Small business owners face an ever-growing influx of information. Data about in-store and online transactions, coupled with metrics about marketing initiatives, loyalty programs and overall service performance, threaten to overwhelm entrepreneurs with more information than they can process. It’s critical that business owners be able to pick out meaningful data points from their various activity streams, but it can be difficult to know where the important information is lurking and what it all means. Turning data analytics into actionable insight is a skill small business owners need to master if they’re going to achieve the results they want.
Challenges behind getting good value out of data analytics
One of the problems Malinda Wilkinson, CMO at Salesfusion, says small businesses face is that they sometimes overcomplicate their data analytics initiatives, biting off more than they can chew in the process. “They think they need to measure lots of metrics, but they lose sight of what they’re trying to accomplish,” she explains. Without a tight focus, it’s difficult to identify those data points that represent trends and opportunities. “We talk to people about starting small,” Wilkinson says. “Begin with a few metrics and, as you get a handle on those and understand them, then you can start gathering more data.”
Ensuring the right information is included in the data analytics process is another challenge for entrepreneurs. Marketing attribution information, for example—the identification of where resources such as money and time are consumed—isn’t always fed into the data stream, even though it’s critical to the analysis. “Essentially, if I spend a dollar or an hour of time on marketing, what do I get in return for that?” asks Brooks Robinson, co-founder and CEO of Springbot. It’s a concept that proves difficult for many entrepreneurs, but it’s a key piece of data. Fortunately, Robinson says, “There’s a lot of technology around things like smart tagging and creating trackable links that allow you to turn digital marketing campaigns into something you can track.”
Focus on the right information
Marketing spend can quickly spiral out of control if you don’t know what’s working and what isn’t. Winnowing down the field of data that must be analyzed is the first step. Which metrics are most useful in influencing how, where and when your business can drive better results? “Look at things like how recently a customer made a purchase, the frequency of their purchases and the dollar value of each,” Robinson says as an example. How often do they buy? That’s a relatively simple metric to track and review, but it reveals a wealth of important information about how to influence customers’ behavior that can then be translated into action.
Because data analytics platforms generate huge amounts of information, business owners may have a tough time identifying which sub-sets of data to examine. Wilkinson suggests starting with the end in mind. “Look at what you’re trying to accomplish,” she explains. “You’ll have different goals for a campaign that’s just trying to raise awareness about a product or service, versus one intended to generate leads and opportunities.” Once an entrepreneur knows what sort of results they’re trying to drive and what their end goals are, it’s easier to zero in on the right data and understand what that data is saying.
Strategies for converting analytics data into actionable insight
To be sure the information harvested is the most useful, Wilkinson says entrepreneurs should remember that making small course corrections is a good approach. “Look at the individual metrics so you can identify those small, incremental improvements you might want to make,” she explains. Rather than looking at the revenue generated by an e-mail campaign, for example, start instead by reviewing how many people opened your message. “When you see average open rates from one campaign to another, you can improve,” Wilkinson says. That granularity sometimes gets lost in data analytics initiatives, but the small pieces in the puzzle can make a big difference.
Busy entrepreneurs may still find it difficult to translate metrics into action. Robinson says some data analytics platforms now offer features that do much of that translation internally, taking raw data and giving users more nuanced insight on what to do next. Once the system identifies which steps will help get you where you want to go, Robinson says, “These platforms don’t stop at what to do next. They then help automate activities and make it easy to do the next thing.” By turning data insights into action, entrepreneurs can implement those changes that will move their business forward.