The 3 Most Important Metrics to Analyze When You’re Short on Time
What data should you track when you're busy?
Data. The great saviour of the internet age. In a world where you can track anything, we should have the answer to everything, right? If only it were that easy. Often, the vast array of readily available data gives growing businesses a headache.
You either don’t know where to start with data gathering and end up missing out, leading to what STB calls data-paralysis. Or, you spend so much time analysing the mountains of data you and your team have been capturing that you end up with no actionable insights.
Being data driven doesn’t mean you have to be great with numbers. It doesn’t mean knowing what’s happening with every inch of your business at every moment in time. And it doesn’t mean obsessing over your iOS vs Android split and stressing about how that might impact decision making at your car dealership (I wish that wasn’t a true story).
Tracking data is one of the key pillars of a successful business. Without tracking, you just won’t know what works and what doesn’t. In Growth, nothing can ensure failure more quickly than that. Amidst the trend of “track everything” advice though, one thing is sorely lacking: the acknowledgement that if you’re overwhelmed by too much data, you might as well have none.
So where do you start with your initial data analysis efforts?
Let’s get one thing out of the way: we’re not telling you that this is all you’ll ever need to track. Organisations that apply data-driven decision making out-perform their competitors. No ifs, buts, or maybes.
What we’re saying is that these are a selection of the key metrics we look to track, analyse, and improve, before anything else. We do this whether we’re looking at STB metrics or a client’s business. This is our jam, so we quickly get more in depth than this. However, if you don’t currently have the benefit of a kick ass growth team, this is a good place to start gaining real insight.
Customer Acquisition Costs (CAC)
This is not complicated: customer acquisition costs (CAC) are what it costs to acquire a customer or sale. It is all too easy to overspend in this area, which means this is a vital measure to track. If you spend too much here, you will need to find a way to increase margin, conversions or reduce costs quickly.
Keep an eye on this and track variations across channels or segments. If you’re noticing that one channel or group is converting at a lower cost, i.e. they have a lower CAC, that’s a key signal to start developing a distinct User Persona for that segment. From there, you can work out how to scale up your efforts with that segment as much as possible.
The other reason to track CAC (apart from CAC being extremely fun to say) is that it keeps you focused on retention. As anyone will tell you, it’s cheaper to retain a customer than acquire a new one. Having one eye on your CAC will remind you of that and keep you motivated to provide great service to those existing customers.
Conversion rate is simply a measure of how compelling your communications are. Whether it’s your landing page, a display ad, or your content marketing, conversion rate tracking enables you to see how your audience is reacting to your efforts.
Before you start rushing in to chase aggressive, conversion focused changes: a warning. If you leave your conversion rate ambitions unchecked for too long, your optimisation efforts will turn your website into gambling or porn. It’s important to remember to stay in touch with what you’re trying to do instead of optimising solely for conversions.
Focus on creating a compelling promise that is in line with your product or service. If you can provide value up front, do it. Things like proof (testimonials, companies you work with, etc.) are a powerful example of a landing page addition that can have powerful conversion impacts without adding promises that aren’t aligned to what you actually deliver.
Burn/Costs/Margin - Fundamental Financials
Sorry. We’ve lead you on. With good reason, I promise. This may seem like more than one metric but it’s not. It’s a fundamental view of business performance. Once you have your financial tracking set up (we like Xero), getting a view of your immediate position as well as your short, medium, and long-term outlooks is a piece of cake.
Don’t have Xero or another accounting platform? No problem. There are fantastic templates ready to go on Google Sheets. Open the Financial Statements template from the Google Sheets homepage and get started by entering and categorizing your transactions. Everything is taken care of automatically, and you’re left with charts, a financial position, outlook, and more. To get an overview, watch this video.
There you have it. While it’s far from a comprehensive article about data tracking and data backed decision making, we hope this provides a starting point. Or, that this guide helps you to see what you should be looking at out of the mountain of data you’re faced with.
The Takeaway: There are 3 main metrics that you should never neglect, no matter how busy your business (or personal) life gets. Ask yourself these 3 questions. How much does it cost to acquire a new customer? What % of visitors are you converting into customers? How much money are you burning through? Track this data and you're set to improve your business as a whole.
Make sure you subscribe to get more detailed data related topics in the future. If you have any questions, email the crew at email@example.com. We’d love to jam.