Even an experienced business analysis specialist cannot instantly tell you what they're exactly doing. It's difficult to overestimate the significance of the process of business analysis, as it gives you a clear picture of how your company works. It also helps you make balanced management decisions at all levels: optimize sales, boost marketing efforts, and improve HR strategy.
The process of business analytics unravels the needs of a business at every stage — from planning to optimization. Methods, tools, and algorithms of business analysis allow us to see the state of things from various points of view: evaluate the strategy, organizational structure, finance, and so on.
Business analysis covers a wide spectrum of areas and tasks. We will tell you how processes of business analytics work in marketing.
Any marketing strategy aims at minimizing expenses and saving time spent on selling goods and services. You can achieve these goals using business analysis.
So, what exactly do we need to do?
Target Audience and Returning Customer Analysis
A visitor becomes a client when they understand that the product solves their problem or caters to their needs. To find out the users' problems or needs, we need to analyze the target audience and create a customer avatar.
Understanding your client allows you to build a more detailed sales process and increase the probability of a purchase.
How to Segment Your Target Audience
When dividing visitors into groups by specific criteria, you can personalize communication with each client.
Mark Sherrington created the 5W rule that can be used in any process of business analytics.
Target audience segmentation gives you a better understanding of what each group really needs.
How to Analyze the Client Database and Their Activity
The next step is to analyze the already engaged clients who made a purchase.
RFM analysis uses the following questions to study clients:
- When was the last purchase made?
- How many purchases were made?
- How much did customers spend?
We already have an article on RFM analysis on our blog, go check it out if you want to learn more about dividing up clients by the degree of their loyalty.
RFM segmentation gives you several customer segments, and each of them requires a special approach.
How to Turn Newbies Into Loyal Customers
If you need to turn a newbie into a loyal customer, tell them about the product range and offer to join a loyalty program. However, don't offer a discount this instant, it'll reduce marginality.
How to Keep the Hesitant Clients
Such clients don't need any promotional campaigns and discounts to make a purchase. They need to know the company values them. For example, such clients are more likely to give feedback, take NPS surveys, be involved in omnichannel, be aware of new products and so on.
How to Wake Up the Sleeping Customers
If you don't reactivate such customers, they will go into the Lost category. Personal discounts, special offers and promos are a great choice for such people.
Reactivation of subscribers can be a useful tool in your hands. However, you can't just reactivate and forget about them.
How to Return Lost and Lost Loyal Customers
Why did formerly loyal clients stop buying? You can create "the greatest deal" for these clients from the danger zone. However, if you don't find the real reason why they nearly left and eliminate it, the reactivated clients will be lost again.
How to Emphasize the VIP Clients' Status
VIP Clients possess all characteristics of the loyal clients, but they demand an approach of a higher level. It's important to show such clients that their status gives them additional benefits. For example, they get access to juicy promos, can buy products at special prices, or get access to some private events.
How to Calculate Customer Lifetime Value (LTV)
Customer Lifetime Value is the amount of revenue a customer can bring during their lifetime. LTV helps measure the efficiency and the pay-out of the business model. It also lets us forecast the future revenue.
LTV can help you if you wonder:
- whether you need to optimize the promo channel expenses;
- whether you need to focus on acquiring new customers;
- how much you need to spend on the customer retention;
- what income to expect in the future.
Let's take a look at the basic options of calculating LTV and find out what methods suit you best.
1. Using ARPU (Average Revenue Per User).
This method is very popular, but it doesn't suit everyone. The ARPU rate is good for the cases when the expenses per user are not high. It's common for the gaming industry, for example, as there are millions of users and the expenses are spread between all of them.
2. Using AMPU (Average Margin Per User).
This option goes well for businesses where expenses per user are sufficient. This formula allows you to see the real picture of how much a user brings on average.
3. Using AGM (Average Gross Margin), RR (Retention Rate) and RD (Rate of Discount).
This traditional formula takes into consideration changes in revenue within the analyzed period and inflation (by adjusting the discount rate). It's suitable for those who have no annual sales data, i.e. at the initial stage of your business development.
To understand whether you're doing everything right you need to track the LTV to CAC (Customer Acquisition Cost) ratio. The most successful startups analysis showed that in their case, this ratio is 1:3 and higher. For this reason, this rate is used as a basic value, and if it is lower than 1:3, your customer acquisition cost is too high and you need to change something.
For example, if you need to increase LTV you should lower the customer churn or increase the marginality (either reduce the expenses or increase the product cost).
What Is Cohort Analysis and How to Conduct It?
When we do cohort analysis, we analyze the behavior of certain groups of users within a period of time.
Cohort analysis is a versatile/one-size-fits-all approach that allows you to study the behavior of certain cohorts (groups of users: customers, subscribers, or visitors) over a certain period of time. Apart from that, you can evaluate the cohorts from the point of view of key metrics (Retention Rate, ROI, LTV, etc.)
Any business will only win from resorting to cohort analysis as it provides them with different perspectives:
- measure the efficiency and the ROI generated by the advertising channels;
- forecast the LTV;
- measure the efficiency of email campaigns;
- define the behavior of the cohorts within general metrics;
- build a more detailed product analysis.
How to Analyze Pairs of Products and Product Recommendations
At this stage, we need to understand what combinations of products people tend to buy. This method is suitable for a business with a vast catalog and a large number of transactions.
The Apriori algorithm helps form pairs of products. It allows you to go through a large/big transaction database and find not only the most frequent pairs but also spot certain patterns. At first, these rules may resemble a set of random things, however, these rules were formed because of a pretty unlikely "beer-diapers" pair.
Analysis of product pairs will help you:
- increase the income of your business with the help of cross-selling;
- optimize the assortment;
- define seasonal pairs of products.
This method is not so expensive, and it lets you get ready-made pairs of products quickly.
You can use the results of the analysis in product recommendation sections on your website or in an email campaign. This method can be called semi-automatic as you don't need to create the pairs of products, only place them into a block.
How to Analyze Sales Within a Process of Business Analytics
Depending on the problem you need to solve, analyze the rates below.
Dynamics of Sales
We track total sales volume and compare it to the previous periods. This is how we can find the bottom in our sales funnel.
Plan vs Actual Analysis
Plan vs Actual analysis includes tracking the sales KPIs: both overall and by departments/employees/products. It will help us find weaknesses and quickly make decisions to achieve our goals.
ABC analysis helps businesses categorize the products to identify the most valuable ones.
We evaluate what products bring most revenue and form the basis for the business. We also find the products that are sold poorly and are secondary. This way, we can optimize the product range and focus on the profitable section.
Here, we look for the factors influencing the sales volumes. If you focus on certain bottlenecks, it will be easier to beat them one by one.
You can use additional filters, for example: analyze sales channels, marketers working on the project, and clients' characteristics.
How to Analyze Marketing Channels
To increase sales, marketers tend to use various communication methods engaging clients in omnichannel interactions. However, you will need to track the KPI of each method in order to actually get profit from such an interaction.
How to Analyze Ad Campaigns
As a rule, businesses tend to use several advertisement platforms, e.g. Google Ads, Facebook Ads, etc. For each platform, you need to track the main metrics that will offer insight into the success of each campaign.
These KPIs are:
- Cost per thousand clicks (CPM);
- Number of clicks;
- Click-Through Rate (CTR).
- Efficiency Metrics:
- Conversion Rate (CR);
- Click-Through Conversion (CTC);
- View-Through Conversion (VTC).
How to Analyze Email Campaigns
You need to monitor the results of email marketing: it can help you correct your email strategy in time, find and fix possible mistakes, and focus on profitability.
You will need to track the following main KPIs to succeed:
- undelivered emails rate;
- Open Rate (OR) (remember to consider the recent Apple's update);
- Click Rate (CR);
- Click to Open Rate/Click-Through Open Rate (CTR/CTOR);
- % of errors;
- % of complaints.
You can get the data for your processes of business analytics from ESPs.
If you track these metrics in a single email, you won't get the whole picture: you need to have general rates of promotional and triggered campaigns, of each email series, and so on.
Rates may heavily vary depending on the type of business and campaign, so you will need to have expertise to understand whether your marketing strategy is going in the right direction.
In case you don't have such expertise, we can help you. Just after you finish reading this article, fill in the feedback form below and we will answer you ASAP. You can also read our case studies and see it for yourself.
How to Track Social Media Campaigns
An average user spends about 2.5 hours on social media, which is one third of their total time online. This is why social media is considered a powerful tool of influence on a potential buyer, and requires proper organization.
If you want your social media to achieve your goals, you need to track the key rates that define the efficiency of your campaigns
- Subscriptions and unsubscriptions dynamics (you can make a detailed report by hours);
- Love Rate/Talk Rate;
- Engagement Rate.
These rates can help you do content analysis, define the interests of the audience, and find the best posting time and frequency.
How to Calculate Marketing ROI in Business Analytics
It is important for businesses to understand whether their marketing channels pay off or not. You need to combine the data from the advertisement systems and ESPs with the data from your CRM software.
For example, you can analyze the efficiency and recoupment of the marketing channels by calculating the ROI, ROMI, and ROAS rates.
You can measure the profitability both of every email and of the campaign in general. This way, you can find the ROI of your marketing campaigns and optimize your expenses.
What Else You Can Analyze to Grow Your Business
Analyze Your Competitors
It's important to comprehend why you need to analyze your competitors and formulate your goals correctly.
You can analyze your competitors using the following criteria:
- product range;
- price policy;
- website quality;
- competitive environment as a complex;
Using the acquired data, you can do the SWOT analysis of your competitors: you will find their strengths, weaknesses, opportunities, and threats.
Analyze Employee Performance
You can track KPIs for each employee or department. This can help you optimize business costs and find both strong and weak sides of your work processes.
For example, the number of sales, profit from sales, and average hold time can become KPIs for a sales department.
Major companies successfully follow this direction. HR analysis can help you find weak spots in the hiring and working processes, reduce the employee churn, increase their performance, and evaluate the level of competence.
HR analysis allows you to avoid making human errors due to being subjective.
Non-standard analysis deals with unusual business tasks. They either can't be solved with the help of existing systems or they require special knowledge to be solved.
For example, we often have to analyze the purchase frequency to improve triggered campaigns or to find correlations between different products.
Customer Journey Analytics
Customer journey analytics allows you to trace the user's journey from the first interaction to the end of their customer lifecycle. Thus, you need to combine the data from every source into one marketing report to measure the efficiency of your efforts.
It sounds easy-peasy, but it requires much effort to integrate the customer journey analytics system. You will need to gather data from various systems, set integrations, introduce changes into the work structure, if needed (which nearly always is), track these processes, and test them.
Customer journey analytics is used in companies that launch omnichannel marketing campaigns and interact with audiences on lots of platforms.
The Best Tools for Your Process of Business Analytics
Essential Tools for Web Analytics
Use the following tools to learn more about your website's accessibility and users' activity:
- Google Analytics;
- Google Search Console;
- Matomo, etc.
Some analytics platforms have extended functionality, e.g. provide an opportunity to track ecommerce metrics.
Best Advertising Platforms
The most popular online advertising programs are Google Ads and Facebook Ads Manager. These platforms not only have essential advertisement features, but also help analyze advertising campaigns, optimize your budget, and automate campaign settings. One of the essential parts of maintaining such campaigns is to make reports. At EmailSoldiers, we track the performance of our ad campaigns using a special template in Google Sheets.
Best CRM Software for Business Analytics
You can use CRM platforms to automate work with clients, track deals, revenue, and marketers' work. We've already featured an article about the best CRM software on the EmailSoldiers blog — read it if you need a more detailed overview.
Rare companies create custom CRM platforms as their maintenance and support require much effort. We'd recommend trying the following CRM software:
- Drip E-CRM;
- HubSpot CRM;
- ZoHo CRM;
Most Popular ESPs (Email Sending Platforms)
ESPs differ by their functionality, user interface, and price. Some platforms support SMS campaigns and push notifications aside from email campaigns. The pricing is usually calculated depending on the database volume and email sending volume.
The most popular ESPs are:
Tools for Social Media Analysis
The most popular social media platforms, such as Facebook, Instagram, and Twitter, have convenient built-in tools for analytical accounting and data management via API. Social media analytics tools are also great for brand promotion, support and improving client communication.
Other Sources for the Process of Business Analytics
You can analyze data from any other sources if the task requires it. Data in cvs/xls format works as well as getting it from the sources supporting API/OData/HTTP/FTP.
Business analysis opens new possibilities for a company's growth. It helps find and remove the already existing problems and flaws, prevent them from occurring in the future, and develop strengths. The main thing is to filter methods of your business analytics process and choose only those that suit your goals.