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Ep. 82 - You Are One Data-Driven Decision Away From Success with Meaghan Connell & AJ Yager

Meaghan And AJ are the founders of Praxis Metrics, a business intelligence agency with a unique advantage to provide big data insights, at a fraction of the cost, and with a much faster time to value for smaller to medium sized businesses. 

They have built accurate dashboards and solved data problems for companies like Organifi, ClickBank, Agora Financial, Black Rifle Coffee Company, Air Arabia, Encompass Health, Scribe Media, Lo & Sons, Outdoor Voices, Digital Marketer and many more. 

Meaghan is an international speaker and expert in reducing resource waste by capitalizing on information intelligence. 

AJ is a data-driven digital marketer and productivity expert who uses data to drive new behavior in people and companies. 

In This Conversation We Discuss: (50 Characters)

  • [00:00] Intro
  • [01:15] Meaghan elaborates what Praxis Metrics do
  • [03:02] Chase makes it simpler for store owners
  • [04:04] AJ’s race car analogy
  • [05:01] “The who over the what” analogy
  • [06:06] Defining Business Intelligence (BI)
  • [06:44] As business owners, be excited about numbers
  • [07:03] Gut decisions are data-backed decisions
  • [09:15] Sponsor: Klaviyo klaviyo.com
  • [09:45] KPIs that will improve by analytical data processing
  • [12:15] Praxis Metric’s realization towards profitability
  • [14:37] Can data be too small for analysis?
  • [16:32] Start tracking data now, even if you have no use yet
  • [17:55] Chase and AJ doubling down on tracking data
  • [20:02] The importance of naming conventions
  • [21:35] Make a “data dictionary”
  • [22:12] You don’t have enough data when starting out
  • [23:29] Sponsor: Gorgias gorgias.link/honest
  • [24:17] Moving from “spreadsheet hell” to professional help
  • [30:11] Sponsor: Postscript postscript.io/install
  • [30:43] The transition from outsourced to in-house data team
  • [32:16] “Left-field” insight stories
  • [36:10] Take advantage of data now

Resources:

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Transcript:

Meaghan Connell  

It does not matter [the] size of your team; It does not matter the size of your revenue. Data exists at all levels and right now, big data is not reserved for enterprise anymore.

Chase Clymer  

Welcome to Honest Ecommerce, where we're dedicated to cutting through the BS and finding actionable advice for online store owners. 

I'm your host Chase Clymer, and I believe running an online business does not have to be complicated or a guessing game. 

If you're struggling with scaling your sales, Electric Eye is here to help. To apply to work with us visit electriceye.io/connect to learn more. Now let's get on with the show.

Alright everybody, welcome back to another episode of Honest Ecommerce. I'm your host, Chase Clymer coming to you from a ridiculously rainy Columbus, Ohio today. 

I don't know why it's raining so much this week. I am not a fan of it. 

But joining me on the podcast today are an amazingly smart group of people. The 2 founders of Praxis Metrics, a business intelligence agency. 

They have a unique advantage to provide big data insights at a fraction of the cost with much faster time to value for small-to-medium-sized businesses. Welcome to show Megan and AJ. 

Meaghan Connell  

Thanks for having us.

AJ Yager  

Hey! Great to be here.

Chase Clymer   

Alright. So, the one sentence how you want your business to be introduced. That's like... I feel like agencies or businesses, they work on that for so long.  

And then it usually ends up being pretty long. And there's a lot of stuff going on really quickly. So I guess, explain what that sentence means. Most importantly, "much faster time to value." What does that mean? 

AJ Yager  

Here's the thing. There's a ton of different dashboards out there and you can just turn them on and they're supposed to instantly work. The problem is, if they are really fast --time to value-- then it's usually not very valuable.  

You have to sacrifice either speed for quality. And so what we do is we actually work building more custom dashboards. But the reason that we have a fast time to value is because we've worked really specifically in the ecommerce niche for a while.  

So we've done over 150 dashboard implementations for different brands. And what that means is we've learned from other people's experiences, so we don't have to reinvent the wheel. Every single time we build a new dashboard.  

So we'll have a brand new ecommerce company who comes in, who's never had a dashboard before, and they want custom analytics like "What is my customer acquisition cost in comparison to my lifetime value, but let's filter out all of my COGS."  

And we're like, "Great, it's not like we're figuring that out for the first time. We've done that for 20 other clients." And so we can leverage our existing knowledge and experience rather than starting from scratch every time. And that reduces that time to value.  

So instead of it taking 3 to 6 months to figure it out, we can adjust... We can just do it in a couple weeks. And then you get all of this custom insight and knowledge without having to spend that time doing it. Does that make sense? 

Chase Clymer

It makes a lot of sense to me. But I'm going to explain how it makes sense to me. And you can correct me because I'm sure I'm going to make some assumptions that I think a lot of listeners might also make.  

So the key differentiator here, I believe, is that Praxis isn't a dashboard solution. You guys partnered with many data studios and data dashboards, and you understand which ones work best for which industries.  

And you guys are actually implementers, you are technology... You're very smart with these platforms and you know how to implement it quickly for these clients so they're not in there pushing, and prodding, and poking buttons, and connecting the wrong things, and breaking it, and most of the time getting frustrated and blaming it on the technology, when it's actually the lack of understanding of how it works.  

So you bridge that gap between getting them these cool dashboards that work with these powerful solutions and you guys having the technical expertise of having implemented this dozens of times. 

AJ Yager  

It's pretty good.  

Meaghan Connell   

Yeah. Perfect.  

AJ Yager   

Right on. 

Meaghan Connell

(laughs) Yeah. AJ likes to refer to it as like handing somebody a racecar. Car analogy. 

AJ Yager

Go ahead, I'll let you. 

Meaghan Connell

So basically, if we were to hand somebody a race car right off the street, they probably have some basic skills, but they're not going to be able to handle it around the curves, they're not going to know when to do the gas and brakes to really go around the race track as fast as possible.  

And so, Praxis, we act as --depending on how experienced our clients are-- we can either act as a coach where we sit in the passenger seat. We are there coaching saying, "Okay. So you're letting off the brake too early. Or you're going into this corner too fast. Or you're going in too slow."  

And we can coach them to utilize the vehicle or the tool in a way that helps them get the results that they want, which is being faster. Or if there's somebody who doesn't have that experience, doesn't have the know-how, and doesn't want to learn right now and they just want the results, --they just want that win-- then we can sit in the driver's seat and get them to that finish line. And then eventually hand it over in training, right?  

AJ Yager

Yep.  

Meaghan Connell  

And there's so many amazing tools out on the market right now. We didn't have to go and invent a new one. There's hundreds of millions of dollars invested into tools like Tableau, Power BI, Looker, Sisense, Domo, Grow 

But there's so many business owners out there or CMOs or growth strategists who understand what action to take from data, but they're not necessarily a data scientist 

And that's the last thing that you should be investing your time into learning. If you're running a business, you shouldn't be out there learning SQL coding. You hire other people to do that so that you can get the insights you need to make decisions. So that's what we do.  

We take out all the nerdy aspects of it. We take that onto our plate so that the people leading and running the companies can do their job efficiently and effectively with the information they need, rather than going deep into the rabbit hole and doing something that's not their true [specialty]. 

AJ Yager 

Yeah. The BI implementation success really came down to "the who over the what". So not so much important as the "What platform do I go on?" But the "Who's gonna build this for me and take this across the finish line." 

Chase Clymer  

Yeah. You just said a buzzword there. The "BI" What does that mean? You gotta dumbed down for this audience? No offense to my audience.  

AJ Yager 

Business Intelligence.  

Chase Clymer 

So, Business Intelligence.  

AJ Yager  

The numbers in your business. That's all it means. 

Chase Clymer  

Yep. So the numbers in your business, I want to really, really just harp on that. If you aren't measuring it in your business period. "It" can refer to almost everything.  

If you're not measuring it, it cannot be improved. 

AJ Yager 

Yeah. So how are you making decisions now? Is it a gut reaction? Is it just based on your bank account? Is it a coach telling you what to do? Knowing you're... Obsessively knowing the numbers in your business will dramatically increase your competitive edge. 

Meaghan Connell   

Yeah. And the thing is most people that we talk to glaze over instantly when we start talking about data, because people didn't study math or science in school. --and they're really creative business owners or the marketers-- and they're not really excited about the numbers. Really data is simply information.  

So if you think about even going on from your gut, it's not really going off of nothing. It's going off of instinct, which is developed over time. And you, being exposed to different situations that have led you to believe that certain inputs create certain outputs.  

So let's say that I'm walking down the street and I get mugged by somebody who is wearing a trench coat. And that happens 10 different times in my lifetime. Well, naturally, as I'm walking down the street in the future, if I see somebody in a trench coat, I'm naturally going to assume they're going to mug me.  

And I'm going to take action to cross the street or not go down that alley to avoid these painful outcomes or to go towards pleasure. And it's the same thing with our gut instincts in business.  

If you're a marketer, and you've seen this copy, work over and over and over again in your history, and then you're going to go and put that out into your new landing page or whatever. And so data is already driving your decision, it's just through experience.  

So nowadays, the thing is, all of our platforms are capturing more pieces of information than you're currently aware of. And so it's just... It's all out there and it's all available to you but we can't process it all on our own.  

And so we can leverage tools to aggregate that together to give you more information about what is and isn't working.  

And so that's all we do is we help take all of these insights --that would take you forever to do it manually-- and we automate it, distill it, so that they can be refined down to the things that will help you make better decisions.  

The problem today is that,  --especially over the last 2 months-- the entire market has changed. Every day... This is true just over the last two years.  

The modern consumers are changing the way that they consume information, the way that they are reached by ecommerce brands.  

And so what you knew 2 years ago doesn't necessarily apply to today, so we need to have more in-time, real-life data that's being brought to us in real time so that we can make better decisions that's applicable to today's modern market, not just what we knew from the past. 

Chase Clymer 

Yeah. 

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Chase Clymer  

There's something that you mentioned earlier that I want to go back to... The analogy about getting mugged and just the difference between and pain and pleasure from a statistical data perspective.  

What are some of the main KPIs that are going to be improved by putting this level of thought and process behind the data within your business. 

AJ Yager   

(laughs) Well, everyone... Every single KPI you can imagine can benefit from visibility and from analysis. So one of the biggest things that we've had... Well, let's see... I would say there's probably 5 different major --especially in ecommerce-- major KPIs that I think have been at the forefront lately. Inventory is one of them.  

There's a lot of our clients that have a lot of inventory on hand. And that is revenue --that is cash-- that is stuck in this inventory. And so by going and analyzing the inventory on hand, matching that up with the recent trends and purchases, as well as matching that up with promotions and how that impacts sales, you can then switch over to a just-in-time inventory system, where it reduces your cash on hand and it increases your ability to invest in marketing, right?  

So that's just one example. Another one, AJ? 

AJ Yager

Lifetime value. 

Meaghan Connell  

Mm-hmm. 

AJ Yager   

It always comes back to lifetime value. How much can you afford to acquire a customer and truly know that cost and know your true lifetime value [for] more than 30 days. So 30-60-90 [days], up to six months or further. [It] depends on the business.  

Meaghan Connell   

Yeah. So by understanding and reviewing these numbers... Because it's constantly in flux. There's too many of our clients that come to us and they say "Well, I know my... let's just say my AOV for..." 

AJ Yager  

Average order value.  

Meaghan Connell   

Yeah. Oh yeah. "...my average order value for the last year."  

But if you can't slice and dice that and tell me "Well, what's your average order value for people who come in through paid media or cold media efforts, versus those who come in through affiliate sends, versus those who come in and purchase your bundled SKUs, versus your individual SKUs."  

So just understanding one aspect of your number does not mean you really understand it in-depth. And so what we want to do is give you all of the.... All of this splintering, all of the variations of that number, because it really tells a bigger picture.  

So really any KPI that you can think of in your business: profitability... Actually, here's a good example of profitability. So even in our company, we always say that any client that we work with is one data-driven decision away from exponential growth, because we've seen that happen so many times.  

Even us as a company, we grew exponentially because we ended up... We were co-founders and it was like year 2 or 3 in the business. And at the end of the year, we did a deep dive analysis into our numbers.  

And really, we realized that we were operating at a 2% profit margin. And as entrepreneurs who are hustling or working overtime, we were like, "Man, this isn't worth it." (laughs) And we're giving everything away and we're not really benefiting from this and we said our profitability is so low.  

And and as we dug into these numbers and into the data, what we found was that we had been over-extending ourselves and really, we were driven by purpose and so we were serving our clients. We were over -erving our clients and giving away a lot for free and we weren't charging people for hours that we were working. And... 

AJ Yager  

I think it's a startup mentality... 

Meaghan Connell  

Yeah. 

AJ Yager 

...that most SMBs could relate to, especially service-based businesses/agencies where it's like, "Look, we're gonna over-deliver and just acquire as many great customers as we can, get the testimonials, and then turn that into more business. 

Meaghan Connell

Right. In advance. Yep.  

AJ Yager   

At what point do you stop doing that? We didn't question that. We weren't data driven in terms of that.  

Meaghan Connell 

So what we did is we exposed that to our entire team. We said, "Here's the problem. Here's our goal. Our goal is to not have 2% profitability..." 

AJ Yager  

(laughs) 

Meaghan Connell  

"...How can we get there?" And we determined that there were just 3 different action steps that we could take in order to increase our profitability.  

Within 3 months of implementing action around these KPIs that we were tracking, we went from 2% up to 33% profit margin within 3 months. And it was small adjustments that we made because we had the data.  

And because we were able to identify what levers would impact that outcome. And we've seen that happen time and time again with these ecommerce brands as well, not knowing your lifetime value of your customers, not knowing your retention rates based on what initial products people purchase, not knowing your attribution 

So any KPI in the business can be optimized by monitoring, then reviewing and putting together a hypothesis. "What are we going to go do to change this?" And then reviewing it once you're implementing these changes to get new data and see if it's working or not. 

Chase Clymer  

Absolutely. So during that deep dive within a business, I believe, some businesses may be a bit too small. They might not have enough data to do this properly.  

Is there a certain threshold  --a certain amount of data per se-- where you can make realistic statistical decisions from? How does that work? 

Meaghan Connell   

It definitely varies. You're right. When we look at statistical analysis, there's a certain threshold.  

But even if you're a startup business, every day of orders and transactions, you can be tracking your average order value and your customers retention rates from the beginning.  

And that... It's still helpful to analyze that from day one. So I wouldn't make big decisions until I have maybe 1000 transactions or 1000 visitors. There's certain decisions I wouldn't wait or I would wait to make based on data. But in the beginning, even just analyzing and understanding it will give you more context for what is and isn't working. 

AJ Yager

Yeah. Start with the data that you do have. I think this is for SMBs or people that are just getting started. It's not about the complexity or the amount of data, it's "Are we tracking the right things in the business right now that are going to move the needle for us?".  

For example, it's usually the beginning, return on investment, --ROI sales and marketing-- is most important for them, usually. But it's a matter of "Are we tracking the right things consistently, with as little human error as possible, with the tools we do have now?"  

And whether you get into what we call "spreadsheet hell" or not, that's okay. It's a negative word but it's actually a good place to be when you're starting off.  

Just use spreadsheets for now. You don't have to get into business intelligence tools yet. Just make sure you're tracking the very most important parts of your business --whether that's agency or ecommerce or whatever-- and start there.  

Then you're going to be able to upgrade down this data maturity roadmap that we would like to talk about. 

Meaghan Connell 

Well. And before we move on to that, I think that you hit the nail on the head.  

A lot of our clients, in the beginning, you're not tracking everything that you should because you're like, "Well, I'm not going to go and do anything with this. I'm not going to go and hire a data scientist right off the bat."  

The problem is, though, when you wait 1 to 2 to 3 years, and then you are ready to hire a data scientist, that guy comes in there when... A lot of times we come in and we don't have data to analyze.  

So what AJ is saying is from the beginning, you need to set up that tracking and make sure that even if you're not using the data now, that you've got it somewhere. And that you're saving it and doing these historical saves.  

One of the biggest issues that we see or the biggest... I'd say one of the most prevalent issues we see is a lack of tracking for source data. Most of our ecommerce clients are just solely focused on transactions in the beginning... 

AJ Yager  

So Shopify for example. Shopify is great, but it's only got so much information. 

Meaghan Connell   

Correct. Or if they're running Facebook ads or Google ads. They're not tracking... They're not using UTMs. They're not using [the] Google enhanced ecommerce setting. And so a lot of our clients don't have that stuff set up because they're like, "Oh, we're too small."  

But then by the time they're big enough, where they can afford to hire an analyst, they don't have any historical data. And we end up coaching them to go start tracking these things now, so that then you are collecting the data. Does that all make sense? 

Chase Clymer   

It makes sense to me. And it frustrates me as an agency owner.  

Meaghan Connell  

(laughs) 

Chase Clymer   

Obviously, all we're doing is... "At the end of the day, I'm trying to help you guys make more money." Our clients over at Electric Eye, I'm trying to make them more money and I can't do it if I can't make informed decisions.  

And it frustrates me when I... Like you said, it's pain and pleasure. I'm trying to throw a dollar amount at why this is worthwhile to fix.  

But without the data, I'm just like, I'm literally pulling numbers out of thin air based upon my history as an agency owner and what's worked for other clients... 

Meaghan Connell 

Mm-hmm. 

Chase Clymer   

But I'd rather just show you with your own data/

Meaghan Connell   

For sure. 

AJ Yager  

Yeah. Yeah. 

Chase Clymer   

It's frustrating to me. But I guess maybe I'm a little bit more intelligent when it comes to technical stuff and implementing things.  

But seriously, installing Google Analytics and turning on enhanced ecommerce within Shopify is almost as simple as uploading a picture to Facebook. So I don't know why you guys aren't doing it. 

AJ Yager and Meaghan Connell   

(laughs) 

Meaghan Connell   

Amen. Preach! (laughs) 

AJ Yager 

Listen up people! And just to second that, just to piggyback off that is UTMs, which is... There's a free element in Google Analytics. It's called "Urchin Tracking Mechanism".  

And all it is is a link that contains information so that you can specifically... For example, Facebook ads, Facebook is a channel. But you want to know... If you have 30 different ads, you need to know specifically, did a customer come from one of those 30 ads? Well, yes.  

And UTM is that key to taking that extra mile. It's not a software cost. This is a discipline. It's a practice. And it's an organization structure.  

We have tools that are free that people can use to help track that and/or you can just use a spreadsheet. But it's about saying, "Hey, someone on the team needs to own this and be very consistent from paid media, to social media posts..." 

Meaghan Connell   

"Ads... Mail..."  

AJ Yager

"...affiliate..." Any marketing activity needs to have a source tracker on it. That is how you really win this game. You do what you just said. Google Analytics advanced tracking, make sure Google Analytics is set up by a professional, and then UTMs. All of that, combined with the current [trackers] that most of these SMBs have, it's a game changer. 

Meaghan Connell  

For sure. Well, and here's another thing. Not to derail that tangent.  

AJ Yager 

(laughs) 

Meaghan Connell  

But here's another thing that we find [in] every single client that we have to fix when we go in is naming conventions. There are so many clients that... They're doing...  

AJ Yager   

But explain that first. What do you mean by naming conventions?  

Meaghan Connell   

So in every aspect of the business... 

AJ Yager and Meaghan Connell   

(laughs) 

Meaghan Connell  

Products within Shopify, they'll have 10 different variations of the same SKU, but then there's not a consistency in the naming convention. And so when we pull it out, it's 1s and 0s on the back end for us. 

And if there's not something that says all 10 of these products are the same base product --like inventory product-- then we have to go in and clean that all up. Same thing when it comes to campaigns. A lot of our clients don't do TOF or BOF ortop of funnel/bottom of funnel and then they want... They have a question.  

They're like, "Well, how good are all of my efforts going towards the top of the funnel? How is it converting?" And then they have no way to sort that out because they've never been implementing a strict naming procedure.  

So I think that's one thing that a lot of people miss in the beginning. It's just whenever you're creating anything new in any of your systems, make sure that you're utilizing some sort of standardized naming convention, so that any agency that touches it, any internal person that touches it, they all know what those acronyms are, or what this product names are, what those promos are, so that you can have that consistency across the board.  

Otherwise, it'll lead to a lot of "dirty data" in the future.  

AJ Yager  

And document. Documents [are something that] the entire company knows, where it's not in somebody's brain. 

Meaghan Connell   

Yeah. 

AJ Yager   

Who knows how long they're going to stay there. [If] something happens to them, whatever. You need to have documentation of what that is. And we call that a data dictionary.  

Simply a place that everything lives that defines what you're actually doing all your different technology stacks. 

Chase Clymer  

So you're telling me when I'm doing ads, my naming conventions of "Copy New, This One Final" aren't good? 

AJ Yager and Meaghan Connell   

(laughs) 

AJ Yager  

It's good. Could be better. 

Meaghan Connell  

(laughs) 

Chase Clymer   

Yeah. I think it goes back to what you're saying about using UTMs. It's the discipline behind it. 

AJ Yager  

Mm-hmm. 

Chase Clymer   

And then this is very top of mind for me. In some of those efforts... Going back to when you're a younger business, you need to trust in the process, per se, and don't get turned off by the initial results of anything. Because that's clearly not enough data to make any decisions. I think...  

Meaghan Connell  

For sure. 

Chase Clymer  

Yeah. I hope no one thinks I'm talking about them because I'm not.  

AJ Yager and Meaghan Connell   

(laughs) 

Chase Clymer   

This is just a general thing that happens with every small company. You're watching what's happening the second you throw something live for the next couple days. And trust me, your budget is not enough for there to be anything that matters from that data.  

Depending on how much you are spending on these efforts, or how big of a list or segment that you've got to play with. You're not going to have enough data really for the first couple days --even months sometimes-- depending on your budgets.

 AJ Yager   

Oh yeah.  

Meaghan Connell   

Oh, for sure. Yeah, we've got people who are changing directions after 50 clicks. [We're] like, "No, no, no. You have to have a sample size that's large enough to make decisions off of." You can monitor it and you can see the trends. Don't make decisions until you have enough data to see an actual trend. 

Chase Clymer 

Yeah, specifically Facebook. Facebook is smarter than everyone in the world so why are you going to fight it? Let it do its thing. 

Meaghan Connell   

Mm-hmm. Yeah. 

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Chase Clymer  

So I know it's gonna be hard to answer this. Is there like a threshold as far as business size? Or are we looking at dollars of revenue or sales a month? Or headcount?  

I don't know what the KPIs are to measure to understand when you need to start thinking about moving from "spreadsheet hell" into "You need a custom dashboard for your business." You need to tag in someone that actually knows what they're doing.  

Or is it more like there are certain pain points that are just top of mind at all times when it starts to make sense for people to make the switch from that spreadsheet to hiring a professional? 

AJ Yager  

It's a great question.  

Meaghan Connell   

Yeah. 

AJ Yager   

There's quite a few different things that make that up. 

Meaghan Connell  

Yeah. So because we've worked with so many different ecommerce brands, what we found is overarching themes.  

And I'm going to put a big asterisk on this right now, because we'll have companies come to us that do $200 million in annual revenue, and they don't have the very basics done. So this is definitely a recommended roadmap.  

But here's the foundation: no matter how small you are, if you are making money at all, tracking is your number one step. It doesn't matter if you just began.  

Making sure your GA is set up, making sure you're utilizing UTM, and making sure that you have SOPs --standard operating procedures-- around your naming conventions. That is foundational. Everybody has to do it. 

AJ Yager 

And making sure the softwares you are using is being utilized to the maximum capacity. 

Meaghan Connell   

Correct. Yeah. 

AJ Yager   

Know your systems. 

Meaghan Connell  

Yeah, don't skimp out on all those extra fields. Fill them out. Do it right the first time because it will be collecting data that will be valuable later on. That's the basics. Then typically, what happens is the next logical place that people go is spreadsheet hell.  

They'll start manually pulling all these things together, because not all the systems talk to each other. So they'll log into their 10 different platforms, pull out 10 different numbers, create this divided by this as a conversion... That is the next logical step.  

We see companies stay there anywhere from $1 million in annual revenue up till, --like I said-- $100 million - $200 million. But the place that you know that you've crossed that event horizon where you need more complex help, is when you are spending too much time in these spreadsheets. So it's...  

AJ Yager  

Wasting time. 

Meaghan Connell   

...costing you a lot. Yeah, it's wasted time. Or when there are critical business questions that you are trying to get answers to that you either can't or it takes so long to do it manually, it's not worth it. That's that tipping point.  

So for a lot of our clients, things like lifetime value, you can create an overarching calculation for, that even Shopify has one built-in.  

But when you're starting to get these more detailed questions from the CEO/CMO saying, "Okay, but when this type of avatar does these types of actions or has this customer journey, what is the output?" You're like, "Oh god. I'm gonna have Joe have to work on that. And I'll get back to you in 2 days or 2 weeks."  

That's that tipping point where you're actually cannibalizing your growth by not having these insights on demand. So usually, that happens, around $5 million in annual revenue. It's where the juice is worth the squeeze.  

Sub $5 million, we get customers that have more of a budget issue. But after $5 million if you just dedicate 1% of your overall annual revenue towards data, either tracking... It could be to just hire a GA team just to set up really robust tracking there with Google Data Studio or into custom dashboards or into data science. That should be plenty.  

So think about spending $50,000 at $5 million. $50,000 covers almost like a full time person for a year and that will give you these insights. And $50,000 to make 1% more for your company to have ROI on a data initiative is so easy because you have so many KPIs.  

And if you just move the needle on one of them --I told you like we increase one metric by 30% for our business-- so naturally, the 2 weeks of diving through the data was worth it because it yielded so much benefit to our organization.  

So usually around $5 million is where we see customers start investing in their data. And not just having a marketing budget, not just having an ops budget, but also creating a data budget.  

Then at that point, they'll either... They'll enter in that first level of dashboard analytics, which is "Let's look at hindsight. Let's look at where we've been. Let's look at these trends. And let's make decisions off of this."  

And that can expand from sales revenue, from your COGS to inventory to supply chain. And then usually around $25 million in annual revenue, we get customers that are a little bit more mature in the fact that they now know that they can't be successful without data.  

And now they're willing to really dive in because they know that they cannot scale at all if they don't know their numbers. And that's when they get into more of, "Well, let's drive insight. Instead of just analyzing the data we have, let's drive actions in the organization to where the dashboards are telling us what to do, versus us having to analyze it and infer that out of it."  

And then around $50 million to $100 million is when they start wanting to get into foresight predictive modeling. "What should we do? How can we change these levers in the future versus just looking at the past?" Does that all make sense?

Chase Clymer  

Makes sense to me, but I'm a nerd. 

AJ Yager and Meaghan Connell   

(laughs) 

Meaghan Connell  

Yeah. 

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Meaghan Connell  

Yeah. Really, every company no matter where you are in the annual revenue spectrum, the number one place that you should be looking is your tracking and making sure you're collecting data because you can't analyze if it hasn't been collected.  

And then the next logical step is [to] do your own manual reports because then you'll understand which KPIs are important and drive the lever for you. And then once that becomes too cumbersome, then you need to outsource this and you need to get somebody to help you.  

And usually companies between $1 million to $150 million, they'll utilize an outsourced agency. And then at some point... So like us. We're an outsourced data agency. Then at some point, it just makes sense for you to hire your own internal data division.  

Just like with marketing, you start out by hiring all these agencies because you leverage their shared experience and they're testing things on other clients and you're learning from them.  

But then, maybe once you get to a certain size, you need your own full-time, content person, full-time ads person. Somebody who's in-house to understand every aspect of the business and can turn these things out.  

So usually, we don't see companies get their own data division until about $100 to $150 million in annual revenue. And then at that point, we get in that passenger seat and then we are more like overflow rather than driving the bus. 

Chase Clymer  

Absolutely. It's funny how that $5 million mark is where I also say it usually makes sense to get into AB testing because you'd have enough data before that to where it makes sense.  

AJ Yager   

Mm-hmm. 

Chase Clymer  

So it makes sense that would also make sense on the business-intelligence side. 

AJ Yager 

Yeah. 

Meaghan Connell   

Yep. Exactly. 

Chase Clymer 

Awesome. Now this question is going to be out of left field for sure. But are there any insights that you can share? Or just like any quirky stories of just insights you found that might have helped clients or just good stories that came out from like diving into the data. Zeros and ones, at the end of the day, it does tell a story. So is there anything that's happened with you guys or with your clients from all this data? 

AJ Yager 

For sure! Okay. So you want left field? We'll give you left field. (laughs) So, here's the thing, most people when they think about their own business data or information, they think about the information that they have trapped in their own systems. The transaction data, the inventory data, the marketing data.  

What about all of the other external things that impact your business --that you're not necessarily in control of-- but that impact you? And so one thing that people don't really think about is public data is available.  

Most of the time, it's free. And then a lot of times you can just pay for data. There's tons of research out there. There's tons of data sets. So think about if you're a coffee company, do you think that your return on ad spend might potentially be impacted by weather data? When things get cold?  

Or a tea company when things cross over into the fall or winter. Don't you feel that sales might go up? Or Same thing with soups. There are certain things that are definitely impacted. And we've had customers who have a 10x difference between a certain temperature.  

When they spend money at 71 degrees, they'll make a 2x ROAS but when they spend their money at 70 degrees, all of a sudden now they've got a 20x ROAS. So not just thinking inside of your own box, but thinking about everything externally.  

So the weather is a big one. We've got a pest control company, who aligned their internal sales data and marketing data with the temperature because they have certain rodents that are more active at certain temperatures.  

So they stop spending in certain areas, and double their spending in others because they know that it'll be impacting the rats and the bats and all of the rodents. And that's a way to really optimize what their business is doing.  

They're doubling down on what's working and eliminating those areas of waste and that yields exponential growth.  

Then another thing is yogurt, for example. We had a client that basically had a $40 million yogurt crisis because they had all these wholesale contracts to huge chains. And then they were locked into these contracts and all this yogurt was being thrown out because when it is freezing outside, you don't want yogurt.  

When it's super hot outside, you don't want yogurt. You don't want dairy products. And so it's understanding those levers that impact your sales. One of the big things we've been doing lately is overlaying this sales and marketing data with COVID data.  

Are you impacted? And are there certain areas that are more impacted by COVID? And so it's drawing... It's reducing your sales in that area. But man, that rural suburb out in the middle of Colorado that hasn't really been impacted, your ROAS there is exponential.  

So let's double down on these areas versus the ones that are super heavy. And so it's just really thinking outside of the box and not being narrowed in to only thinking that you have to be trapped within the systems that you have set up and really looking at everything else --the whole picture-- because you are not... You're not in control of everything.  

So does that help? (laughs) 

Chase Clymer 

Oh man. Yeah. It absolutely helped. Those are great examples. And I loved them all. I know we only got a few minutes here left... 

Meaghan Connell  

(laughs) 

Chase Clymer  

So I just want to ask 2 things. One, is there anything that I haven't asked that you think is worth sharing? And then 2, if people are picking up what you're putting down, how do they get ahold of you? 

AJ Yager  

Hmm. 

Meaghan Connell  

Let me see... Anything you haven't asked? We'll come back... Now, I think you've done a really good job. You've done this before. So I think you've covered a lot of the basis.  

I just think the biggest takeaway with this is it does not matter [the] size of your team, it does not matter the size of your revenue. Data exists at all levels and right now, big data is not reserved for enterprise anymore. 

AJ Yager  

Every single business is a data business.  

Meaghan Connell   

They just don't know it yet.  

AJ Yager  

They just don't know it yet.  

Meaghan Connell   

And if you're not doing this, if you're not analyzing this, guess what? Your competitors are. And they're going to have the leverage to put you out of business.  

So it's so, so, so important --as data becomes more accessible-- that every person is integrating this into their business because it will be the defining factor between you and your opposition. 

AJ Yager  

Yeah. I think the thing that I want to say is you don't have to [have] been an A+ student in math class. And you don't have to be a data scientist. A lot of business owners out there just aren't, so it's okay that you're not naturally good with numbers.  

So if you can find somebody on your team that is good with numbers, or at least just trying to have an open conversation around what's important and what your data is looking like, what your tracking is looking like.  

I think it's worth time in your schedule, weekly, maybe monthly, just to sit down as a team and ask the business questions, lay them all out and look at your technology stack and really just understand what you're able to track now, what you're not and do a gap analysis between the two.  

Knowing where you are is just half the battle. Just starting that conversation. 

Meaghan Connell 

For sure. Yeah. And that manual tracking of it is a good, acceptable first step. Everybody has to get through that in order to understand what they want automated in these dashboards. 

AJ Yager  

Crawl before you walk in.  

Meaghan Connell  

Exactly. And then in order to get in touch with us...  

AJ Yager 

Yeah. praxismetrics.com is our hub. We've got some amazing content there on the blog, which we love. We actually have a show [that] we do, which is interviewing other experts in ecommerce and just sharing different data-driven metrics and how they can be used in your business.  

But praxismetrics.com. You can go in and get a free data strategy with us, get on with our team members and...

Meaghan Connell  

And we'll walk [you] through, even if you're not ready for this yet, like we've got a lot of clients that come to us, and we give them a roadmap, and we're like "Alright, here's what you need to go and do. And then whenever you're at this level, come back to us."  

So there's clients that come to us that they know they want to work with us in the future, but they don't know what to do in the meantime.  

So feel free to hop on with us. We'll give you that roadmap, and what you need to do in the meantime, and then whenever we can be of service, then we'll be here. 

Chase Clymer   

Awesome. AJ, Megan, thank you so much for coming on today. 

AJ Yager  

Thanks, Chase. We appreciate it. [We had a] nice time. 

Chase Clymer  

I cannot thank our guests enough for coming on the show and sharing their journey and knowledge with us today. We've got a lot to think about and potentially add to our businesses. Links and more information will be available in the show notes as well.  

If anything in this podcast resonated with you and your business, feel free to reach out and learn more at electriceye.io/connect. Also, make sure you subscribe and leave an amazing review. Thank you!