The amount of data business owners and employees are faced with today is truly alarming. While everyone can agree that it’s important to understand basic information about your customers and what they respond to, it can be very difficult to determine which data is relevant. Which metrics should drive your decisions, and which ones should you disregard? Today we’re going to share some simple but powerful tips for turning all those metrics you are inundated with into actionable data that produces real results.
Half of the battle in making sense of your data is determining which metrics are most important. So many business owners and investors are wooed by metrics like unique visitors, downloads, “likes” or social media followers, and then act surprised when those metrics don’t translate to increased revenue and profits. It’s easy to get distracted or misled by these vanity metrics— they make us feel good about ourselves and like the business is going in the right direction.
But ask yourself: how many of those new visitors to your website are sticking around? How many are opting into your email list, and of those, how many are actually opening the emails and returning to your site? Of that percentage, how many are making purchases, and then coming back as repeat customers? Furthermore, what posts on your blog attracted those customers to your site in the first place? Where do they come from, and what were they searching for when they found it?
These are the sort of metrics that matter, and this is what we mean by “actionable data”. They are KPIs that directly correlate with people taking specific actions that translate into more user engagement, and ultimately, more business. It also tells you who your customers are and where they come from, so you can make your marketing more targeted to their specific wants and needs. Take the time to figure out which metrics actually matter and which are more about glamour.
The human brain can process visual data much faster than written words. If you want to use your data to improve your business, doesn’t it make sense to present it in a way that will be most easily understood?
Once you’ve identified the most important metrics, you can use data visualization to clearly depict what’s working, and what’s not, and make the necessary changes. Visualization also helps to facilitate predictive analytics by making it easier to identify patterns and emerging trends in market operating conditions, as well as customer behaviors. Plus, real-time data visualization allows your team to directly interact with data and incorporate it into your company’s strategic planning.
Because it can be so readily understood, data visualization is probably the fastest way to depict and communicate actionable data and build a culture of data-driven decision-making in your organization. Even small businesses can harness the power of visualization with tools like Google Data Studio.
While it might be fun for marketers to geek out all day on analytics, at the end of the day, the one metric business owners and CEOs care about the most is return on investment. The most actionable data is the ROI for marketing, sales or internal initiatives expressed in real-world monetary terms. Here is where you will truly find out if you’re on the right track.
Let’s take a look at one simple example of combining data with a basic business calculation: your Customer Acquisition Cost (CAC). Your CAC is the average cost of acquiring one new customer. You simply add your sales and marketing costs per month/quarter/year (this will include salaries and commissions + program and advertising spending + any additional overhead) and then divide it by the number of new customers you’re getting in that same time frame.
So let’s say you spent a total of $35,000 one month for sales and marketing, and brought in 8 new customers. Your formula would look like:
If your CAC is going up as you calculate it each month, quarter or year, you know you need to make some changes in your approach to sales and marketing. Combine this with the relevant metrics you identified using Step 1, and you’ll be able to pinpoint problems and make changes that will lower your CAC and increase your ROI. THAT’S what we call actionable data.
There are too many people and businesses getting lost in the ocean of metrics that gets deeper and wider by the day. Simply collecting and measuring data just isn’t good enough: it must be relevant in order to be take action on it. Use the tips here to begin separating the wheat from the chaff in the data your organization is generating, and turn distracting metrics into actionable data.
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