This Masterclass Online recap is brought to you by our friends at Vonto.
A recent study by tech brand Intuit found that over 80% of small and medium-sized businesses were using six apps to run their business operation. Running a business is messy and complicated enough without having to rely on multiple platforms (with multiple logins, insights and analytics) to try and understand the status quo. It’s no wonder the word ‘data’ is one that can scare, excite or bore business owners to tears.
Data is the new currency, and no matter how it makes you feel, your business data is a big asset and understanding it is the key to growth. In a recent Masterclass Online, we were joined by Elliot Cousins, the Managing Director of Vonto, who guided us through what it takes to make business decisions based on facts. He outlined the steps you need to take to go from a business that isn’t data fit to one that is, and shared an outline of the key tools and metrics you should be considering to drive a proactive, data-driven business.
When examining data, it’s important to be aware of cognitive biases, your own subjective reality that sees us relying on our assumptions to make decisions. We all suffer from cognitive biases from time to time, and they can present themselves in a variety of ways, including:
- Correlation vs causation (a correlation does not always mean that the change in one variable is the cause of the change in another)
- Anchoring bias (making a decision based on the first or biggest piece of information you see)
- Availability heuristic (a recency bias, when you over index the most recent piece of information)
- Confirmation bias (when we put more weight and emphasis on the data we believe to be true)
The metrics to measure and the way you take action from insights will completely depend on your business goals and objectives, and it’s important to track both leading and lagging metrics. Leading indicators will help you identify trends and advise you where to move forward. They tend to measure effects rather than causes.
The key financial indicators on your business health let you assess whether sales and margins are appropriate, and are consequently one of the most critical KPIs for small companies to track.
- Revenue % change
- Operating profitablity
- Cash flow (operating and free cash flow)
- Cash conversion days
Not to be confused with product, growth or financial metrics, these metrics track your customers’ perspectives of your products, business and your brand. The benefit of tracking customer metrics over time is that you can identify issues in your business that are impacting customer experience.
- Customer Lifetime Value (LTV)
- Customer complaints
- Customer engagement scores
- Customer satisfaction and loyalty (NPS)
Tracking metrics that are impacting the operations of your business is critical to ensure smooth day to day actions, and is helpful in guiding investment allocation decisions and identifying hidden ‘cost out’ opportunities caused by inefficiencies.
- Inventory turnover
- Channel performance
- Employee engagement (NPS)
- Product/service velocity
- Variable cost growth
- Last mile costs
Designed to help understand the health and trajectory of the business, and identify opportunities to improve customer acquisition and reduce churn. These metrics are important to drive long run efficiency in customer acquisition and retention, and thus your business operating profitability.
- Channel growth (eg. online vs offline)
- Customer Acquisition Cost (CAC)
- Average Revenue Per User (ARPU)
- First time user experience/conversion
- Products per customer
These metrics are aimed at helping inform your product development decisions, understand customer engagement and drive better customer experience. Whilst these metrics vary depending on business type they are necessary for understanding how your product/service performs.
- Active users/customers (MAU, WAU)
- Returns or warranty claims
When identifying the most common challenges facing businesses (attracting new customers, growing revenue profitably and improving cash flow), Elliott and his team at Vonto identified a common limitation – the lack of time for business owners to get a holistic view of their business, in order to make quick and effective decisions. Vonto solves this business challenge, allowing small business owners to connect a variety of different data sets ( Xero, Vend, Shopify, Google Analytics, Facebook Business Manager, Instagram and more), and pull all of the data into one platform, to run powerful analytics and serve up business data and insights in real time.
Elliot Cousins is the Managing Director of Vonto, a data analytics startup backed by X15 Ventures, Commonwealth Bank and ASB Bank. Elliot is known for his passion for disruptive business models and is an active contributor and ambassador for the thriving Australian startup and small business scene.