You have a great idea for a new small business or start-up, and you are gathering quite a bit of interest from the people around you. Next, what sort of data should you be collecting?
The answer, of course, depends on the business’ structure, products, and goals. However, there is some common ground which will apply to most businesses.
The first major set of metrics relates to customer acquisitions. You’ll probably have the following questions:
- Where do my customers come from?
- How did they find me?
- Which channels are bringing me the most bang-for-the-buck?
The easiest way to do this, at least at the start, is to just ask them. Ring up your current customers, send them an email, or attach a survey to your invoice/receipt. While this may seem like an approach that doesn’t scale, many large companies still do this, and it works very well.
One thing to keep in mind with customer-focused surveys is length. I’ve found that many customers will get quite annoyed with two common mistakes companies make with their surveys.
The first is a huge number of questions, pages of Likert scales, and lots and lots of question. This indicates a poorly formed set of questions, where the scope of the survey wasn’t restricted, and the “let’s just ask them everything” approach was taken. Keep it small, keep it simple, and limit yourself to about 5 questions, and never, ever, more than 10 questions for a business-to-customer survey (that includes if your customers are businesses). Having too many questions will cause low response rates, and you’ll miss important feedback - it will often be the case that the people who are frustrated with your business will not bother to fill out your 20 question survey, yet these are often the very people you want to hear from. (Oh, and by the way, a single question with 5 sub-questions counts as 5 questions!)
I should note, that in the case of academic studies, this first problem often needs to happen, where a properly formulated research question may need lots of control questions and so on, leading to a huge number of overall questions.
The second mistake I’ve seen in business’ surveys is the “and just one more thing” approach. This is related to the above, but aims to trick the user into filling out more information. The customer will fill out the one-page survey, submit, and then… get asked to fill out a few more questions. After all that, they will submit, and then… yet another page. This again is poor survey design, leading to a poor user experience. Think about the reliability of the answers to the later few questions, when you have been annoying the customer for the last 15 minutes with “oh, and another thing”.
The second set of metrics relates more internally – how your business is going: What are the expenses? How much income is coming in?
This used to be quite hard to keep track of and visualise, but modern accounting packages are making this easier and easier. I can now bring up my Xero page, and see who has paid, how much I can expect to be coming in next week, what my overall expenses are, and then drill down to see the detail of all of those. Software such as this saves lots of time and problems related to “guessing” the overall status of your company, and saves lots of expense in chasing up the details.
Accurate bookkeeping can seem like a tedious affair, but can make the world of difference when looking back and projecting forward. This, of course, is true for most record-keeping, but it is critical for businesses to thrive.
In addition to the legal requirements though, there are many types of reports that you can do to gain better insight into your business. One great example is a cohort analysis, where customers are broken up into different groups (such as “month they signed-up” or demographic), and reported on, based on their spending and engagement with your company. This often gains better insight than looking at your customers as one big group. For instance, if the customers you gained last year no longer use your product, you have a retention problem, even if your overall number of users is going up.
In many cases, the results will match your intuition about how the business is going. After all, it is your business, and you know how it is run. However as your business scales, it becomes harder to keep track yourself and more important to use summarisation reports to get a sense of where to go.
Finally, it is really important to remember that data analytics is only as good as the people using it. Good analytics is driven by expertise in algorithms, expertise in application, and expertise in delivery. However, the most important person is the end-user, the client, who will not only be using the end results, but also asking the right questions early to guide the analysis.
At dataPipeline, we can definitely help with choosing and applying the right algorithms, but we pride ourselves on integrating your expertise into the process. Let us be the technique experts, but you are the domain expert. If you would like to work together on a project, feel free to contact us anytime at email@example.com, or call on 0430 013 554.Image attribution