Data-driven decision making

‍ow do I make data-driven marketing decisions?

“Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”

John Wanamaker, a pioneer marketer, said that 100 years ago, and it still holds true today. We want to reduce spending on ineffective marketing and increase spending on effective marketing, but how do we know effective marketing?

Data-driven marketing and data-driven decision making is key to pinpointing and resolving the issue of ineffective marketing.

The problem is understanding what the data means and how we can take action on data.

Here are three metrics you can use for data-driven marketing and what actions you can take to improve the metrics.

Page Load Speed

What is it?

Page load speed is the time it takes for the website to display information, measured in seconds.

Why is my Page Load Speed critical?

Have you ever clicked on a website and got frustrated that it took so long to load? It’s a universal problem, and according to Google, 40% of consumers will leave a webpage if it takes more than 3 seconds.

How can I find my Page Load Speed?

I recommend Google’s TestMySite, because they generate and email you a report on what you could do to improve your site speed.

What can I do to improve it?

TestMySite reports provide data-driven insights and recommendations on how to improve your page load speed, but here are three common culprits that are slowing down your website:

1. Unnecessarily large image sizes

• The larger the image sizes, the longer it will take to load the page.

2. Inefficient website code

• Inefficient website code leads to unnecessary things loading on the page, slowing page load speed.

3. Bad website host

• Your website made for Australian customers may be hosted in Romania, which drastically lowers page load speed.

Bounce Rate

What is a Bounce Rate?

It is the percentage of users that leave the website after only viewing one page.

Why are Bounce Rates critical?

A high bounce rate indicates that the customer is not receiving the information they need when they go to your website. Factors that may cause a high bounce rate could include

• Hard to find or a lack of useful information
• High page load speed
• Annoying popups

How can I calculate it?

The formula is number of people who leave after visiting one page/ the total number of visitors to the website. It can be a pain to obtain this information, but if you set up Google Analytics on your website(a free tool provided by Google), it will calculate it for you.

What can I do to lower my bounce rate?

1. Display helpful content at the top of your webpage
2. Use relevant images on your website
3. Have more concise copywriting
4. Customers would be more satisfied if they can quickly get the information they are looking for.

Customer lifetime value (CLV)

What is it?

Customer lifetime value is the revenue a business can expect from a customer.

Why is it important to calculate CLV?

CLV can help decide how much you spend on customer acquisition - if your business’s average CLV is high, it will make sense to spend more on acquiring new customers. It can also help identify the value of specific customers, so you can provide personalised marketing to increase their CLV.

How can I calculate it?

A formula to calculate a general CLV is: 52*average customer value per week* average customer lifespan(in years)

If you want a more in-depth calculation, this link has an excel sheet that you can fill in to calculate a customer's CLV. While it would be great to have a value for all your customers, it is time-consuming. 

Try to categorise your different types of customers, and calculate for each category, so you can spend more time figuring out ways to improve the CLV for each category.

What can I do to improve my customers CLV?

• For an already high CLV customer, you could focus on customer loyalty - they already have a high spend, so keeping them for longer would increase their lifetime value
• The focus for low CLV customers could be to increase their spending - if their average order value increases, so will their lifetime value

Should I only use these metrics?

Page load speed, bounce rate, and customer lifetime value are valuable metrics that provide data-driven insights, but there are so many more that can give us more insights.

Knowing what metrics to use is one matter, but knowing what to do based on the metric’s makes the metric useful.

Focus on data-driven marketing, and you’ll see your business become more profitable and grow.

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Created by Zak on 15/10/2019, last edited on 20/05/2021.

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