How To Use Data To Your Advantage As A Small Business Owner
By Patrick McAdams
A major competitive advantage that businesses are always looking to develop is their inventory of data: the information about their consumers, their competitors, and even themselves.
You’ve heard of big data and the companies that are paying loads of money to procure this new and important raw material. Seemingly, it’s only used on a large scale…but what about your smaller-scale business?
Data can be a complex business tool that requires specific technical skills – and a significant investment – to utilize.
Data is what you make of it. It can be easily collected and used at scale to guide decisions – with tools that are accessible to anyone.
We’ve spoken about how to measure the effectiveness of your marketing, but what about all the other aspects of your business?
The Good News: it’s not one-size-fits-all.
Maybe you think that:
- There isn’t any valuable info out there
- You don’t have the skill to collect or understand the data
- It would be too expensive or time-consuming
Truth is, your business does not need to be on the Fortune 500 list to benefit from data collection and analysis. You can implement a data collection system for your business relatively quickly, and at little to no cost, giving you easy-to-understand insights with actionable takeaways.
I’d like to give you some insight on how I set up and analyze data analysis systems for small-to-medium-sized businesses.
I’ve outlined a step-by-step guide below that you can follow, helping you:
- Identify trends
- Increase efficiency
- Isolate problems
- Guide your decisions
Let’s get right into it.
What Are You Looking To Know?
“What get measured, gets managed”
– Peter Drucker
First and foremost, we want a clear idea of the type of information that will be valuable to your business.
Are you looking to know more about your audience? Your website performance? What products are selling? Whatever it is, there is likely a way to measure it.
Keep in mind that we’re looking for objective measures that are directly linked with the performance of your business. What factors would be helpful to consider when making a decision? There are likely elements that you may have access to but are irrelevant to actual performance.
Determine Important KPIs
“Not everything that can be counted counts and not everything that counts can be counted”
Once you’ve got an idea of the high-level business goals you’d like to measure, it’s important to break them down into KPIs: Key Performance Indicators. These are the metrics that represent progress towards your goal.
For example, if an e-commerce company is aiming to increase their bottom line, they will likely be looking at KPIs like Revenue Per Transaction, Cost Per Customer, and Return on Investment. These KPIs give a more granular view of where things are going right or wrong, and in turn, where to focus on improvement.
Some tips on picking the right KPIs:
- Keep the goal in mind: A KPI should directly contribute to a higher-level goal.
- Put yourself in control: Choose metrics that your team can influence so that they can see the results of their efforts.
- Is something hard to measure? Consider using a Proxy-KPI: a separate metric that is similar to, or correlates with, the KPI you’re looking to track.
- Keep it simple: choose metrics that are easy to comprehend and explain to other stakeholders. The last thing you want is to over-complicate and end up like the cartoon below.
Based on what you’ve decided is important to track for your business, let’s find a solution that will help you measure the information you’re looking for.
Find The Data Platform That Fits
There are many free services that collect the information you’re looking for.
My recommendation is to start with the Google Marketing Platform — it’s the most universal, easy to navigate, and free.
Find A Baseline of Your Current Performance
Once you’ve got data tracking set up, the next step is to analyze what you’ve collected.
A good way to do this is to calculate a historical value for the KPIs you’re planning on improving going forward. You’ll want a reliable amount to base your benchmarks off, typically a month, quarter, or year of data.
- Cyclical and/or seasonal trends that may skew your data. Be sure to look at a long enough time period to isolate anomalies or temporary trends.
When you’ve got a good grasp of how your KPIs have been performing historically, it’s time to use these as a foundation for your goals.
Based on your findings, where would you like to see these KPIs in the next month, quarter, or year?
It’s time to use what we’ve learned to set realistic goals and see how we can make progress towards them.
I like to set KPI goals as a percentage of the current value. For example, a 10% increase in the Average Revenue Per Transaction for an e-commerce site. This takes into account the current value and builds off it — it has a foundation of actual data.
Rather than picking an arbitrary goal, I would also recommend using the SMART model to review
- S: Is the goal specific to a single KPI?
- M: Are you measuring an objective, quantifiable KPI?
- A: Do you have the control to influence the KPI to attain the goal?
- R: Is the goal realistic based on your past-facing benchmark data?
- T: Over what time horizon do you plan to have achieved this goal by?
It’s good practice to set goals for all your KPIs as these should all be significant measures of success. Be careful not to overwhelm or discourage yourself. KPIs are meant to provide clarity, not further increase the mystery of your online performance.
Create a Performance Review Plan
What good are these numbers if they are not actually considered?
It’s helpful to make a plan of when you’ll consult the data you’re tracking — whether it’s on a weekly or monthly basis, or in coordination with specific meetings or decisions.
When reviewing your performance, here are some helpful tips to extract as much value as possible:
- Keep an eye out for trends or spikes.
- Are there ways to capitalize on your positive or negative performance? Would it be beneficial to make business changes in response?
- See if you can attribute performance to events. Could it be from an operational change? Weather? Politics? etc.
Tips to Optimize Based on Your Findings
“In God we trust. All others must bring data.”
– W. Edwards Deming
The next step is to tweak your marketing based on what the data suggests. This process involves some level of experimentation to find out what works for your business.
- Keep track of marketing strategy changes you make, so that you can attribute performance changes to them.
- Find which audiences or product segments are doing the best. Shift your spend towards them to maximize value.
- Have any preconceived ideas of what makes your business succeed? Put them to the test and see if you are correct.
- Reconsider your target audiences — chances are there are people who care more or less about your business than you had thought.
- Experiment, experiment, experiment!
Optimizing your marketing strategy is all about finding useful information that tells you what you should increase, continue, or stop doing. If there is ever a lack of clarity on if something works, aim to be able to answer these questions using the data you collect. Remember that knowledge is only potential power — it is what you decide to do with this information that truly matters. Use it to improve your business and you will reap the rewards.
Consult The Experts At Intrigue
Looking for help with your digital marketing strategy as a whole?
Digital marketing is our bread and butter. Contact us today to get the conversation started.