A few factors come to mind when thinking about how valuable a business is. There’s revenue, cash on hand, inventory and other tangible things. Those are quantifiable and important aspects of any small or large business, but they aren’t everything. A less considered but equally valuable component of any business is the data they have on hand. Using the power of data analytics is a smart way to drive sales and increase engagement. Beyond that, data can make your online advertising efforts more efficient, so you aren’t throwing money at people who would never become a customer.
Data has no inherent value on its own — it’s only when you glean valuable insights from the information you have that it becomes useful. Using data analytics can lead to more revenue if you keep the following things in mind.
No More Throwing Good Money After Bad
Anyone can spend money on advertising and see some positive reactions. However, too many people are tempted to amp up spending when a campaign isn’t having the large effect they imagined. This is a bad idea that will only lead to more wasteful spending as bad habits sink in.
Economist Steven Levitt experienced this firsthand when he was a consultant for a retail chain. The store regularly spent a significant amount of money on newspaper ads. Levitt discovered that there was zero correlation between advertising spending and sales. The store, however, didn’t like that conclusion.
Partly out of habit and partly because the higher-ups wanted to make it appear like they were doing something, the newspaper ads stayed around despite being a waste of money.
Thankfully, using modern data analytics can ensure that advertising truly provides a return on investment. By being smart with your advertising budget, you can lower the cost of conversions and attract more engaged customers. This requires lots of experimentation with the copy of the digital ads, the targeted audience, and so on.
Learning from every iteration of the ad will allow you to craft the perfect campaign — and bring in more revenue.
Fulfilling a Need
One of the most challenging things about marketing and advertising is knowing what potential customers are looking for. Big companies spend millions of dollars on this research in an effort to reach untapped markets. Marketers trying to grow their websites can do this on the cheap by using data analytics.
Using tools like Google Adwords Keyword Planner and SEMRush’s Keyword Research, marketers can discover untapped opportunities on the internet. Those tools can show you exactly what people are searching for and how competitive websites are for that category. You’ll sometimes find that people search for topics and there’s little competition amongst websites. When that happens, you have the opportunity to tailor your content to those unsatisfied searchers.
Similarly, those keyword tools will also show you what categories are over saturated and probably not worth your investment.
Strengthening Customer Relationships
Acquiring new customers is a wonderful feeling. Turning a one-time buyer into a loyal, repeat customer feels even better. The 80-20 rule states that 20 percent of customers generate 80 percent of a company’s sales. With such a small percentage of customers accounting for so much value, it’s important to provide them with the best possible experience and give them exactly what they want.
Using data analytics makes that challenge much easier. For example, Amazon’s detailed recommendation algorithm is designed to turn good customers into great ones by providing relevant related products. That secretive algorithm is part of the reason why Amazon is so successful.
Any other website can adopt similar methods to improve relationships with customers. Take a look at your data to get a good idea of what people are buying, when they’re buying it and where they’re coming from. Those are three big-picture questions to get started. The deeper you dig into your analytics, the more insights you’ll be able to find.
Preparing for the Future
Data is becoming increasing valuable, with plenty of companies hopping on the big data bandwagon in order to boost revenues and learn about their customers. Using analytics is here to stay, which means that the data itself is more valuable than ever. That’s why companies of all shapes and sizes need to create a plan about how to collect relevant data and then what to do with that data.
By taking a step back and coming up with your goals (more satisfied customers, new customers, increased engagement, etc.) you’ll be able to set up your data collection in a way that becomes increasingly valuable over time.
With preparation, you’ll even be able to forecast the future based on previous trends.
Using data analytics is a marathon and not a sprint. Making knee-jerk reactions about one data point won’t be of much benefit. Instead, you need to look at larger trends in order to come to a usable solution. Once that happens, you can implement a plan that will help drive revenues and bring in more money.