I am a budgeter. Ever since I was sixteen, I have tracked almost all of the money I spent in Quicken and compared it to a budget I create annually. I guess it makes sense that I ended up in a data-related field!
One of the reasons I have always tracked my spending in a budget is that I found that those who don’t track it, tend to spend more. I find that the same mentality applies to business. Having spent many years as a consultant, I witnessed organizations acting differently based on how the economy was performing. When the economy was good, they might hire more people than they should or take on projects that have questionable returns on investment.
When it comes to digital analytics, I find that organizations can get lazy about maximizing digital performance. When the economy is humming along, some organizations don’t pay that much attention to the data they are collecting in their digital analytics platforms. If the lead form competition rate is 15% vs. 17% does it really matter? Is it a big deal if the order conversion rate is 2.5% vs. 2.8%?
I also see organizations “over-implementing” when the economy is good. They sometimes spend weeks or months tracking their digital properties to excruciating detail. Developers may set hundreds of data events or track every single link or button on a website.
As we enter into what could be a prolonged economic downturn, I am hearing and seeing a lot of fear out there. Some companies may not make it through the downtown and others may be forced to cut back on people and projects. However, those in the digital analytics field are often in a better position than others during troubled economic times because they can use data to quantify how they are contributing to growth. When growth slows, one of the best ways to accelerate it is to leverage data to optimize digital properties. Oftentimes data is the key to identifying ways to improve conversion rates or increase revenues. While many things can be cut during a downturn, I have rarely seen an organization throw out its digital analytics team or platform during these times. In fact, economic downturns are when digital analytics platforms are often most valuable.
So as we enter these uncertain times, I would advise you to consider the following:
Focus on the Data That Matters
Despite how much data you collect at your organization, there are likely a handful of metrics that really matter when it comes to saving or making money. Take a step back from your digital properties and consider what data is most critical to the organization. If you are a retailer, that might mean focusing on cart conversion rates. If you are a technology company, that might mean focusing on lead conversion rates. Pick the customer journey flows that matter the most to the organization and optimize the heck out of them.
Skip the Vanity Metrics
Another benefit of an economic downturn is that you have an excuse to skip the vanity metrics! When times are tough, it is interesting how few people care about the number of visits or unique visitors your digital properties are getting each week.
Treat Digital Analytics as a Profit Center vs. Cost Center
Many organizations incorrectly treat digital analytics as a cost center within the organization. They view digital analytics software and teams as something that you just have to have – like desks, computers, and phones. It is part of the cost of doing business. But digital analytics should be viewed as a profit center and an economic downturn is a great time to shift this mentality. Your organization should be investing in digital analytics so that it can either cut costs or increase revenue. The digital analytics team should be able to show specific examples of how data was used to improve the organization’s bottom line. If your organization isn’t already tracking how digital analytics data and the resulting analyses are contributing to the bottom line, use this downturn as the reason to start doing this right away. Using a profit center mindset will also help your digital analytics team avoid low-impact projects and requests over time.
Experiment, Experiment, Experiment
While your organization should always be experimenting to find ways to improve customer journeys and experiences, instead of pulling back on this, double down on it! It is very easy to abandon experimentation efforts during tough times, but experimentation is often one of the biggest unlocks to new growth. Challenge your team to identify new ideas for optimizing conversion and test as many of them as you can. The beauty of experimentation is that you can use control groups to prove how valuable the tests are when you find winners.
Re-evaluate Digital Advertising
If you need to cut costs, one of the best areas to do this is digital advertising. It is easy to scale back your digital advertising and view the impact of this on your conversion. While there can be negative branding impacts of reducing advertising, many organizations have not taken the time to find where they have diminishing returns. Try reducing your digital advertising by 10% and see if your conversions have gone down by 10% over the next few weeks. Don’t be freaked out by the decrease in visits. Focus on the longer-term impact on conversion. If your conversion metrics don’t fall, try reducing digital advertising by another 10%. Eventually, you will see conversions go down, but it may have been the case that you were over-indexing on last-touch attribution and overpaying for digital advertising. The economic downturn provides some cover for testing the efficiency of your digital advertising efforts.
Invest Money Where it can Compound
Every dollar invested is not equal. If you spend money on advertising, you may get a one-time lift, but you have to keep investing there to see repeat lift. Money spent improving digital products has the potential to create exponential growth. For example, if your organization spends $20,000 making a new feature that improves the product experience, that could lead to increased product adoption. This increase in product adoption could lead to increased referrals and revenue retention. During economic downturns, it is important to recognize that all investments are not equal and that investments in product growth can have a compounding effect. While the natural reaction may be to slow down product development when times are tough, it can often be the time to double down on product development projects that will increase adoption, engagement, and retention.
Some of you reading this might be saying to yourself – why wouldn’t we do these things all of the time? Why only during an economic downturn? Of course you should probably do these things all of the time. But as I mentioned at the start of this post, when times are good, we tend to lose our focus. We implement more than we need. We focus on vanity metrics. We analyze data that may be nice to have instead of critical. We don’t consider if the analyses we are doing are providing ROI. We experiment, but maybe not as aggressively as we should. We buy ads to get traffic but may not do it efficiently.
Economic downturns can be horrible, but if there is a silver lining it is that they force you to refocus on what is most important. I advise you to take advantage of this time to focus on what matters most to your organization and maybe when the downturn is over, you can try and avoid some of the bloat that happens when times are good again. And hopefully times will be good again soon!