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To watch the video recording of this episode, click here
This week on the Coders’ Startup, Carter “The Marketer” Johnson returns from Mexico to add his knowledge and experience to our discussion of business analytics.
You may be familiar with analytics in the form of the entrepreneurial mantra, “Know your numbers.”
This phrase is frequently used in advice from successful business leaders, to the point that it is drilled into the heads of beginning entrepreneurs. But even Carter and I–entrepreneurs with years of experience under our belts–sometimes fall short of the goal.
The biggest challenge of analytics is figuring out a consistent process to gather the information, record it, analyze it, and then make strategic decisions based on the analysis.
Let’s start with the first step in the process.
Track Your Numbers by Hand
On first thought, it may seem like using an automated process would be the best way to gather and record information for your analytics. After all, putting aside time to do the work is one of the hardest parts.
It turns out, though, that the numbers you pay the most attention to are usually the ones you manually record and put into a spreadsheet.
Carter recalls how he was required to learn many complicated equations and work them by hand while he was studying finance in college.
At the same time, he also owned a fancy financial calculator he had been required to purchase that could solve those same problems in two button presses.
His professors made him learn to do the equations manually because that’s the way he would come to understand the process.
When you do your numbers by hand, you actually know what the values are, and you begin to understand the flow of the process.
The first time Carter really understood this is when he got serious about his personal finances. Once he began breaking down his monthly expenses, he started to get a feel for how each item fit into the bigger picture.
The same principle applies to analytics. When you confront each piece of data individually, you see how it affects your business as a whole. For this reason, Carter is a huge fan of doing the process by hand before automating it.
Compare Your Analytics Month-to-Month
Carter and his employees typically create monthly reports for their clients. Using big data aggregators such as Google Analytics, SpyFu, and Google Webmasters, they pull statistics that are customized for the client and the specific campaign.
He has discovered with experience that it’s always a good idea to compare your reports month-to-month, or whatever your reporting interval may be. Come up with a way to quickly look at your current report and compare it with previous ones.
Carter’s business began to elevate its internal operations when his team created a format that allowed them to analyze previous reports, determining the goals that were set in those reports and whether or not the goals were subsequently met.
In the same way, you should be able to compare your own analytics from one period to another. Your numbers will be of much more use to you if you understand how they are changing over time.
It’s very important to be consistent with gathering your analytics. Set aside a specific time during the week to crunch your numbers, or link the task to a strong habit you already have.
For example, Carter compiles his analytics one hour before his weekly team meeting. In this way he tacks a new habit onto a preexisting habit, and the combination makes sense because he will have the data he needs for the meeting.
Dive into Google Analytics
We’re going to make the assumption that if you’re listening to this podcast, you probably have an online business or are planning to start an online business.
Therefore, you need to have an account with Google Analytics or a similar tool because you need to track your traffic, visitor demographics, and more.
If you are familiar with Google Analytics, you may be aware of the Goals section within the app. In this section, you can set up a workflow for any kind of goal you want to pursue, such as a conversion goal or e-commerce goal.
The Goals and E-commerce tools built into Google Analytics give you amazing opportunities for analyzing your data.
Other programs like LeadPages allow you to track conversions, but sometimes just knowing someone converted is not enough information. In Google Analytics Goals, you can additionally view the demographics of people who converted, such as age, gender and location.
This kind of information can be incredibly powerful, informing your marketing and your methods of engaging your target audience. Perhaps you thought your market was 18-year-old females, but your analytics reveal it is actually 65-year-old males.
Although this is certainly an unlikely scenario, the results of your analytics would alert you to the discrepancy between your perceived and actual audiences.
Here is another application of knowing your demographics: if you know the countries, states or cities in which the majority of your customers live, you can advertise specifically to those locales. This should theoretically increase your conversion rates.
My own analytics have shown that the majority of my sales are in the United States, with the top three states by revenue being California, Florida, and New York.
Based on this information, I can maximize my profit by advertising only to these states, or even to certain cities within these states. I could also go a step further and use my customer list to create a look-alike audience on Facebook (as explained in Episode 41), but only retarget people from the look-alike audience who live in California.
This would most likely be a hyper-responsive segment of the audience, and my cost per lead acquisition would drop dramatically due to fewer wasted impressions. Therefore, using your analytics to determine who your audience is and where they live can be extremely profitable.
Getting Started with Your Analytics
As I said above, set up an analytics tool if you haven’t already. Then dive into the tool and start tinkering.
If you don’t know how to use the app, browse through any instructional videos or documents that come with it, or consider taking a course on the software. You could even search YouTube for tutorials.
To get started gathering your numbers, you will have to identify what you are going to track and figure out how to consistently track it. Create a schedule and be serious about sticking to it.
Start with your most important metric. If you are trying to acquire users, track user acquisitions; for revenue, track sales and conversion rates. Whatever you think is the first key to the success of your business, track it first.
Once you have that under control, identify your next most important metric and begin tracking that. Continue in this fashion until you feel confident you are tracking everything that is important. If it turns out you were wrong, change your criteria and start over.
Do your analytics with pen and paper first so you learn to understand how all the pieces of data interrelate. Once you have a good feel for the process, you can begin using advanced software.
Book and App of the Week
Book: The Harvard Business Review is technically a magazine, but it’s still a great source of information if you’re interested in business. The magazine features articles on fascinating trends in the business world as well as in-depth case studies, which Carter loves because he finds it easiest to learn by hearing about things other people are doing.
The magazine has subsections for topics such as finance, marketing and technology, which is nice if you’re only interested in certain subjects. If you prefer to receive your information audibly, you can check out the HBR IdeaCast podcast, which is also divided into different areas of interest.
App: Brain.fm comes as a recommendation from entrepreneur Noah Kagan. It is a website dedicated to playing music in the background that will increase your productivity. Noah Kagan says it works for him, so I tried it, and I discovered it also works for me.
What you hear is more like ambient noise than music, and it somehow focuses you. You begin by building a profile that supplies the software with some basic information about you (e.g. moody, easily distracted), and then you choose whether you want to work, relax or sleep.
The music plays in 30-minutes chunks. Eventually you stop thinking about hearing the music and just get in the flow of your work. It is apparently based on scientific research regarding neurochemistry, and you can try it for free!
That does it for our conversation on analytics. We hope you learned a few things about the benefits of knowing your numbers and how to make business decisions based on them.
Carter and I may be discussing Instagram in our next episode, as Carter is now 100% onboard with the app and thinks our listeners’ businesses could benefit from using it. Time will tell!
Harvard Business Review website