How do marketers make smart decisions about how to connect with customers?

A smart marketing decision is a data-driven decision. There is so much data available to businesses about their customers now – to the point that it can be overwhelming. How do you know what data to use?

If you think that you should just collect all of the customer data you can and save it like a squirrel hoarding nuts, think again. You want the data you collect to be information you can use to connect with a customer better.

Christopher Lewis, an Account Manager at ActiveCampaign, hosted a webinar about how to better analyze the data that you have about your customers to make you smarter and more effective marketer.

When you’re smart about data, your marketing reports can be one of your most useful resources for connecting with customers.

Watch the webinar above, or read the recap below. You’ll learn:

  • The difference between data and good data. Data is good, but good data is better
  • How identifying vanity metrics helps you learn to create meaningful marketing goals
  • KPI vs. PSI: What’s the difference and which one you should focus on?
  • The ABCs of data collection – and how Hypothetical Harry used them to see a difference in marketing through data

1. Data is good, but good data is better

Everyone wants big data – it’s intoxicating.

But collecting data just for the sake of having it is not going to help your business. There’s a difference between data that exists and good data you can use. “Just because information is available doesn’t mean it’s pertinent,” says Christopher.

In the old days, data collection was minimal — it’s harder to get data from marketing efforts like printed and recorded media or mailers. Data collection was slower and couldn’t be updated in real time.

In today’s world, industries are saturated with data.

Phones, computers, tablets, credit cards, and software collect data at lightning speed.There’s lots of good data out there. The challenge is collecting the data that is valuable to your business.

There are 3 characteristics of good data. Good data is:

  1. Responsive – It informs your business to help you make smart decisions
  2. Actionable – You can create a plan to use it
  3. Narrative-driven – It follows the story of your business journey alongside your customers’ journeys.

“A lot of SMBs can get swept away by the allure of a lot of information,” says Chris, “ it’s the mindset of ‘if it’s there I should have it.’” What SMBs don’t consider is that available information doesn’t always equate to relevant information.

The hardest part of using good data is knowing what to keep and what to let go. Some businesses are “data hoarders.” Even if there’s no plan for the data, some people just want to have it.

Irrelevancy is the biggest cardinal sin when it comes to poor data collection. Your business needs to trim some data fat and get relevant data that you need. Unless you have a quality plan to use this info, you don’t need to collect your customer’s favorite color.

A scenario of how data can be classified as good is collecting a birth date. If you’re a digital publishing company and you collect this information, you could send someone an article from the day they were born. That’s a cool content idea and an example of responsive good data.

2. Identify vanity metrics to create meaningful marketing goals

What is a vanity metric?

It’s a metric that doesn’t matter.

The metrics you get from your marketing reports are useless unless they contribute to meaningful marketing goals. Every single industry has vanity metrics, and it’s easy to get wrapped into the success of these vanity metrics because they feel so important – they’re big and they come easy.

Unless you can see a quality impact from a metric that helps you shape long term goals, some metrics are not worth your time.

But sometimes, it takes pulling the wrong metrics to find out what are the right metrics. Chris shared one example from the auto industry.

A particular auto dealership was working with outdated contact methods for customers – specifically phone calls. They failed to see the value in updating their processes based on customer behavior – like online behaviors. Because of that, they focused only on outdated customer metrics:

  • Phone call volume
  • Email volume

“The goal of a car dealership is to sell cars. So they think X number of emails + X number of phone calls in a week = X amount of car sales for that week,” says Chris. But their approach was outdated because the way people use technology has changed so much — people don’t use their phones the way they used to, so the old metrics don’t matter anymore.

Many businesses don’t recognize the need for new data. Their collected data is inaccurate, but they still use it. When your business grows or your product changes, the data you have from the time before is inaccurate.

Consumers today want to remain anonymous for as long as possible, and they don’t make calls nearly as often. Most modern customers start by looking up information online, which means that call and email metrics aren’t useful to the dealership at all.

“That made me think, ‘what kind of information can we take anonymously that influences a customer decision? There’s online customer info that we can use as a business so by the time a customer shows up at the dealership, they’re ready to pick up the key and drive off the lot,’” said Chris.

That info includes customer actions like:

  • Clicking on a map to a dealership
  • Clicking on a Carfax report
  • Looking at dealership reviews or looking at the dealer description

These customer actions indicated that people weren’t just passively looking at ads or emails. They specifically were interested in showing up on the lot.

Chris helped the auto business create a marketing report that was actually useful – and helped them create scalable goals.

What that auto business found in the report is that they would take all of the types of interaction that the customer had over a specified period of time, and break it out to see what were the last points of contact on that ad before it was removed.

Can you see what customer connection point doesn’t even make the top 5 types?

The marketing report shows the top five customer connection points. Types like “map to dealer” and “dealer website” come even before email. And then driving directions and more details print.

Phone calls are nowhere to be found in the top five connection points.

This marketing report helped the auto business contextualize the types of data that do exist — and gave them the freedom to stop using outdated methods like phone calls and start looking at things that do motivate customers to show up and buy.

In Chris’s opinion, open rate is the biggest email marketing vanity metric.

If a hypothetical company has:

  • A 45% open rate (due to things like good subject lines, familiar branding, and a good sending cadence)
  • A very low 0.3% click-through rate (due to bad CTA placement, excess amount of copy, and an unclear CTA)
  • A far-too-high 85% bounce rate (from poor site user experience, bad landing page, and the CTA taking them to an irrelevant page).

It means there’s some room for testing.

The company tests changes to their CTA and nothing else. Their open rate stays the same. They jumped to a 15% click-through, which is fantastic. But their bounce rate is still 80%.

They only dropped 5% on their bounce rate, which means that their success of turning a profit on their emails is still not high.

Even if you have a great open rate, you’re still not making a lot of money. As Chris says, “if we spend all of our time being obsessed with open rates, and not on conversions, we can get a little bit lost.”

As an expert in the collection and analysis of customer info, Chris has an important mantra to remember:

“Processes beget results. And if you aren’t getting the results that you want, you have to examine the processes that produce them.”

3. KPI vs. PSI: What’s the difference?

You might be familiar with the acronym KPI, or key performance indicator. But KPIs don’t work alone. They only work because of PSIs.

What’s the difference between a KPI and a PSI? Chris digs into it for you.

  • KPI = Key Performance Indicator
  • PSI = Process Success Indicator

A KPI is directly related to your business’s goals. KPIs are industry-specific and are identified as being highly focused on singular metrics (10% more new sales; 80% retention)

Common KPIs include:

  • The number of conversions
  • The percentage of recurring revenue
  • The number of sales
  • The number of new subscribers
  • The rate of customer retention

KPIs change as a business grows. Marketing constantly changes, and your customer journey needs to run in tandem with your business journey. A brand new business has very different KPIs than a 10-year-old company.

A new business needs to focus on product optimization, or building a client base. Once you build your business up and it grows profitable, your KPIs change with your growth.

A PSI falls underneath your KPIs. PSIs are operational and KPIs are organizational. If the organization wants to make more money, what are the processes that need to happen to see that result?

Here’s how it works:

If your KPI is “new subscribers,” your PSI would be to look at your onboarding process for friction points to achieve your KPI.

If your business sets KPIs like getting new subscribers or increasing time spent on certain site pages, you have to ask yourself what exactly you can do to make that happen.

If you try for new subscribers, you take a look at the friction points.

  • How easy is it to sign up for a new subscriber?
  • How enticed are they?
  • What’s the incentive of being a part of my list?

If the process is successful, you’re statistically more likely to hit your goals and your KPIs. And this helps you identify what numbers you should be focusing on

Once you’ve identified your KPIs and PSIs, you might realize that they’re not aligned. When you align your KPIs and PSIs, you’re more likely to get info on your marketing report that helps your business grow.

4. Follow the ABCs of data collection to see a difference in marketing

Sometimes it’s as easy as ABC – not 1-2-3.

These are ABCs of data collection that you can follow to see a difference in marketing.

  • Ask questions like a researcher
  • Build out an effective strategy
  • Contextualize your data

When you ask questions, you identify areas for improvement – just make sure your questions are specific enough to get quality answers. Focus on something operational that can be identified and improved through testing.

A business like yours might say, “I know that I get pretty good open rates sending on a Tuesday, but I’ve just always sent on Tuesdays. I’m not entirely sure that that is the best day to send. What would happen if I sent it on a Thursday?

These are the types of questions you’re looking for.

As you ask the right questions, you establish a hypothesis, like:

  • “If I reduce the number of questions I ask in my form, submissions will increase by 25%.”
  • “If I change the verbiage of my subject lines, open rates will increase by 10%.”
  • “If I shift the position of my CTA, Click-Throughs will increase by 5%.”

How do you build an effective strategy? 3 steps:

  1. Choose your testing method – incremental or iterative
  2. Pick the tools to help with testing – like A/B testing
  3. Make sure you know the audience you’re testing – segment a control and a variable in your audience for different flows

Choosing your testing method is the big first step.

Incremental testing involves changing only one variable of marketing at a time – like the subject line of an email.

Iterative testing is when you test multiple variables of a marketing campaign at once. But it can be harder to get usable data from an iterative test because it takes longer to identify what changes actually make a positive difference in your marketing.

Contextualizing data means analyzing the results of your tests.

  • Isolate Drivers and Depressors. AKA Look for the outliers. Do you have someone that’s performing way lower or higher than expected? Be wary of Success Theater and Bad Averages (don’t take a 45% open rate at face value; one person can open an email more than once and it dilutes your open rate numbers.
  • Determine if your hypothesis was right or wrong. If it’s right, how do you use this new data? If it’s wrong, what did you learn from the test? Testing is never wasted time
  • Decide if your questions have been fully answered. Do you need to tweak your hypothesis? Sometimes the question you think you need to be answered is not the right one – and that’s ok!

Here’s what happens when SMB Director of Marketing Hypothetical Harry uses the ABCs to collect useful data and see a difference in his marketing.

Hypothetical Harry is testing open rates. His challenges are:

  • Struggling with Sales
  • High Bounce Rate
  • Low Click-Through
  • Low Opens

His hypothesis is: “If I change my send day from Tuesday to Wednesday, I’ll receive a 5% higher open rate.”

His justification for the hypothesis is: “Our lowest order days are Sunday-Tuesday; perhaps it’s the wrong time to reach out. Why have we been sending emails on a low-order day? Let’s try a new day.”

This is the incremental test that “Harry” built within ActiveCampaign:

The automation splits the test between the control and the variable groups.

During the 1-month test, the audience is an even 50/50 split. The control group A gets an email on Tuesday like normal, and the variable group B gets an email on Wednesday. The content is the same in both emails. Only the open rate is being tested.

It turns out that Hypothetical Harry’s hypothesis was correct. There was a 6.3% open rate increase. In fact, it was even underestimated. The average group A open rate on Tuesdays was 9.6%, and the average for group B on Wednesdays was 15.9%.

How does Harry learn from this information? He stops sending on Tuesdays! The customer has been able to tell him what they want, and Harry’s business can take that info and create actionable marketing that they want to experience.

Statistically, the more you follow your customer’s journey, the more you allow the market to inform you as to what it wants, you might see the results you want.

Conclusion: Data is good, good data is better

Marketing reports can be one of your most useful resources as long as they give you the information you can effectively use.

Just remember:

  • Data is good, but good data is better – collect the data that matters for your business
  • Identifying vanity metrics helps you learn to create meaningful marketing goals
  • Establish KPIs and PSIs to learn what data to focus on
  • Follow the ABCs of data collection to see a difference in marketing through data