Owners who want to drive innovation and grow strategically shouldn't underestimate the role of statistics in business decision making.
But if you aren't especially data savvy, you're probably wondering, How can I start using statistics to measure effectiveness, performance and customer satisfaction? One way to start is by seeing how other business owners implemented statistics in their companies.
Take Kyle Goguen for example. He's the founder of Pawstruck, a southern California-based manufacturer of dog treats.
—Fehzan Ali, CEO and co-founder, Adscend Media
“Because our products are consumable, a great deal of time and effort is devoted to gauging customer satisfaction," Goguen says. “Our team tracks the following metrics: monthly number of repeat sales, percent of sales that are repeat, net promoter score and average product star ratings.
"By measuring each of these key performance indicators [KPIs] on a weekly basis," he continues, "we're able to quickly identify and address any issues. Also, we're able to set related quantifiable goals that improve each score over time."
For Fehzan Ali, CEO and co-founder of the Austin digital marketing company Adscend Media, the role of statistics in business decision making is equally important.
“We use statistics to measure the unique users who interact with our video streaming platform. We analyze views, engagement, retention and ultimately satisfaction," he explains. "From these key points, we can understand changes in the user experience and determine where issues originate so we can work to resolve them."
The Mechanics of Analysis
In considering the role of statistics in business decision making, a core question is how will you derive key metrics in the first place.
For Goguen, sales metrics come from a reporting dashboard in Shopify, Pawstruck's e-commerce platform, and net promoter scores and product ratings from an app called Stamped.
“My team pulls these numbers weekly and records them in a spreadsheet for our executive team to review," he explains. "Because we have years of data, we can easily spot unexpected fluctuations and take action."
Ali collects most of his statistics from Adscend's database and Google Analytics.
“Typically, we analyze the information by running internal queries to find meaningful data points," he says. "We may decide to combine this with exported data from third parties as well."
How can data affect your business choices? Goguen shared a recent sales example.
“A few months ago, our team identified a 5 percent drop in repeat sales for the month. While not extremely alarming, it was worth investigating. That same day, we determined the cause—a technical glitch that prevented our re-purchase email sequences from firing," he recalls. "In other words, we were forgetting to remind our customers to shop with us."
The role of statistics in business decision making for Ali is layered. It involves examining how his company's service should ideally operate for a user and also understanding what an average user looks like from a monetization, time on site, page view and engagement standpoint.
“If we find that our aggregate averages are lower one day than the previous, this usually indicates an issue with our video or tracking technology, our bandwidth/streaming service or an ad partner. This data will typically uncover the source of the problem," Ali explains.
“And, if we are making an update—for example, adding new layers of technology to our platform—we monitor the same metrics to catch issues that are otherwise hard to see until the impact is too great. By focusing on the finest grains of detail, we can make decisions that result in a superior user experience," he says.
Starting From Scratch
If you've never considered the role of statistics in business decision making, now is a great time to start. But uncovering statistics that matter can take a lot of trial and error.
“Brainstorm what you believe are key stats and then closely monitor them to determine if they are actually meaningful and can enhance the business. From there, refine each one and hold a team member accountable for tracking it," Ali suggests.
Goguen had similar advice.
“Identify one to five of the most important customer satisfaction-related metrics specific to your business," he recommends. "Your goal is to pick the numbers that provide a holistic view of customer sentiment across your entire company."
Owners must continually evaluate the role of statistics in business decision making. By implementing a model that involves tracking, analysis and appropriate action, you can use data as a competitive advantage and tool for consistent improvement.
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