The 6-point formula to create a data-driven business
A couple of weeks ago, I had a chance to attend a tech talk at Galvanize titled “How to Use Data to Optimize and Grow Your Business.” The speaker is Chris Neumann, CEO of CROmetrics — a company that specializes in Conversion Rate Optimization, providing turn-key solutions that help turn traffic into paying customers. Chris has a product management background, but more importantly, he is a growth experts. There has been a trend in a lot of tech startups in the Valley shifting from traditional marketing methods to growth hacking. A growth hacker creates product/market fit, finds scrappy ways to get the word out, and optimize with data to grow. This talk is interesting to me because it provides the data-driven facets of product management, a path that I aspire to follow.
The overarching goal of the talk is to provide practical/tactical advice on how to use data instead of opinions. Why is it important? There has been empirical evidence that gut feel is a bad way to run a business. Data can be collected from conducting experiments. A/B testing is the most popular type of experiment, where we have a hypothesis and then try it on a half the traffic and see if it makes a difference to the business. These are often pretty thoughtfully planned out and designed to move the needle in the business. Despite all that, across a lot of data we only see a 20% win rate. That means that you can be super confident that you will win if you have data vs. the other person going with their gut.
So here are Chris’s tips and advice on creating a data-driven business:
1. The biggest obstacle to prioritize data over opinion is corporate culture: Everyone is used to managing based on their own opinion (Senior management wants it their way, engineers think they’re better marketers than you and undermine your project). The tip here is to invite everyone to have their idea tested, which is a win-win.
a. If the idea is good, you get more lift.
b. If the idea is bad, they eventually stop giving ideas.
2. Learn some tech skills, including HTML and SQL:
a. You will be able to create a webpage, deploy code etc.
b. You can empathize with engineers working for you.
c. You will not try to spec things that are impossible to do
d. SQL will give you a huge competitive advantage over other marketers, particularly in SaaS companies, but valuable for marketing programs at e-commerce companies
3. Embrace a strong champion ideology internally: This means that every person in the company needs to take full ownership to conduct tests and experiments himself.
4. Keep a nice balance between product and marketing: It is critical to segment these 2 business aspects — building the product and branding the product, because they are both vital in growing a business. Tools like CROmetrics will help you keeping them in line.
5. Conduct User Testing: This helps you to experience the user’s environment, as well as uncover areas of the business that are new to you. Chris suggests a few software that are fantastic user testing tools:
a. Optimizely (No.1 tool for A/B Testing — a hypothesis validation machine)
b. Crazy Egg / Hotjar (Heat Maps and “User Movies”)
c. Delighted (Feedback, Messaging)
d. Qualaroo (Onsite User Surveys)
6. Adopt company-wide internal tools that drive a strong data-focused culture. Examples that Chris is using at CROmetics include:
a. Projects (Idea Backlog Management)
b. Slack (Culture, Internal & Key Partner Communications)
c. Trello (Project Management & CRM)
d. Quip (Internal knowledge base and planning)
e. Axure (Prototyping and mockups)
So there you go. With this list of advice and tools, you can go ahead and build a business that uses data to create the best product in your market!
