For businesses, the only relevant data is data happening right now.
By Kathryn Loewen
Small-to-medium-sized businesses (SMBs) are changing. The next generation of SMBs are working together to support each other, in turn spawning new ecosystems and collaborations. At Control, our payment analytics software is part of a real-time collaboration: one that presents real-time analytics to business owners, which is more important than ever in a fast-paced business climate. The Intuit 2020 report tells us that “those who become proficient in the collection, management and analysis of digital data will gain competitive advantage, leaving others behind.”
My experience in the field of business analytics and data-management software engineering has taught me a few key lessons in why all businesses need real-time analytics:
It’s important to analyze a business in motion. Being able to analyze a business in motion is one of the most important methods of ensuring customer retention — especially for software as a service (SaaS) or eCommerce businesses — more so than promotional strategies, customer experience, or on-site optimization.
A stitch in time saves nine. Business owners have to know the latest data in order to make the decisions that have the biggest positive impact and manage risk. Accessing real-time data allows you to respond in a timely way to opportunities and prevent critical events from escalating. For example, if you see a sudden increase in customer churn, investigate and plug the gap before it widens.
Analytics is a capital idea. Without your finger on the analytics pulse, you will struggle to raise outside funding, whether you’re looking to gain capital from an investor, friends, or family members. While your family members likely aren’t subject to this experience, venture capital investors can hear over 5,000 pitches a year. Being able to show your valuation on the spot whether you’re presenting a pitch deck or bumping into the VC in the elevator is proof that you are serious and committed.
Solving the real-time problem
Having the ability to access real-time analytics can solve many problems:
- Business owners don’t want to rely on others for reporting and gathering information. Chasing down metrics can be a burden and huge time killer. Accessing real-time, in-the-moment data eliminates paper-chasing and frees up leaders to focus solely on their ventures.
- Managers are not always at their desks, monitoring performance. That being the case, they often return to the office to find high-volume data accumulated or information that has already gone stale. Using mobile tech to access analytics on the fly is how leaders can be “location independent”, while being fully engaged with their businesses and their performance.
- Real-time data can be expensive and onerous, but it doesn’t have to be. Most small businesses have a budget of about $1,500 per year for business software apps. They can’t afford the enterprise add-ons. An analytics app like Control is built with the needs of financially conscious SMBs with lean development teams in mind.
The metric lowdown. What kind of analytics do you need to know?
Revenues are the fundamental building block of every business. Every business owner must know how much money their company is making. Accessing this information on the fly allows for nimble analysis, enabling the leadership team to make well-informed, revenue-based decisions. As a leader, the team is relying on you to take command when a job needs to get done. A quick look at your sales revenue will let you know whether there is running room to hire a contractor, add tools, or acquire additional resources.
Monitoring acquisition metrics in real-time gives an instant analysis of where your customers are coming from and make informed decisions faster. For example, if you notice a trend in orders or customers coming from a certain demographic or country, you can quickly generate more business by micro-targeting a campaign for a particular market or area.
Customer Lifetime Value (CLV)
CLV is touted as the “single most important metric for understanding your customers.” Analyzing this metric in real-time gives business owners an understanding of how much their customers are worth. If left unmonitored, CLV leaves business owners out of touch with acquisition cost and customer retention — this can lead to a decrease in profits.
Monthly Recurring Revenue (MRR)
Any new SaaS or subscription-based business must measure the amount of recurring revenue generated each month. Leaving MRR unanalyzed will mean that reporting on growth, expansion and CLV becomes difficult and potentially nonexistent.
Churn measures the amount of customers who leave a business, which is arguably more important than customer acquisition when you have an established business. Monitoring this metric in real-time gives an instantaneous picture of what a business needs to do in order to retain customers. If left to go stale, churn will end up eating into MRR.
Every savvy business owner will know that it costs more to acquire a new customer than to retain a current one. Not measuring customer retention can lead to neglect and potentially customers leaving the business.
Beware “Vanity” Metrics
Don’t focus too heavily on vanity metrics such as engagement. The number of Facebook likes you have or Twitter followers doesn’t matter if you’re not converting. These are soft and often skewed metrics that don’t allow business owners to reliably measure how their business is performing. I know it might feel good checking on it daily to see the number grow, but there are more important metrics for you to be tracking and — like Facebook or Twitter — you can now access this critical data from your mobile device in real time.
No business owner wants to feel out the loop. And importantly, there can be significant costs to working with stale or incomplete data. In short? Traditional data collection methods can leave managers trailing behind those who access metrics in real-time.
Kathryn Loewen is the founder and CEO of Control, the startup behind Control, a payments analytics tool for small businesses. Kathryn has been working in the payments space for more than 15 years at companies including Citigroup and SAP, working on solutions for notable brands such as Apple, Toyota and Oakley. Through her payment consultancy, Vancom, Kathryn built payment gateways and risk management systems for gaming companies serving more than 45 different markets worldwide.