Business intelligence (BI) is certainly a hot buzzword, and if you’re like a lot of ecommerce managers up to your ears with work, you generally don’t have time learn every buzzword in the zeitgeist. You may already pull a half dozen reports out of Google Analytics, why bother with more?
But BI is to Google Analytics what a rotary phone is to an iPhone. BI can be game changing for your business, and it’s well worth adopting. Why?
To begin, when you use a BI tool, such as Magento’s Business Intelligence, you essentially create a data warehouse using data from all the systems deployed throughout your business: website analytics, CRM, OMS, ERP, help desk, inventory management, email management and so on. Those datasets are layered on top of one another in visual dashboards, letting you spot interesting correlations, and ask very strategic questions based on what you see. It offers a level of insight that’s impossible to achieve by manually merging data in a spreadsheet. And it’s fully automated.
How to Know if You Need BI
You know you need BI if:
- If you, or someone in your company, spends a good chunk of time merging myriad datasets into a single Excel spreadsheet to arrive at some kind of understanding of what has happened in your business.
- You want to know what’s happening now in addition to what just happened. Reports tell you what happened yesterday, last week or some other past interval. Only a dashboard fueled by BI can tell you what’s happening right now.
- You’re considering making changes to your business, say expanding into a new market or your product suite. BI doesn’t just tell what’s happening; by layering on multiple data sources, it tells you why. And that, in turn, will help you assess the risks and opportunities of more strategic moves.
You don’t need to be a data geek to gleam insights from BI. By definition BI is highly visual, offering dashboards that highlight correlations between datasets that would otherwise be difficult to see. You can then drill down into the data, and begin to ask additional questions and test hypothesis.
A New Level of Insight
Google Analytics and similar website analytics programs do a great job at tracking metrics such visitors to your website and conversion rate. But those metrics don’t offer the critical context you need to home in on your most profitable customers, and drive ROI. To understand which customers cohorts will drive your business forward, you need to understand their lifetime value (LTV).
With a BI tool you can merge conversion rate and visitor information with actual revenue data to arrive at customer lifetime value. Then when it’s time to make critical decisions, such as product selection or pricing, you can see the impact of those changes on the LTV of the customers you acquire.
For instance, let’s say you sell a product for $200 and that your margin on that product is 45%. Now that lets you know (because you’ve used a BI tool to get LTV insight) that customers who purchase that product have a $2,000 LTV. This is strategic information, because it means spending up to $150 – $200 to acquire that customer will still deliver stellar marketing ROI. Without that LTV data, you might not be willing to spend that much for the customer.
Snapshot of What Best Behaving Customers Look Like
BI also allows you to track LTV by customer behavior and segments. For instance, do shoppers who purchase a particular line of products have a higher LTV than your overall customers? What are the LTV of customers by geographic location, age, gender, income or by any combination of attributes? Which channels — Google AdWords, Facebook Ads, email newsletters, etc. — deliver the greatest number of high LTV customers? Are there behaviors and demographics that indicate a consumer who will purchase just once vs. those who will purchase frequently? What about time in between purchases?
A thorough understanding of LTV dynamics will help you drive ROI by:
- Focusing your marketing promotions on products that attract your most profitable customers.
- Model your most profitable customers by demographic and behavior use those models to target consumers who are new to your brand.
- Target consumers in the channels in which they’re most likely to respond, thereby driving return on ad spend (ROAS).
Out of the Box Plug-ins Means Fast Implementation
Once upon a time, business intelligence was a hugely expensive proposition, one that required engaging an army of system integrators to merge disparate data sources. Today’s SaaS, API-driven tools, particularly Magento BI, has leveled the playing field. Merging data from tools such as Google AdWords, MailChimp, Salesforce, Facebook, Zendesk, SurveyMonkey and many others is a simple one-click process. The plug-ins — not your IT department — will retrieve and normalize the data automatically, allowing you to set up a robust BI tool in less than a day.
Once all of this data is centralized in your dashboards you can begin to compare how each channel/campaigns perform with your particular customer segments, and quickly identify which have the best LTV.
One of the most frequent questions we hear at Something Digital is: How do I establish an attribution model? Online retailers want to know which channels deliver the most profitable customers so that they can focus their marketing spend on them. BI sheds light on attribution.
By tracking trends on a wide variety of data points, BI can tell you how your customer cohorts first engage with your brand, as well as show you where the gaps in your understanding of your attribution might be.
Once your understand how customers arrive at your site, you can then probe on a deeper level, such as:
- Which channels are best for brand new customers?
- Why does one channel bring in customers with a higher LTV than another?
Assess All Your Customer Touchpoints
So far I’ve talked about customer acquisition and sales, but as every retailer knows, sales are hardly the sole customer touchpoint. Fortunately, BI can deliver insights into all interactions customers and prospects have with your brand.
For instance, let’s say you wish to know how many customers experience a slower than normal time-to-ship for their orders. More importantly, you want to understand the impact of such delays on their LTV.
The first question alone is extremely to answer because you’ll need to pinpoint when the packages shipped, when they left your warehouse, when the customers actually received them. BI can pull all of these datasets from your internal (OMS, CRM, ERP) and external (UPS deliver) sources.
Once you have that data in your dashboard you can then determine the impact late shipment has on your customers. Are they more likely to return their product if they received it late? Are they more likely to cancel their order? What are their purchase patterns after receiving a late package? Are they less likely to become a repeat customer if we ship poorly on the first time?
Each question leads to additional insights, all of which are actionable. For instance, if customers with behaviors and demographic attributes that indicate a high LTV receive their packages late, you can proactively send them a coupon or offer by way of apology.
BI insights can help you improve interactions with every customer touchpoints by allowing you to monitor every part of the customer lifecycle, identify where your trouble spots are, and more importantly identify what your company is doing right and focusing on those activities.
Customer loyalty deserves its own blog post, it’s worth mentioning now how BI can help you build a customer loyalty program that rewards your brand promoters without breaking your bank. For instance, you can take advantage of the one-click access to SurveyMonkey from Magento BI to understand how customer sentiment affects purchases, and how purchases affect customer disposition. By layering sentiment data onto purchase data, you can begin to understand what motivates your brand promoters, and ways to reward them.
One Final Thought
While everything I’ve described above should great and amazing, I can promise you this: it’s only going to get better! Magento is investing serious research and development into its BI tool, adding new functionality while driving the cost down. Expect to be dazzled at this year’s Magento Imagine.
If you have questions about you Magento BI let us know!
Like this blog? Check out this blog on why you need Magento BI.