Stop Guessing: How to Run a Data Driven Ecommerce Company

The beauty and power of digital marketing and ecommerce is that you can see data in real time. You know right away which marketing campaigns, site strategies, or product launches are working and which are not. This presents a huge opportunity for the business owner, but many companies don’t use data to systematically create a massively successful business.

What Is the Difference Between Data-Driven Growth vs. Gut-Driven Predictions?

Why do so many companies default to using gut feelings to make predictions and decisions instead of looking at data?

Well, running a data-driven company requires a certain mindset. Sure, there is always some intuition involved. Leaders need to have a deep, instinctual understanding of who their customers are in order to develop meaningful strategies. But they also have to let go of their opinions (and egos) and allow data to indicate success or failure. To put it simply, they have to be willing to admit when their opinions were wrong.

This is a delicate balance where both sides are needed. Without data, businesses are run on gut instincts and educated guesses. Sometimes you’ll get it right, but sometimes you won’t. On the other hand, blindly following data without an understanding of why your customers behave in a certain way will also lead you down the wrong path.

Brands need a combination of leaders’ experience and data analytics to win. Getting this balance just right is hard, but the reward is great. Running a data driven company is the closest thing to being able to predict future success.

Why is Data-Driven Growth Difficult?

Most would agree that the balance between following intuition and data is important. The challenge is knowing what data to look at, where to get it, how to read and interpret it properly, and how it plays into your company’s unique formula for success.

In this post, we’ll look at 8 keys to running a data-driven ecommerce company so you can achieve more predictable success.

8 Keys to Data-Driven Ecommerce Growth

1. Know Your Customers Deeply

Depending on the current phase of your business, you may or may not already have this intimate customer knowledge. Typically young viral brands have a very close connection with their customers. Larger organizations are often more disconnected from their customers. This is just the nature of having been around for a long time. With lots of employees, plus changes in leadership and ownership, the relationship with the customer suffers.

If you do not currently have a close relationship with your customers and a deep understanding of how they operate, it’s time to reignite this.

A great way to do this is through creating customer avatars. Outline detailed profiles of your ideal customers, digging into their interests, buying mindset, pain points, values, etc. Share this information with your organization. Here’s a free customer avatar template to get you started.

2. Create Your Ecommerce Success Formula

After establishing customer avatars, most people would dive into the data as a first step. This is actually backwards. Even if you have accurate data flowing into your dashboard, picking it apart will be a huge waste of time if you aren’t prepared. We all know that feeling of looking at a dashboard full of numbers and getting overwhelmed about what action to take. That is why you want to create your ecommerce success formula first. Let’s learn how!

While every business is unique, almost every business model can be broken down to a formula that achieves established goals. Afterall, success is not random. It’s often mathematical, so you have to create a path to get there. An ecommerce success formula will help define that path.

For instance, if your goal is to grow from $5M to $8M in revenue in 12 months, there are key metrics that will need to be improved to help you get there, such as traffic, conversion rate, AOV, lifetime value, marketing spend, and ad CPC. Use your growth goal (increasing $3M) to create a pro forma that backs out of your goal and identifies what numbers each of those metrics need to hit each month to achieve the revenue goal. This is a great tool to see how impacting one of those metrics has big implications for your business growth.

If you need help with this, you might want to look into our ecommerce growth plan where we help create a plan like this.

3. Define the Metrics that Matter

Since metrics are an important part of the success formula, the next step is to define the metrics that are important for your business before you start looking at the data. As useful as data is, it can also cloud your judgement and impede progress if you aren’t focused on the metrics that matter.

How do you know which metrics matter? Look at your unique goals and pick metrics that will help you know if you are moving towards them. If you are running a subscription business, one key metric may be a certain goal for MRR (monthly recurring revenue). However if you are a content-first business, your important metrics are likely to center around engagement. If you’re a DTC ecommerce business and you want to increase revenue, you will probably watch traffic, conversion rate and average order value.

Once you’ve defined these metrics for your business, you can go to Google Analytics to look for the numbers. This is a better process than jumping into all of the data and seeing thousands of metrics that you could choose to focus on, which gets overwhelming and inefficient.

Not sure if the metrics you’re looking at are “good” or “bad”? Check out our list of ecommerce benchmarks.

4. Focus on Getting Good Data

Next, you’ll want to make sure the data you’re tracking is actually good data.

Simple life principle: garbage in = garbage out. If the data in your analytics tool isn’t accurate (or you aren’t tracking the right stuff), it is essentially useless to you. Following inaccurate data may even be worse than flying blind, leading you confidently in the wrong direction.

Clean data is an absolute must if you are going to run a data driven company. Make sure you instill a culture of measurement across your organization, because having Google Analytics set up correctly on your site isn’t enough. Tracking everything that matters in your business takes work. From using UTM tags on all of your marketing links, to correctly installing the correct pixels on your site from various platforms, and accurately firing conversion pixels, maintaining clean data gets complicated. Invest in a good data partner and make sure your entire team is on board with how important accurate data is.

5. Implement Initiatives to Influence Each Key Metric

Once you have clean data to work with, you can start thinking about ways to improve each metric in your success formula.

While many metrics work together as a part of your success equation, think strategically about how you can influence each one individually. For example, you may want to increase your conversion rate from 2.1% to 2.3%. What can you improve on your site to ensure more customers get through checkout? If you’re not sure how much effort is worthwhile, calculate the return you would see from achieving that goal, and then you’ll be aware of how much you can invest to get there.

Whichever metrics you want to improve, plan exactly what activities you’re going to do to make progress. Put someone in charge and resource it well. Measure your progress every 2 weeks.

Pro Tip: Use “sprints” to improve individual KPIs one at a time. This will keep your team focused on one goal for two weeks (or so) at a time, ensuring progress is made. So put a plan in place to influence each metric that needs improvement and execute that plan during a sprint.

6. Create a Dashboard

Now that you know what metrics are important and have developed a plan for success, set up a great dashboard to be able to review these metrics. The dashboard will give you a quick glimpse into where you are in comparison to your goal. If you want to build a custom dashboard, look at Google Data Studio or a platform like which pulls in data from Google Analytics as well as from marketing channels. Keep in mind that you don’t have to use a fancy dashboard, especially if you’re only focusing on a few key metrics. Setting up a simple Google Sheet to make note of a handful of KPIs will work just as well.

7. Track Metrics Daily

When you have a dashboard or other tracking tool in place, make sure you are using it consistently to track and measure the performance of your key metrics. We recommend checking on these metrics on a daily basis (at least).

However, don’t let it distract you! Hopefully you’ll have a minimalist dashboard that makes it easy to stay focused. If your key metrics look good on your daily check-in, then move on with your day. If you see that something looks off, that is when you (or someone else) should dig into other data. Don’t get distracted by giant dashboards or complicated reporting in GA unless you really need to get a bigger picture of what’s going on.

8. Explore Whatever the Data is Telling You

Be ready for your ideas, predictions, and tests to be proven wrong. Data is the ultimate equalizer, removing ego from all decisions and proving your theories right or wrong. If your data is indicating that one of your core initiatives isn’t working, explore why and adjust your strategy.

Pro tip: As you review what each channel is doing (website, email marketing, Facebook advertising, Google advertising, etc.), keep in mind that your customers don’t look at all of these channels separately. They experience your brand as a whole. You need to view your business the same way. While data from each individual channel is important to judge performance and make adjustments, no channel operates in isolation. Don’t get too myopically focused on a single channel’s performance and then cut lower performing channels entirely. You have to recognize the bigger picture of how these pieces work together to achieve conversions on your store, not just the final piece that closes the sale.

Take the Next Step

While tracking and analyzing data can feel tedious at times, it’s truly the way customers speak to you. Taking the time to listen and adjust accordingly is the closest thing you’ll find to predictable ecommerce success.


Need help developing your ecommerce success formula?

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