We’ve written previous posts in this series on measuring what matters in a down market and using data, not moving data. It’s important to understand the key metrics you should be focusing on, and how to get your analytics personnel directly involved in the business, so everyone is pulling in the same direction.
If your organization is aligned on those needs, it’s time to take action with data.
Create a data-driven culture
Our advice in the last piece was focused on getting your analytics personnel involved. Aside from getting what you paid for from some of your most expensive personnel, it’s also necessary because most companies are struggling to be data-driven, and you need to be realistic about what becoming more data-driven actually looks like.
In a survey of 9,000 employees around the world, Accenture found just 25% of employees believe they’re fully prepared to use data effectively. Only 21% are confident in their data literacy skills, measuring their ability to read, understand, question, and work with data.
It’s not just a problem of skills and training. Only 37% of employees trust their own decisions more when they’re based on data. Just 48% say they frequently refer to their gut feeling, rather than data-driven insights, while making their decisions. Access to data does not guarantee data-driven outcomes.
Onboarding a BI tool or hiring a data analyst isn’t enough. People make data useful when they can bring their experiences and specific knowledge to problems data is tasked with solving. Without a commitment to a data-driven culture, there will always be unrealized potential.
Pair people with strong analytical skills with people who understand the business context.
Consider the example of examining a report on customer churn rate over the last quarter. Someone on a customer retention or sales team will likely have more context on why Customer X stopped doing business with your company. That expertise is needed when trends are assessed for actionable retention strategies.
When you have the right people working on projects involving data, you get better results and you create a much easier path to buy-in for data-driven operations. Make sure your teams believe in the process.
Fill in any gaps in financial modeling
Financial modeling can seem complicated and even intimidating, but it’s also critically important. Here are a few projects to get moving on sooner rather than later.
Know your forecasted burn rate. Know how much cash runway you have. With the economy faltering, you need to understand what the future looks like from a cash perspective. If you have less than 18 months of runway, you should be considering actions that can increase that runway.
Understand all options for increasing runway. Your executive team and all decision-makers need to know what the options are and the tradeoffs for those decisions. That doesn’t mean you must act on every single option now, but you need to understand their impact if you’re concerned about runway. Know how much time they’ll buy you and any cascading effects on revenue or operations that you’ll have to adjust for.
Monitor your leading topline indicators weekly. You can’t afford to miss any trends in leads, user engagement, sales pipeline, etc. If new business grows more slowly than you thought it would or if customer churn is higher than you expect, you’ll need to react rapidly — because you may need to update your cash burn forecast. Pre-plan with your executive team what actions you’ll take if you’re straying from your plan.
As you can see, these financial models immediately start impacting larger decisions that touch multiple teams. You can’t delay these projects and have a clear view of your business.
Identify when and where to make cuts — and where to shift spending
Instead of telling each of your team leaders to cut X% from their budget and calling it a day, make sure these decisions are based on data. While your team leaders’ intuition will likely point to some smart options — especially if they’ve been keeping an eye on their own metrics consistently — deliberate choices here will help you keep successful campaigns projects running while minimizing trade-offs.
Get your marketing metrics in order and run consistent campaigns
To many companies, marketing spend is a seemingly obvious choice for cuts. It’s often expensive, and many campaigns are complicated (and even difficult) to effectively assess. But don’t forget marketing is driving revenue, too. Whether you’re B2C or B2B, marketing is driving awareness, sourcing leads, and influencing consumer actions.
Start by assessing your existing marketing campaigns. Even if you’ve been tracking your campaigns consistently, now is the time to put the effort in and get your data and metrics in shape. You need to know how your spend is actually performing.
Identify lifetime value (LTV) for your customers. Also known as customer lifetime value (CLV), LTV tells you how much revenue to expect from your customers. You can (and should) segment this for different channels, because not all customers fit the same profile.
Understanding LTV is going to let you identify your most valuable customers, which you need to prioritize retaining. Examining LTV and acquisition costs will also show you less profitable channels and campaigns, which are potential areas for cuts if you need to decrease spend. If you’re expecting less revenue from a channel and can accurately assess these costs, you have the data you need to make a decision.
What does this look like in practice? Just because, let’s say, Facebook is currently a profitable marketing channel does not mean you should assume it’s the correct option for increased spend, especially a proportionally large increase. Your bets should be small and informed.
Experiment intelligently. If you still have the ability to run experiments (if you don’t have product-market fit, we think you likely need to be experimenting still), you need to be making small bets, interrogating the results as much as possible, and taking appropriate follow-up action.
One aspect of this that can be hard to quantify is scouting your new opportunities effectively, so your small bets are made in places that have a realistic chance of success. Don’t say yes to a newsletter ad because it’s cheap and in your general space of business — make sure the data backs it up. Ask for metrics on the audience and know what you’re paying for. If you’re looking to run content ads somewhere, like LinkedIn or a site relevant in your space, make sure you’re finding out which types of content perform — and what performance looks like — before you commit. All of this requires someone with a strong business context to guide these opportunities.
Take care of your loyal customers
Customer churn or a reduction in repeat business should be one of your largest concerns when the economy is faltering. You can’t afford to lose business unnecessarily when it’s likely going to become harder to acquire new spend-conscious customers.
Tune into any data you have about your customers. If you’re selling something like software, it should be easy for you to access user data and see how people are actually using your product. This helps teams focused on customer retention, but it can also reveal strengths and weaknesses of your product that your product development and/or engineering teams should know about. When you consider the resources you need to continue to build the product customers want, you should be turning to this data. Don’t be afraid to stop production of a feature if it will lengthen your runway.
If data about the usage of your product isn’t available to you, you should still have a great deal of data about your customers. Ask product marketing (or whoever is communicating with your customers) to look at this data and build flexible strategies. An example would be preparing a promotion, like an exclusive flash sale, for loyal customers.
Reward loyalty and create evangelists. If you’ve already got some sort of customer loyalty or referral program, you’re already on the right track here. If your product is delighting customers, do what you can to create momentum. A product newsletter in the brand voice your customers trust with a call to action like “refer a friend” can be a low-risk, cheap way to acquire new customers.
Arm sales with the context to close deals
The last thing you want is a sales team operating in a silo, removed from marketing, customer, and product data and relying on what has worked in the past. They need to be working hand-in-hand with other teams and equipped with the tools to succeed in a changing spending environment.
Revisit and personalize your cadences. Sales teams always strive to provide relevant information in a convenient way for the person they’re contacting. Make sure the data backs up and informs their intuitions. Lead sources that you know are higher intent probably warrant a different approach than leads you’re getting from channels that close at a historically lower rate.
Update or create new, relevant sales materials. Identify obstacles to closing deals and give sales teams everything they need to overcome those obstacles. Perhaps it’s new one-pagers your team leaves behind at the end of a conversation comparing the costs of your product or service to an alternative. Maybe it’s arming sales with updated talking points about the cascading benefits of what you’re selling. What matters is using data to identify a weakness and addressing it as soon as you can.
Arm yourself with the tools to take action
As you deliberately examine spending and experimentation across departments at your company, the end goal should always be to find opportunities to strengthen your position. Your best shot at uncovering the opportunities unique to your business is getting the right people working with the data.
Cutting waste is easy. Strategically cutting something else, or foregoing a project, is more difficult. If you’re identifying data-supported trade-offs, it’s going to be much easier to streamline these choices and make the right ones.
And if you haven’t yet conquered product-market fit, prepare yourself for the small experiments that can help your business become more efficient.
Ready to tackle all these data projects? Learn more about how Mozart Data’s out-of-the-box modern data stack can quickly help you get up to speed, at a fraction of the cost of other options.