Marcus Richards
As a business, you have to be a reactive decision-maker. This means all business decisions need to be based on data analytics. Following consumer behavior through data is the best way to improve your sales strategy and lead your company to success.
“Without big data analytics, companies are blind and deaf, wandering out onto the web like deer on a freeway,” mentions Geoffrey Moore, author and consultant.
If you’re a new business owner, you need to understand how to collect, analyze, and use data to your advantage. If you want to expand and grow, data will be your best friend. Keep reading to learn everything you’ll need to know about using data analytics as a new business owner.
How To Collect Data
Before you can start analyzing your data, you first have to collect the data. One of the most common ways to do this is using a paid program or Google Analytics. These programs will collect the data for you, so you can use it as you see fit.
“Data is the currency of understanding. The value it holds in technology is far beyond any financial currency,” points out Natalia Morozova, Partner at Cohen, Tucker & Ades Immigration Law Firm.
Once you’ve collected your data, you need to interpret it. If you are not used to reading the type of data that data collection programs provide, it can be complicated to navigate. However, the information provided is incredibly valuable, so you need to prioritize finding a way to interpret it.
How To Analyze Data
If the jumble of numbers and graphics that Google Analytics provides overwhelms you, consider hiring someone to compile the data into an easier-to-read format. Outsourcing might be your best option if you don’t have someone on your team who can do it for you.
“You can collect all the data in the world, but if you can’t interpret and apply it, then it has no use,” says Maegan Griffin, Founder, CEO and nurse practitioner at Skin Pharm.
There is a wealth of knowledge hidden in the data you’ve collected. Once you can make sense of it, you’ll find information such as who is looking at your site, when they are looking at your site, where they spend their online time, what they searched to bring them to your page, and much more. You will also find information like how well ads work to funnel traffic to you and how many returning customers you have.
What To Do With the Results
So you have the data, and you’ve analyzed it. The next step is figuring out what to do with it. Data analytics are what you make of them, and it’s never a one-size-fits-all approach. The things that your company needs will differ from others in your field.
“Things get done only if the data we gather can inform and inspire those in a position to make a difference,” says Mike Shmoker, author.
Let’s look at how to use those analytics to optimize your sales strategy. From product pricing to customer retention, there is not much you can’t do through data analytics. Here are some of the best ways to use data to your advantage.
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Data Analytics for Product Pricing
One of the trickiest aspects of running a business is deciding on product prices. Prices that are too high could drive away customers, while prices that aren’t high enough could affect your bottom line. To get your product prices right, you need to use data analytics.
“Product pricing should only be done after extensive research and data collection. It’s not something you want to mess up, as the results of that mistake could be catastrophic,” advises Matt Masiello, Chief Marketing Officer of BabyBuddha.
Product pricing requires constant analysis of the market as well as competitor behavior. Depending on the specifics of your industry, this could include factors like customer preferences and price elasticity. Having this information makes it easier for you to make informed decisions when it comes to pricing.
Market/Cost/Value-Based Pricing Models
A market-based pricing model is one of the most popular models for businesses, as it accounts for several different factors. Some of these factors are market conditions, competition behavior, and forecasted demands. A cost-based pricing model factors in material costs, labor costs, and other expenses that contribute to the value of the product.
“The cost of your products should comprise several important factors. In fact, it’s impossible to overcomplicate this process. The more data you apply to it, the better the results,” suggests Jason Zhang, CTO of Tapin.GG a gaming company specializing in Valorant boosting.
Value-based pricing, on the other hand, relies solely on consumer perceptions about the quality of your products. This is typically done by analyzing customer data and trends. When it comes to which pricing model to choose, that will depend on the nature of your business and the market you are in.
Competitive Pricing
Awareness of competitors’ strategies to price their products is essential when determining your own prices. When you track and analyze your competition’s pricing models, you can better identify opportunities to adjust your pricing in response.
“Staying competitive in the sales world is akin to staying afloat. The second you stop being competitive, you sink,” mentions Seth Besse, CEO of Undivided.
Adjusting your pricing accordingly can lead to increased sales, higher profits, and improved customer satisfaction. Using data analytics to set your product pricing is vital to help increase sales and improve the longevity of your business.
Knowing When To Use Discounts
Setting your standard prices can be challenging enough, but managing promotional discounts and pricing is an entirely different task. Discounts and sales require their own set of careful planning and analytics. You should also analyze customer data in this process to identify price sensitivities.
“The more data you collect, the easier decision-making will become. If you want to be confident in making difficult decisions, start with analytics, and then you have information you can build upon,” says Shaunak Amin, CEO and Co-Founder of SwagMagic.
Discounts and sales, when used correctly, can help create a healthy profit margin. However, you need an in-depth understanding of your product’s competitive pricing history. If you are just starting out, you may not have data on this yet. But keep in mind that this process will become easier as you progress and collect more data.
Using Customer Data Analytics
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While data analytics is a more encompassing term for a broad range of data collected by companies, many businesses use customer data analytics, too. Customer data analytics focuses on data collected specifically relating to the customers and how they interact with a brand’s product. This data can lead to better insight into customer usage and adoption.
“Customer data is key to understanding the people who buy your products. When you start to understand them, you’ll become a more effective salesperson,” mentions Brandon Adcock, Co-Founder and CEO of Nugenix.
Customer data analytics are used for a variety of reasons. One of the most significant, perhaps, is its effect on customer retention. In addition to customer retention, data analytics also impacts customer acquisition, which is important for improving your sales strategy.
Finding New Opportunities
Data analytics can help you discover new opportunities for your business to expand. Using the data to identify patterns and correlations can help you uncover insights that give you a competitive edge in your market. Whether for new product development or expanding into a new market entirely, use the data to your advantage.
“As a business, you should never stop seeking new opportunities. Let your customers pave the way for you to find new opportunities and business deals,” suggests Miles Beckett, Co-Founder and CEO of Flossy.
If you continue to collect and analyze data over time, you will have better visibility and understanding of your market. Stay ahead of the competition and keep your eye out for new opportunities by using data analytics.
Driving Traffic
Web traffic is one of the first things people will look at when analyzing data. Knowing the volume of monthly visits and where they are coming from can greatly improve your sales strategy. This data will also include demographic characteristics, including age, gender, language, occupation, income, and the type of device used.
“Find where your customers spend their time online and determine how you can redirect them to your page. If you cater to them, they will cater to you through an increase in sales,” says Andrew Chen, Chief Product Officer of Videeo.
This information is easy to apply to sales techniques. For example, if you find that most of your customers purchase your products via mobile devices, you can adjust your website to run better on these devices. Using data to cater to your audience should be a priority for your sales strategy.
Purchasing Behaviors
It is constructive to know about the purchasing behaviors of your customers. The data will tell you which products are purchased the most and which are purchased the least. It will also show you which products end up in customer carts but aren’t purchased.
“Learning about purchasing behaviors can help your business excel or fail. If you listen to the data, you can better determine where to put your money. If you don’t listen, you can end up with a whole lot of wasted product,” mentions Michael Klein, CEO of Herbaly.
This information helps determine inventory and supply needs. You can also use it when developing new products or variations of your existing products. Overall, understanding this behavior is essential to increasing your online sales.
Elevate Your Sales Strategy
Use this guide to help you form your sales strategy based on data analytics. However, keep in mind that brand-new businesses will have limited data to work with, so market data will be your go-to until you become more established. Good luck, and happy analyzing!
