How Startups can Improve Visibility in the Market Using Analytics
One might be tempted to think we are living in a startup bubble, with investors being largely optimistic about startups and investing millions of dollars in them, with many startups crossing the billion dollar valuation on a regular basis. But managing a startup is tough, with almost unreal targets set in between funding rounds. The founders need to, at all times, be focused on the direction in which they need to head, and be sure of the selective performance indicators that they need to keep watch of. Creating data has become easy at current times. Though acquiring data from multiple sources has its potential benefits, but for a company at its seminal stage, dealing with multiple KPIs is a huge risk. Startups can easily get side-tracked by following the wrong KPI. In an ideal scenario, startups should keep only one performance indicator and keep scaling up in that direction before achieving a milestone and involving others in the development plan. With a large number of startups around, existence of a red ocean, and ample amount of data giving number of insights and scope for strategies, implementing analytics can be a sure shot way to keep startups focused on the optimal way to scale up, and in extension create organic buzz and visibility to scale further. Analytics has the capacity to point out which should be the root nerve of a startup and how to scale further in that direction. The seminal stages of creating a high visibility in the market and expansion of a startup involves a repeated cycle of – Building and improving of the Core Competency, and measuring the effect in KPIs and increase in adoption by customers. Let’s see where and how analytics can be optimally implemented for these scenarios.
Building Core Competency
The starting point for understanding core competences is understanding that businesses need to have something that customers uniquely value if they’re to make good profits. “Me too” businesses (with nothing unique to distinguish them from their competition) are doomed to compete on price: the only thing they can do to make themselves the customer’s top choice is drop price. And as other “me too” businesses do the same, profit margins become thinner and thinner.
This is why there’s such an emphasis on building and selling USPs (Unique Selling Points) in business. If you’re able to offer something uniquely good, customers will want to choose your products and will be willing to pay more for them. Here are three ways to turn analytics insights into actions that make your company more competitive:
Gain control along with visibility of patterns
People often use analytics to understand what’s already happened, but don’t look beyond “what”, to ask “why.” By understanding why certain patterns emerge in your data, you gain greater visibility and control over what’s happening right now.
For example, when you understand why certain factors affect your margins, your sales team is better able to address underperforming products and customers, identify potential revenue opportunities and design more optimal coverage models for your reps.
Put analytics in the right functional areas to drive change
To get results, you need a way to deliver analytical information to sales reps at the product and account level. This empowers reps to negotiate from an informed position and use data to have strategic conversations with customers.
Also, when reps have good access to customer analytics, they’re better able to invest coverage resources in high-quality leads. It helps them to identify opportunities with large value and position sales offers in the context of a dynamic market. For example, if there’s a lot of variability in a commodity and price wars break out, you want to quickly reposition your offer in relation to that dynamic market.
Build an ecosystem
To get the best results from your analytics, you need the ability to monitor what’s happening and use that data to adapt. As you build this process into your company’s DNA, constantly evaluate the criteria you’re using to ensure they stay relevant: Are you looking at the right variables and assessing the marketplace effectively? By maintaining the quality of this information, you’re developing a competitive advantage through pricing and sales sophistication.
Measuring Business Traction
Analytics helps your business determine what is working well, and what needs to be improved. We can always go off of a hunch, but the real power comes when we know the hard data behind our marketing or business management efforts, and can make informed decisions that improve our business over and over. Seasoned entrepreneurs know just how important analytics are in growing your business. Without a serious analytics strategy, you are simply relying on hope and luck to grow your company.
In a startup you are constantly under pressure and have way too many distractions. Having a set of metrics that you watch & that you feel are the key drivers of your success helps keep clarity. And the more public you can make your goals for these key metrics the better. Make them widely available inside the company and share your most important goals with your board. Transparency of goals drives performance because it creates both a commitment and a sense of urgency.
If you don’t have a stability goal stated for the company and if you don’t regularly measure how you’re doing against this goal you won’t have your resources focused on the right priorities in the company.
Most companies have some measurements, but I would argue that people often measure the wrong stuff, measure with the wrong precision. The best way is to start by asking yourself at management team level: what are our company objectives and how do we best measure them? Because it can be hard to define or agree company objectives at an early stage I believe most people avoid them.
At the highest level you’ll obviously want to track how many customers you’re adding every month (and for some businesses that have hit scale this is measured on a daily basis). If you can break this down by channel that you’ve acquired them from this is obviously better.
How many additions came through organic SEO? How many through affiliate deals? How many through SEM? Do you have a customer referral program? If so, make sure you can track which leads come from this. Measuring viral adoption is obviously important.
Usually you have a catch-all bucket for “direct” or similar that often came through PR or word-of-mouth.
If you have multiple versions of your product, how many are web vs. mobile? How do the mobile customers break down by device type?
The next step after measuring the customers you’re adding is to add the “cost to acquire” by channel. This is important because it will later tell you whether you have a scalable business or not. In the early phases if you can’t acquire customers cost effectively enough you’ll need to diagnose why and how to fix it.
The Final Question of Scalability
The repeated cycles of Building and re-engineering and Core Competency and Measuring the Market environment effects takes the startups further and further into the final stages of having a scalable model. Like I mentioned at the beginning, there could be n number of directions a startup can head towards, as many as there are number of significant KPIs that need to be improved. But finding the right nerve and chasing the wrong performance indicator is the difference between ending up with a scalable business model and ending up with a marginally incremental model. In this current age of every changing topography of the market with disruptive ideas entering and washing off many hopeful businesses, only having an optimal analytics solution to track their locus can make sure startups sustain and succeed.