Benefits of Analytics for Startups
Why do you need analytics? And what are the top six data analytics you should track?
By Lenka Davis
The beauty of analytics is that they deliver information startups and small businesses don’t know or they confirm the predictions businesses have made. They help you make decisions, because without them you would be roaming around in the dark, guessing what your prospects or customers really want or are interested in when they are on your website or using your product. Much of what you do digitally can be measured. Your website traffic, your email or newsletter open rate, and your social media. Instagram, LinkedIn and Facebook have metrics that give you some idea if you're heading in the right direction. They give you some insight to what is going on.
“The unpredictability and the risk are what drive many entrepreneurs to the startup life. Fortunately, they can find some comfort in startup analytics. They’re logical, they’re rational and they make sense of this yo-yo lifestyle.”
Web Analytics
The best place to start looking at analytics is on your website and you can do that by connecting your website to Google Analytics (GA). Some website providers offer analytics for your web page so check in the admin areas to see what data they report. Read more about the benefits of a basic website and different options on building one. Also, you will want to consider aligning you and your team on your business and marketing goals because they will drive what analytics you want to track. Your business goal may be to get interest, create a waiting list, collect an initial set of customers, or build awareness etc. For most goals you are going to want to have a website.
Connecting Google Analytics
Google Analytics (GA) connections to your web site provider usually require a few steps.
You will need your website URL.
You will need to set up a GA account so Google can assign you a Property ID.
Your GA property ID will then be used for your web site provider’s setup.
So for example, if you are building a Squarespace site, follow Google’s instructions on their support page and then follow the Squarespace instructions on their support article, Using Google Analytics with Squarespace.
Note: GA now has a new version of analytics named GA 4. Make sure you know if your web site provider supports Google's Universal Analytics (UA) properties or the new GA 4 properties.
Benefits
Benefit #1 Helps you keep your eye on the ball
In sports that involve a ball/puck, such as baseball, ice hockey and tennis, a strategy that coaches tell their players to improve their accuracy is to keep your eye on the ball. It helps focus and control. It gives better eye-hand coordination, for example, because better signals are sent to your brain. It helps players react to where the ball is going, which might I add, can’t always be predicted. Analytics work in similar ways. They help you keep your business eye on the goal. It’s a good idea to have analytics based on your goals all set up in all the places you can. When you need to make a business decision the data you have collected will be there to help you focus and gain control of the direction you need to go.
Benefit #2 You will have data to support your KPIs
KPIs or key performance indicators are what you want to track to measure your company's progress. They are measures that investors use to track their portfolio companies performance. KPIs center around revenue and growth. If your business is pre-revenue you can set up key performance indicators to track active users, website visitors and other customer interactions. Customer interactions can be found on your social media, and in product reviews. Not only will this help you understand what your customers are looking for and how they are using your services or products but it will also build a set of indicators that investors can use to evaluate your business. KPIs show your progress.
KPIs measure how well your business is achieving its goals. A KPI must be measurable and also quantifiable. One method to set up your KPIs is with the acronym SMART. SMART stands for specific, measurable, achievable, realistic and timely. Put all the specific, measurable, achievable, realistic and timely parts into each KPI.
Benefit #3 Start of building a lean analytical foundation
Just as there is the concept of a Lean Startup, there exists an analytics model aptly named Lean Analytics. Lean Analytics is a book written by Alistair Croll and Benjamin Yoskovitz. Alistair describes the lean analytics model on kaushik.net as:
“The Lean Analytics Cycle is a simple, four-step process that shows you how to improve a part of your business. First, you figure out what you want to improve; then you create an experiment; then you run the experiment; then you measure the results and decide what to do.”
Setting up your lean set of analytics will put you one step closer to achieving your goals.
Top six data analytics you should track
Just a note that your list of analytics recommended will depend on what type of business you are running. Obviously if you have a retail or consumer goods product and are actively selling you will look at revenue and specifically what products sell. Also, as your business grows you will want to evaluate what metrics you are tracking. The first three listed are for pre-revenue companies.
Web site data
As we wrote about above, set up Google Analytics to track your visitors and other specific visitor data about individual web pages. Check on your bounce rate for content on your web site. Looking at bounce rate will tell you if your content is something people are interested in
Insights from social media accounts
Switch your Facebook and Instagram accounts from a personal to a business type account. This will give you access to the Insights data area. On LinkedIn set up a company profile page which will give you access to the Analytics tab. Basic data such as Follows, Reach, Impressions, Likes, Comments, etc are shown for each post.
Email Sign ups
Establishing your own email list of prospects and customers so you can use it to contact your prospects when you need to share news and updates with them. Email addresses can be collected to just keep in touch or for newsletters and other types of direct communications. Just know the legal rules in your country or state on how you can email them. Think of the advantage that restaurants had during the pandemic when they could email their customers about closures, openings, and changing business hours and services to keep their businesses afloat.
Customer Acquisition Costs
Often abbreviated as CAC this contains the cost of sales and marketing, plus any related expenses to acquire one customer. Since most likely you have very little money you will want to closely monitor this data.
Revenue
Once you have revenue you will want to monitor at least these three numbers. Your revenue against your revenue goal, your average revenue and your percentage of revenue month over month. Investors will want to know these numbers anyway and if you are bootstrapped you yourself will want to know them.
Conversion rate
Your marketing strategy needs to evaluate what is working for you and what is not converting into customers. This works for services and products. For a product based business you will also want to track checkout abandonment rates. Find out where in the checkout path customers are leaving and test new options to reduce abandonment.
To set yourself up for success, connect Google Analytics to your website and get familiar with where the data collection happens for the metrics you are going to track. It’s a data heavy world out there so don’t drown in it.
Fun Fact
In 1995, the companies of Amazon.com, Craigslist, Match.com and eBay went live. In that same year the first web log-file analysis program became available from Analog and it was designed to analyse website traffic from the website log files. The server log-files were the initial place you went to in order to find website traffic. Marketers benefited from these programs since they now had access to the traffic data. Today the most popular app to track website data is Google Analytics (GA). Google purchased Urchin software which they later renamed to Google Analytics. In 2013, according to wikipedia, GA was used by 66.2% of the 10,000 most popular websites.
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Lenka Davis is a Managing Partner at Fly to Soar. She has worked in marketing, managing projects and building tools in the high-tech industry for Fortune 100 companies and also ran her own business. Follow Lenka and the Fly to Soar Team on Instagram @flytosoarcompany
