There is an amazing amount of data out there for each of our businesses. So much in fact that it’s easy to get lost, but do you view data as an ally or an enemy? Your small business analytics can tell you so much, but far too many small business owners get overwhelmed, use the wrong tools, get hung up on less important metrics, and simply misuse their data. You have an amazing advantage over those that started businesses even five years ago because there is more and more data available to you each and every day.
The problem is that with so much data out there, it’s easy to misuse, misinterpret, and misunderstand it. Today we’re looking at 5 ugly truths about small business analytics that you really may not want to hear, but you need to.
We, obviously, believe that analytics are vital to any and every business out there, regardless of industry, but we also believe that far too many people aren’t getting what they need out of their data. It’s likely that you already know some of these things and you may even be falling into the trap behind a few of these. We’re here to help you catch the issues now so that you can accurately and efficiently put your small business analytics to work for you.
If you’re just starting out with your small business analytics, we highly recommend that you take a look at our 6 Things to Look for When Monitoring Your Small Business Analytics post to get you started!
Alright, now let’s dive in to the ugly part of this post – the ugly truths about your small business analytics.
We know betterThe hardest part of all these ugly truths is accepting that we actually know better. We know that we need to be utilizing our analytics. We know we need to be spending time to understand them better. We even know that we should be using our small business analytics to help us make decisions.
But the vast majority of us simply aren’t.
There is always something else that we could be doing. There are always revenue generating activities that we could be focused on instead of diving into our data to see what we’re doing right, what is starting to slip, and what in our data is crying out for help.
Analytics have become one of the things that business owners fear, whether it’s due to an abundance of information, time, resources, lack of technical knowledge, or any of many other potential reasons, but even though many businesses face this issue, we all know that we need accurate and up to date analytics in order to really run our businesses correctly and profitably.
The Fix: This one is simple. Think Nike – Just Do It! You should be spending time each and every week on your business’ analytics in order to really understand the health of your business, the direction that you should be taking, and even where the ship is taking on water. As a small business owner, there is ALWAYS something else that you could be doing, but you’ve got to accept and embrace the importance of your own business intelligence in order to succeed long term.
Poor toolsThere are literally hundreds (shoot…maybe thousands) of tools out there that can help you manage, monitor, and act on your business analytics, but the most common tool used for analytics?
It is 2017. How can this still be a thing? Spreadsheets are extremely powerful tools that we simply couldn’t survive without, but they were never meant to be an analytics or business intelligence tool. Sure, more people know and understand spreadsheets (though many probably aren’t using them to their full potential), but when you use spreadsheets to manage your business data, you’re opening yourself up to simple human errors that could have easily been avoided, poor insights, and extremely limiting your capabilities.
In today’s world of open APIs and softwares that widely and easily talk to each other, it’s important that we take advantage of it. As we’ve all seen throughout our years, the more we can take the human error element out of almost any situation, the more success we can have. It’s far too easy to accidentally input a character incorrectly, set up a bad formula, or even mix up our data while inputting it. Relying on spreadsheets to give us accurate information relies far too much on perfect input and no human error.
The Fix: We’ve got to upgrade our tools. Even the brand new startups out there should set aside some of their startup budget in order to be able to accurately track and measure their data. We’ve got to get beyond spreadsheets.
Have we convinced you to ditch the spreadsheets (at least for analytics purposes)? Good! Try a Cyfe dashboard for FREE! No really, it’s 100% free for your first dashboard! Start using a tool meant for your analytics today and leave your spreadsheets behind!
We’re worried about vanityIt’s human nature, but we’re always focused on the pretty numbers, the pretty outcomes, the pretty analytics. Yes – there are pretty analytics.
Vanity metrics get a ton of attention and praise, but they’re not always the analytics that we should really be focused on. Almost any business owner can tell you how many Facebook fans or Twitter followers that they have, but an alarming number of them can’t tell you their email open rates or landing page conversion percentages. While we’re not saying that your fans and followers are completely unimportant, we are saying that we can’t only focus on these type of vanity metrics that make us feel good. In order to successfully use our analytics to move our businesses forward, we have to dive deeper. We have to look at analytics that have a large impact on the health of our business and understand that having 100,000 followers on Twitter doesn’t necessarily translate to a profitable business.
Vanity metrics can really expand outside of social media too. We could argue that revenue is a vanity metric. You might be a little skeptical with that statement, but it can be. Think about it – if you are selling a loss leader and worried only about bringing in dollars, you can be making a lot of revenue, but also have a very sick business. This is why businesses that make millions, even tens of millions of dollars per year can seemingly go out of business overnight. Profit is a much more important metric than revenue, typically.
Would you rather be the business making $10,000,000 per year in revenue, but losing $100,000 per year or the business making $500,000 in yearly revenue and profiting $50,000 per year? That’s a pretty easy answer. Had I instead asked whether you’d rather be a business making $10,000,000 per year in revenue or a company making $500,000 per year in revenue, your answer would have been the exact opposite. In this instance, revenue was a vanity metric and was only telling you half the story.
The Fix: To be clear, we are not saying that things like Facebook fans, Twitter followers, and revenue are not important. They absolutely are. Our point with this is that too many businesses are getting hung up and only focusing on these types of metrics because they make them feel and look good. To fix it, you’ve got to dive deeper and really focus on your most important KPIs for your business.
Need some help determining the right marketing KPIs for your business? Download our FREE eBook now!
Remember – you can (and should) have KPIs (key performance indicators) for each segment of your business. Check out our 5 Sales KPIs You Need to Start Monitoring Today for a dive into how to accurately measure your sales performance!
Living in a vacuumNone of your data should EVER live in a vacuum. None of it is truly independent, but we tend to treat each metric that we measure within our analytics as a separate piece rather than treating them each as a piece to a bigger picture. While your email open rate and business profit may seem to be pretty separate metrics, they are likely very closely related. Your email open rate is likely at least partially responsible for your increased or decreased profit this month (assuming you’re utilizing email marketing).
The Fix: This one is more difficult than the last because we have to change how we think about our analytics. We have to dive deeper and ask “why?”. Why did our profits improve this month? Could it have to do with our social media follower growth, our higher than normal email open rate, our increased advertising budget, or even our new employee? Everything is connected and in order to truly get the information that we need out of our analytics, we have to start viewing them like they are. All of your data is important and has an affect somewhere. Your job is to discern what affect it actually had.
Surface onlyThis point kind of builds on the last one, but we get caught taking our analytics at face value far too often. We don’t take the extra step (or steps) necessary to really get to the reason behind the analytics. Statistics and analytics can easily lie to us if we let them and the way that we let them lie to us is by not asking why.
The Fix: It’s like our elementary school teachers used to preach to us – question everything. Is the information that you’re getting a rule or an exception to the rule? Take each metric at least one step further to get a better understanding of the validity of the data and to understand its actual importance.
As a whole, we as small business owners are really not taking our small business analytics serious enough and with more small businesses popping up than ever, we’ve got to get it corrected. Take the time to learn, understand, interpret, question, optimize, and act upon your analytics and you’ll be on the path to success and profitability!