how you can get creative with your tracking and data to make it sexy. They wanted to figure out what types of content they should post on social media. In order to figure that out, they went back through all of their social posts and tagged each one with meta-data. They tagged each post with information on whether the photo was inside or outside, a close-up or wide shot, and what colors they used.
When they mapped that data out across time with the engagement rates, they quickly found actionable insights that allowed them to skyrocket their social engagement.
The co-founders of Praxis Metrics, AJ Yager and Meaghan Connell, recently went on the Brand Secrets and Strategies Podcast with Daniel Lohman. It was a great podcast episode that we wanted to share here.
Check out the full episode along with our insights below:
What is Praxis Metrics?
Praxis is a data analytics agency. Essentially, they help companies that are scaling but that don’t yet have the resources to build out a full IT or Business Intelligence team. Praxis helps them to leverage their data to scale, at a fraction of the regular price. Once the businesses have scaled to the point of having the resources to hire a team, Praxis moves to support them with the backlog. This allows businesses to remain adaptable and agile, even as they scale.
So how did Praxis get started?
Praxis Metrics started as a department within a marketing agency. Meaghan and AJ ran a successful marketing agency, but found that one of their best employees had to spend all of his time creating reports for clients. They starting researching ways that they could automate their reporting, and stumbled into the world of business intelligence.
They rolled out their reporting solution to their clients, and the clients immediately started asking if they could roll it out for their whole business. AJ and Meaghan decided to launch Praxis as the “data division” of their marketing agency; but the data division expanded so quickly that they had to decide which business they wanted to focus on. They found that businesses desperately needed data services, so they decided to pivot into that. The rest, as they say, is history.
Every company a data company
If you’ve followed Praxis for any length of time, you’ve probably already heard that data recently became the most valuable resource on the planet. In today’s competitive market, your competitive advantage often comes from the insights that you have on your customers. The more data that you have on your customers, the greater an advantage that you have.
Small businesses often have a treasure trove of data, but don’t know how to access it. Most businesses use a myriad of systems, none of which communicate with one another. This causes data-silos, which small businesses rarely have the time to dig through in order to capture valuable insights.
In today’s business landscape, lots of businesses are encouraged to focus on raising money. They’re told that the best way to scale is to raise money, then raise more money, and then some more money. While they focus on raising money, they’re supposed to hand the operations of their company over to an agency.
Dan believes that it’s much more important for business owners to understand their business inside and out. They need to know what drives sales, the pitfalls and struggles of the business, and the key factors to success. Because the landscape today is so competitive, you need to know the ins and outs of your business and your customers.
The challenge of today
The business landscape constantly evolves and changes; now more than ever. The only way to prevent getting left behind now is to develop an omni-channel presence. It used to be that you could stick strictly to wholesale, or retail, or ecommerce; but now you need to talk to your consumer everywhere. In today’s digital economy, even businesses that run exclusively brick-and-mortar stores need to advertise their products and services online. And not just online, but everywhere online.
Data is a big reason for the sudden push to become omni-channel. In a traditional wholesale business, you sell your products to the retail stores, and that concludes the transaction for you. The retailer collects all of the data on who purchases your products, what other products they purchase,and how often they purchase. Because everyone has started to recognize the value of data, traditional wholesalers now want to make sure that they also gather this data. That’s why we see so many businesses pivoting into the B2C and ecommerce models. This transition allows them to also gather data on their clients, and reduces their reliance on the retailers.
A rising tide lifts all ships
Meaghan points out in the video that Praxis has clients that will run 6-figure ad buys in specific geographic areas in order to drive people to their retailers. While we recommend owning as much of your data as possible, you can still find ways to gather consumer data and strengthen your business relationships. These businesses are able to gather data on the people most likely to interact with their ads; while simultaneously driving more traffic to their partner’s store.
This creates what we like to refer to as the “Lift-effect” or “expanding the pie”. The lift-effect is when everyone wins based off one smart decision. Rather than creating a zero-sum situation where the only way for one group to win is by taking from another, you can create scenarios in which everyone benefits. You should check out our real-world example of this from Organifi.
The cost of data
With all of the free tracking tools available, you can get a massive amount of data with very minimal investment. Some people maintain the mindset of yesteryear that data and big data is reserved for large, enterprise companies; but today everyone has massive data in their cell phones. You can easily gain a treasure trove of insights on every visitor to your site with almost no up-front costs, other than time.
Additionally, you can get creative with your data gathering. We had one client who created a massive database for their social media posts. They simply went through all of their previous social media posts and tagged them with meta-data on the location of the image, type of shot, color of the product, etc. By creating this database, they tracked what types of posts were most effective across different seasons. This allowed them to dramatically increase the effectiveness of their social media marketing.
Syndicated marketing data can still be extremely expensive; however you can still get massive amounts of public data for very cheap or even free. For example, Walmart knows that when hurricanes are reported, they see a spike in strawberry Pop-tarts sold. While Walmart tracked the sales of the Pop-tarts, it wasn’t until they joined that data with the public weather data that they saw the correlation.
Data as an investment
Most of what Praxis does for clients is education. We have to change the way that people think about their data. Too many people either live in fear of the data, or they view it as a cost center. In reality, it’s an asset. You wouldn’t view a gold vein as a cost center just because you had to mine it in order to get the value out of it.
Praxis has yet to have a client that couldn’t turn their data into exponential growth. There more information that you have, the better you can run your business, target and acquire customers, and increase your profitability. Many businesses think that data isn’t sexy or fun; but it may be the most sexy and fun part of a business. The best way to scale your business is through data.
Praxis specializes in turning the raw, boring numbers into the sexy insights that can help transform businesses into powerhouses. We do this by delivering metrics that actually drive results rather than vanity metrics. The best way to identify the metrics that can drive your business forward is through a process called “Metrics Mapping”.
As you can see, the process of metrics mapping starts with establishing your goals. From there, you need to figure out what questions you need to answer in order to hit that goal. In this example, we need to know how to increase conversions for the site.
From there, we drill down to see what numbers will help you answer that question. In this example, we need to know conversion rates, customer LTV, our acquisition costs, and profitability by channel. These numbers will help us figure out how much we can spend to acquire new customers, where we should spend that money, and how soon we can expect to see returns on our ad spend.
The next step of metrics mapping is determining the “source of truth” for each of those metrics. The source of truth is the place where the most accurate information on that metric will live. For financial data, that would be your bank account or your payment processor. For traffic source data, Google Analytics is your best bet.
From there, we focus on a process called ETL. ETL stands for extract, transform, and load. We extract the data from the many sources where it lives; transform it by making sure that everything is tracking the same information, and that they’re all on the same scale. From there, we load the data into a data visualization tool.
By following that process, we’re able to take data from raw numbers into insights that allow businesses to scale off their data. This allows businesses to change the way that they behave, decrease their waste, and increase their revenues.
Move beyond what happened, and into why
Once you have a solid understanding of what has happened in your business, you can start moving into the why. This is the most important shift that a business can make. Once you gain a solid understanding of your customers and their behaviors, you can start to look into why they react the way that they do. Once you understand that, you can start to move away from looking to the past, and start looking to the future.
This is the goal of all of your data projects. We want to get you to the point where you know that if you do x, it will yield y. At that point, you can start printing money.
Predictive analytics don’t happen overnight. You need to have an extremely robust data set in order to make accurate predictions. That means that your tracking and data storage need to be put together properly so that your insights are accurate.
The waste business
Praxis is in the waste business. We work with brands to help them eliminate waste and increase their revenues. Too many businesses only focus on the top-line revenue and increasing that. They don’t look into the ways that they can boost the bottom-line profitability without increasing their spending. Praxis helps businesses find the 80% of things that aren’t driving results for the business. Once they cut that waste, they can redirect that waste to the 20% of things that are driving their revenues.
So many businesses focus on doing more of what’s working; not enough focus on the elimination of waste. If you can reduce your overhead or reduce your COGS, you can increase your profitability across the board.
Praxis Metrics ran through this issue a few years ago. We were stuck working in the business rather than on the business. Thankfully, AJ and Meaghan set aside 2 weeks every year to review the data for the company. We were operating at a 3% profit margin, despite the fact that we had glowing customer testimonials and good top-line revenue.
They looked into the company to figure out what was eating up our margins, and discovered that Praxis was marking too many hours as non-billable to the client. This allowed us to deliver amazing results to the client, but the company was unable to profit off our amazing work. As soon as we found this out and started to focus on charging for the hours that we worked, we went from a 3% profit margin to a 30% profit margin in 3 months.
Every business is just one data-driven decision away from exponential growth. You just need to find the number that will drive the results that you’re looking for.
Don’t cut your ham
Dan gave a great anecdote about a radio announcer who visited his son’t house for dinner. The daughter-in-law cut the ends of the ham before cooking it, so the announcer asked her why she did that. She responded that her mother always did that before cutting ham. The mother happened to be there and responded that she did that so that the ham would fit into her small pan.
Too often we do things just because that’s the way that it’s always been done. By getting deep into your data, you can find the areas that you have sold yourself short, or cost yourself opportunities.
One way that we can proverbially cut the ham is in the amount of data that we collect. Too many businesses just settle for basic tracking items. As we discussed earlier, we had one client create their own database of the different styles of social posts that they use. Another one of our clients used data in their branding commercials. This client wanted to track the effectiveness of humor in ads and when they needed to place the humor in order to maximize the effect.
They ran split tests on the different variants of the ad to see which was the most effective with time tags of when they used different types of humor. They then overlaid this data with watch times, click through rates, and purchase behaviors in order to see how humor impacted their consumers.
Talk to your customers
One thing that every brand can work on is making sure that they are talking to their customers and not at them. Often times, marketers get wrapped up in the story that they want to tell; but it’s important to remember that your product is not the hero of the story. Your customer is the hero of their story; you are just the guide, leading them to a better life.
In order to lead them, you need to make sure that your message is extremely clear. You need to tell them exactly what they need to do in order to get the most out of your products and services. Give them explicit directions on their next steps. You want to make their life as easy as possible, so guide them on the things that they should do and the things that they need to do in order to get the most out of your product.
Where to start
The first thing that every business needs to do is figure out where they stand and where they want to go. You need to run an audit of your systems and processes as they currently stand and then outline where you want them to be. That will fill in your goals section of your metrics mapping journey.
Once you know where you are and where you want to go, the next step is simply asking how you’re going to get there. Figure out the action steps that you need to take now and map out the journey that you want to take. Once you know your journey, you should ask for help where you need it.
So many professionals feel like if they ask for help they have somehow failed. That is not the case. It’s much worse to settle for what you think is possible than to ask for help and achieve the impossible.
Find your tribe
The first thing that you need to do is figure out who you want to target. Who are the customers that won’t just use your product, but that love your product, use it frequently, and will recommend it? You need to find the commonalities between those consumers, figure out the persona, and then figure out how to talk to and engage them. If you can nail that down, then you’re well on your way to success.
This podcast was very dense in ideas and action steps that you can take. If you need help taking action on any of the things that we covered here, we would love to help. If you fill out this form, we can help you figure out where you are, where you want to go, and help you set up that map.
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.
We’re down to the wire when it comes to Black Friday and Cyber Monday 2019. Because of the way that Thanksgiving fell this year, the holiday sales cycle is compressed and shortened. This compression has already had tremendous impacts on ecommerce businesses this month. Ecommerce companies across the spectrum are struggling to get traffic and conversions out of their standard ad spends.
In this post, we’ll walk through ways that you can leverage data to help you maximize your ROI and ROAS. While we’re focusing on Black Friday and Cyber Monday, these tips and this information is applicable year-round.
How to make sure that you maximize your ROI this Black Friday-
The first step to maximizing your returns is making sure that you have data.
That means getting your tracking in order. Lots of business owners and marketers put tracking off. It’s a common impulse.
Tracking takes time and it feels tedious to set up triggers and events for everything on your site; but no one can make up historical data. If you don’t set up your tracking until you’ve already been in business for 5 years, you will miss out on 5 years of data and insights.
Even waiting to start until after the holidays will cause you to miss out on potential insights into how you can better capture and serve your customers.
We recommend that everyone do a quick audit of their tracking systems to establish where they are now. Some of the things to check in this audit are:
Do your UTMs all track properly across your customer journey?
Are your UTMs organized in a way that makes sense and actually helps you better understand your customers?
Can you see right now where your traffic is coming from, and which traffic converts the best?
If you can’t answer yes to all of those questions, then you won’t be able to get nearly as much out of your Black Friday data.
As we talked about earlier, you can’t analyze what you don’t have. So if you don’t have your tracking set up before Black Friday and Cyber Monday, you won’t be able to know what you can do to improve your results next year.
Moving into UTMs, you NEED to make sure to track all of your marketing efforts with UTMs. They can help you track variations on ads, help with split testing, and give you clarity into what marketing efforts actually drive results for your business.
Step two to maximizing your returns is reviewing your data.
If you already have UTMs in place and feel confident in your tracking, then you can take the next few weeks to review your data. Look at what has worked for you in the past: analyze which emails have the best open and click-through rates, check which ads yield the highest ROAS, what buttons drive the highest cart values, etc.
Too often we get caught up in our plans for the future. We get locked in a cycle of what we want to test next, and we forget to look at what we’ve done in the past that worked. Those that fail to learn from the past are doomed to repeat it. If you don’t go back and review your data, you could potentially miss out on huge, easy wins for your business.
As we talked about earlier, Black Friday being pushed back a week has changed the face of the buying season. Many ecommerce companies are in full-blown panic mode right now because their year-over-year revenues are way down from last year.
We suggest that rather than making month-to-month or day-to-day comparisons, look at your data through the lense of days before Black Friday. So, if today was 5 days before Black Friday, you could compare it to 5 days before Black Friday last year. Then you can start to analyze what your marketing efforts looked like on that day last year, what worked, what KPI’s you saw success in, and how those impacted sales on Black Friday.
We recommend focusing on driving traffic to your site, and getting them browsing your products. Then you can leverage retargeting to reach them during your Black Friday sale and focus on driving them to purchase.
What metrics you can use to get a leg up this Black Friday and Cyber Monday
Now, we want to switch gears and talk about what metrics specifically you should analyze and track to make sure that you have the best Black Friday and Cyber Monday possible.
Average Order Value (AOV)-
This one seems basic, and it is, but we see ecommerce companies forget about this frequently during this time of the year.
Most companies focus on their profitability and the discount rates around this time of the year. That should be a top priority, but you also need to make sure that you have your upsell flows, recommended products, and bundles in order to make sure that your AOV doesn’t tank. While you may want to focus on client acquisition, you still need to make sure that these new customers provide value to your business.
This is one of the primary metrics that you should review from last year. Explore what bundles drove higher cart values, what products drove cross-sales, and what upsell flows performed best for your business.
Promo Code effectiveness-
This seems like a no-brainer, and hopefully you already have examined this data. Looking back at what discounts you ran last year and seeing what worked, what failed, and what fizzled will help inform you as to what you should do this year.
In addition to just looking at the surface-level of this metric, we recommend that you deep-dive into when your customers used your different codes, what time of day they purchased, what the AOV was based off discount code, and what was the average discount per code.
Black Friday and Cyber Monday are some of the worst possible times to run out of inventory. Obviously you can’t perfectly predict this year based off last year, but by examining your historical data and comparing that with this year’s demand, you can get a better feel for how much you need to order.
Many ecommerce companies neglect to factor staffing into their costs. During this time of increased demand, lots of businesses need to bring on extra help; but they fail to account for this increased cost in their cost of goods sold.
Not accounting for this can easily turn your sale from an asset to a liability. Typically, as you increase sales, you also increase the amount of customer service tickets that you receive. If you don’t have the bandwidth in place for that you may need to bring on additional support, but they may not get fully trained in time. Additionally, the increased wait time to have issues resolved can cost you sales.
If you don’t have a solid plan in place, issues can sneak up and turn your holiday into a nightmare.
Lifetime Value of Customers (LTV)-
One of the biggest dangers that businesses face during this holiday season is acquiring unprofitable customers. Many businesses run loss-leader deals in order to acquire new customers and think that they’ll make up the loss sometime down the line.
Without tracking the lifetime value of those customers over time, you’re stuck guessing about their profitability. We have dealt with clients who offered discounts in order to acquire new customers, believing that they would make it back over time, only to discover later that they had overestimated the value of those customers. They thought that these new customers drove their profitability, but as it turned out, they dragged down profitability.
In order to maximize the effectiveness of your Black Friday and Cyber Monday marketing efforts, you need to understand what these clients purchase initially, what they come back to purchase, and when they come back to purchase. If you understand those three things, you can tailor your marketing efforts to their natural buying tendencies and dramatically increase your effectiveness.
Going through last year’s data and then looking at this year’s plan and making sure that they align is the key to a successful Black Friday.
How to leverage pre-Black Friday sales to your advantage-
We have found that if you can give your clients a juicy enough discount code, you can entice them to spend their money with you even if they know that they’ll likely get a better discount later. Some of the larger retailers have decided to just launch their official Black Friday deals before the official holiday.
You could also promote your pre-Black Friday sale exclusively to your email list. This provides value to those who have signed up for the list, and could entice others to sign up.
We have also tested the tactic of offering a sale before the holiday by pitching it as a way for the customer to make sure that they got their orders on time. If they took advantage of this sale before the holiday rush, they could get a good deal, and also avoid the hassle of holiday shipping issues.
How real-time reporting can increase your ROI this Black Friday-
Tracking and reviewing your data make up the first two pillars of your data temple. The third pillar is automation.
In today’s world, every system tracks one specific thing, and it refuses to share that information with any other platform. Because nothing communicates, it falls to humans to aggregate and gather all of the data together. It can take days or even weeks for people to pull together the data, get it placed in the right location for analysis, and then take action from it.
Praxis Metrics specializes in automating the process of gathering the data from all of the different systems where it lives, cleaning it so that all of the metrics align properly, and then visualizing it in real-time.
This real-time reporting allows you to adjust and tweak your efforts much faster than if you relied on manual reporting. This decreased time to insights allows you to experiment and improve your marketing much faster, allowing you to drive immediate results, rather than having to wait a full year to improve your strategy.
The goal this Black Friday and Cyber Monday-
The goal of this entire process is to help you have the best Black Friday and Cyber Monday possible. If you have set up your tracking properly, you should know where your best customers come from and what efforts drove those customers to your ecommerce site. These insights will allow you to double down on the things that actually drive results, and cut the things that didn’t work for you. You can reallocate your budget from the things that didn’t drive results to the things that do drive results, allowing you to increase your ROI, and bringing in more money that you can then reinvest into the marketing efforts that are actually working.
How can you assess your data maturity to understand next steps?
We always start with an audit of where you stand. In order to understand your next step, you need to understand where you are.
Even if you have set up your tracking previously, we recommend an audit. As your website grows and you make additions and changes to it, you can easily break your tracking, or miss out on tracking valuable insights.
If you fall into stage one, your entire goal is to gather as much information as possible. You can do this through Google Analytics, UTMs, defining your Key Performance Indicators (KPIs), and above all else, create Standard Operating Procedures (SOPs). If you can standardize your naming conventions for UTMs, SKUs, etc., you can save yourself hours of cleanup down the line.
If you fall into stage two, your focus is on automation. What compound interest is to your money, automation is to your time. We have had clients cut the number of man-hours required to complete a data project from 10 hours per month to 1. Automation allows you to scale your efficiency and effectiveness across the board.
The focus of stage three is optimization. Everything before this point deals with historical data. Optimization leverages the wisdom and knowledge gained from the previous stages and applies it to your future endeavors. This allows you to predict outcomes from your actions. This stage is where the magic truly happens. Your efforts yield predictable, exponential results, allowing you to rapidly scale your business.
Stage four is the buzzword stage. This stage focuses on leveraging AI, machine learning, etc. These technologies allow you to improve your business at scale through incremental adjustments.
No matter where you fall on the data maturity spectrum, Praxis Metrics is here to help. We offer free data roadmaps and coaching, analytics audits, dashboarding solutions, etc. If you want to learn more about Praxis Metris, visit praxismetrics.com or drop a line here.
Meaghan was recently interviewed on Lena Elkin’s podcast, Unfiltered.
Check out the full episode below along with our insights on the most important points.
How did Meaghan get her start?
Meaghan grew up in a home that was not entrepreneurial at all. No one in her family had ever gone to college, so she was taught that management was the goal. If you could reach management, you had arrived.
She had her first taste of entrepreneurship in college selling encyclopedias door to door. This experience allowed her to become her own boss and manager her own “company”. This opened her eyes to how her own individual contributions affected her income. Through this experience, she learned the value of being 100% responsible for herself and her outcomes.
After that, she became a sales consultant, but still under an organization. During this time, she met AJ. AJ is an entrepreneur through and through. He started creating companies at age 10, so he opened her eyes to the possibilities of entrepreneurship.
One of the biggest transitions that she had to make was to shift her mindset from individual contributor to growing a company.
Luckily, her journey with data started much earlier.
Meaghan was the math nerd from an early age. She jokes that she had more math books than friends. Meaghan loved math and numbers because everything had a correct response. Everything was either right or wrong, and it was clear why.
She had planned to become a math teacher, but upon discovering her gift for sales, she decided to focus on hustling while she could and teach later in life.
The sales bottleneck
In all of Meaghan’s sales experience, she relied on her inputs to create outputs. She either knocked doors to get sales, or she cold-called businesses to get sales. Enter AJ.
AJ worked in marketing, and Meaghan wanted to learn more about what that meant. So she shadowed him working on a client. The client had set up a course that he wanted to sell, so AJ set up a sales funnel and landing pages, and then sent out an email to his list. They had 500,000 on that list, so they sat back and waited to see the responses. Within 8 hours, the campaign had cleared $1.2 million.
Upon seeing this, Meaghan knew that she needed to make the jump from sales to marketing. Because of her background in sales, she helped with copy and closing clients. Upon spending some time in the agency, she began to notice patterns in the data.
In her time working in sales, she would split test approaches and different scripts. Over time, she perfected her sales pitch. Upon making the switch to marketing, she realized that they did the exact same thing, just on a larger scale, and with more automation.
The marketing bottleneck
While running the agency with AJ, they had to report back to their clients on the progress of their campaigns. So they had a marketer who had to run reports for clients all day, every day. He wasn’t able to do anything else because they had to get this data to their clients.
So Meaghan started researching ways to automate their reporting. She found the solution in the world of data analytics and business intelligence. She found that many of these programs could automatically do what they had someone doing by hand. The programs could extract the data from all of the different sources, aggregate it, and even display it in an easy to interpret format.
Once they rolled out these reporting solutions to their clients, they naturally wanted more. They wanted more information on their business and wanted that same powerful reporting for everything. Ultimately, everything that Meaghan worked on led her down the path to Praxis.
AJ and Meaghan pivoted their marketing agency into a data analytics agency, and now help business owners and marketers understand their businesses better through data.
How to take advantage of your data
The first thing that you need to do to truly take advantage of your data is set your ego and emotions aside. As Meaghan talked about earlier, numbers allow you to see in black and white. Rather than focusing on how they make you feel, you can use that information to help you grow forward and progress.
The next thing that you need to do in order to truly take advantage of your data is a process called “ETL”. ETL stands for Extract, Transform, and Load. Essentially, you need to extract raw data from the back ends of your systems, then transform it to make sure that it accurately reflects what you want to measure, and then load it into a business intelligence or visualization tool.
Lots of solopreneurs and early stage entrepreneurs end up needing to learn sales and marketing in order to get their company off the ground. Learning data as well would likely push anyone over the edge.
That’s a big reason why Praxis shifted down-market. We used to work with larger companies, but we found that they needed answers to the same questions that the little guys did. Everyone wanted to know what worked, what didn’t work, where to spend more money, and where to cut spending in order to better optimize.
The best time to start thinking about integrating a BI or dashboarding tool is after you’ve already hit $250,000 in revenue. For businesses pre-$250,000 it’s best to focus on tracking. Too many businesses wait until they get big in order to worry about their data; but you can’t leverage data that you don’t have. Every business needs to set up tracking, and the earlier you set it up, the better.
Most businesses spend all of their time worrying about their copy and their look and feel, but they neglect their tracking. Google Analytics is one of the most underutilized and error-prone tools on the market.
We see lots of big companies that come to us with very little or no data available to them, looking for answers to their business questions, but they don’t have any data. We have to take them back to the beginning and help them set up their tracking, and then we can help them analyze the data as it comes in.
Data is sexy.
Lots of people view data as something that happened in the past, and therefore not something that can help them in their current situation; however, the true power of data is that it can help you see the patterns in the past, and then predict and shape the future.
As we covered earlier, it’s very important to get started as early as possible with this process. So now we want to cover how you can get started:
UTMs are a free tool that every business can and should use for all of their marketing. UTMs allow you to pass information through URLs in order to better track where your traffic comes from. Adding UTMs to your external links allows you to understand how your customers found you and what content they interacted with.
UTMs allow you to see much cleaner, more granular data about the performance of your marketing efforts. This allows you to get better insights, allowing you to decrease waste and double down on what works.
If you want to learn more about UTMs, we have a course that walks through how to build them and gives you tools to help you automate the creation of your UTMs. Here is the link to that course.
AJ and Meaghan recently had the opportunity to have a chat with Bernard Kelvin Clive of the BKC podcast.
It was a great opportunity to get a multi-cultural perspective on business growth and development. Check out the full interview below:
Data is the fuel for business success
In today’s marketplace, every business works in the data business. No matter what business or industry you fall into, data is vital to your success. While many people still think about data in terms of “big data”, every business can capitalize on the data they have.
While almost everyone understands that data has value, few businesses know what data they need to leverage to scale.
When we talk about data, the key point to remember is that data doesn’t involve crazy math or calculations. Data is just information. Eventually, once you have enough information, you can begin to recognize patterns in the data, and predict the future.
Every business has the power to access “big data” at this point. Most programs that businesses use to run their operations contain data on the back end. This includes things like: when your clients buy, how much they buy, what they buy, and so much more. Just having that small amount of information can help you understand your customer journey’s better. Once you understand their journey, you can better market your products and services.
No matter the stage of your business, you can be doing things with data
At Praxis, we often talk about the data maturity spectrum. No matter where your business falls on that spectrum, there are things that you can and should be doing to make sure that you can get the most out of your data.
If you’re at the beginning of your business, this could be pre-revenue or just starting out, the best thing that you can do is start collecting data. Lots of businesses in the start up realm still have CRMs, POS systems, websites, etc. Each of these systems can be a treasure trove of data if you set it up to track data. Most small businesses though don’t take the time to make sure that they have everything set up to track properly.
You can’t create data from scratch
The reason that it’s so important to set these things up early on in your business is because you can’t go back in time and create historical data. So if you find yourself ready to start analyzing data three years from now, and you haven’t set your systems up to track your customers properly, then you have to start completely from scratch.
You can’t make data-driven decisions without data, and you can’t get data without taking the time to set up your tracking.
More is better when it comes to tracking
Even if you don’t have the time to analyze your data, it’s very important that you start tracking it now. The more that you can track, the better. While you may not use all of it in the future, it’s much better to have too much data than too little data.
Whoever has the greatest understanding of their customers will win in the end.
Several of the biggest companies in the world are strictly data companies, and part of the reason that they got so big is because they collected data to better understand their customers.
Data helps you better understand your customers needs and wants; this allows you to better target and attract the right customers, as well as retain your current customers.
As a business owner, data analysis isn’t your responsibility
Your job as the business owner is to make sure that you have properly invested the time and resources into gathering the data. If you’ve done that, you can have specialists analyze the data for what they need. Your marketing team can scour the data for better customer insights, your project management team can find bottlenecks in your processes, etc.
In order to make sure that you track the right things, you need to know what metrics matter. Too many businesses track everything and then get caught in paralysis by analysis. They end up spending time worrying about metrics and numbers that will only make a small difference, if any.
The key to analyzing your data is making sure that you look at the metrics that will yield results for your business.
The best way to find these “needle moving” metrics is to figure out what business questions you need answers to. Generally, you can narrow down the metrics that you need to keep an eye on down to 5-10 metrics. We recommend “leading with revenue”, which means that you should focus on marketing and sales first.
Wrapping up the foundation level
To summarize the foundation level of data maturity, track everything, but don’t feel like you need to analyze everything that you collect. That is reserved for stage 2.
Stage 2: Analysis
Once your business has matured to the point where you want to start leveraging your data, you’ve reached stage 2.
You don’t necessarily need to analyze the data yourself. You can have your team analyze it, agencies that you work with, or you can do it yourself if you’re data inclined.
One way to start analyzing your data is to figure out the business questions that you want to answer.
The number one question we recommend that every business owner ask is “where do my best customers come from?”. Every business should have a clear answer to this question. You should know what marketing efforts create customers that come into your business and stay with your business.
Another way to analyze your data is to just start looking, and then see what questions arise as you look at the data.
Sometimes, by digging into the data, you can spot anomalies or outliers that spark your curiosity.
Many business owners think that they don’t have the time to analyze their data, and that’s why it’s important to set aside time to do it. Make data analysis a priority and chunk out time to at least poke around in the data. You can spend that time looking for answers to questions, or looking for anomalies. Either way, it’s important to keep your finger on the pulse of your business.
Most businesses are just one data-driven decision away from exponential growth
As we said in the last section, it’s very important to at least wade into your data once a week. Additionally though, it’s important that you schedule time to deep dive into your data, at least once a year.
AJ and Meaghan realized during one of these deep-dive sessions the key to exponentially growing their business. They realized that they wrote off hours like crazy in order to keep their clients happy. They over-delivered on their promises to make sure that they had raving fans.
This yielded them happy clients, but when they looked at their numbers, they realized that it had cost them $500,000 across the course of a year. This one thing was preventing them from scaling their business properly.
They decided to start scaling back the amount that they would write off with each client. They decreased how much they would write off each month by just 25%. This caused them to increase their revenues by 350% year-over-year, and their profit margin skyrocketed up by 1,000%! This allowed them to scale their team up to 10X the size that it was.
The definition of insanity is doing the same thing over and over and expecting different results. Until you analyze your data though, it’s hard to know what you need to change.
A positive data-driven decision
We had a client who came to Praxis looking to get better information on the lifetime value of their customers (LTV). They thought that they had an accurate idea of what it was, but wanted to double check to make sure that it was accurate. Together, we discovered that the lifetime value of their customers was much higher than they initially thought. Upon realizing this, they decided to increase their allowable cost per acquisition by just $5. This decision caused the funnel to go from about 12 sales per day to 350 sales per day in just 2 weeks.
From there, the funnel kept expanding, and within a month, they started to average 600 sales per day on this funnel… All from one data-driven decision.
A negative data-driven decision
We had another client who thought that they knew their LTV, but once we got into their data, we discovered that they had overestimated their LTV. Because of this, the company found out that they were actually losing about $3 per customer that they brought in. And they were doing a lot of sales…
Because they sought Praxis help though, they managed to stop the bleed and update their spend to reflect their reality.
The data will tell you what to cut and what to double-down on.
What is the next step, where should businesses go from here?
The answer to that question depends on where you fall on the data maturity spectrum. If you are stuck in phase one, you need to get your tracking set up. If you’re stuck in phase two, you need to determine if you need help understanding the data and taking action from it.
The best thing that everyone can do right now is run an audit of your systems and see where you stand in your business. Diagnose where you fall on the data maturity spectrum, and from there you can see what next steps you need to take.
Another huge thing that helps all companies regardless of size, is to aggregate your data in one place. Some people call this phase “spreadsheet hell”, because it generally requires a lot of spreadsheets. If you want to avoid spreadsheet hell, we recommend leveraging a business intelligence (BI) tool. BI tools are much more expensive than just using spreadsheets, but they also allow you to perform much more complex analysis and leverage the data in new ways.
Tools won’t solve your problems
It’s important to remember that even if you buy a BI tool, it’s not going to solve your data problems. You still need to have your tracking in place, and you still need someone to analyze the data. Additionally, you need to have plans in place to take action on the data. If you see a dip in your data, you should have a plan in place as to how you want to deal with it.
Every company needs to start thinking about their data as one of their most valuable resources.
Data just surpassed oil as the most valuable commodity on the planet. Information is king. If you know more than your competitor does, then you have an opportunity to outmaneuver and outperform them at every turn.
Caesar’s Palace recently went bankrupt. On their balance sheet, they listed out their data as the most valuable asset that they had.
Every interaction with your clients is an opportunity to learn something new. If you’re properly tracking everything, then you can gain insights and scale your business infinitely faster than by going off gut instinct.
The fastest way to scale your business is to figure out what is already working, and double down on it.
What can people do to better use data in the world of branding?
Start tracking creatively. Tracking doesn’t have to just be about how many people came to the website, or how many people clicked a button. You can track anything that you can imagine. We had a client come through who used Instagram as their primary lead source. They went through all of their posts and tracked what colors they used in the post, how they framed the image, the location, everything. They then overlaid this data with their like, share, and comment data to find optimal posts.
Because they had this data, they knew exactly what their customers wanted to see from them and when. This allowed them to double down on the things that worked for them and cut out the waste.