As a small business owner there are countless things that demand your attention which makes it hard to do anything well. We all know the importance of understanding our data but we aren’t particularly good at it. Here are 5 alarming facts about small business analytics.
1. We know it’s important so we can’t claim ignorance
On the big business side for example a lot has been published about the importance of analytics. Jim Collins identified it as one of the key traits of successful companies. He has this to say in his ‘Good to Great diagnostic tool‘
“We make excellent use of data, metrics and hard tangible evidence to assess external threats and internal weakness. We make particularly good use of trend lines (to see where we are declining) and comparative statistics (to see where we are falling behind others) to discover and highlight brutal facts.”
Small business owners know that they should be analysing their data. In fact in the SMB routes to Market Study SMB found that “getting better insights out of the data they already have” as their top technology challenge.”
Online merchants are no different, in this study by Baynote, analytics evaluation was listed as the top tactic for customer retention – well above any other strategy.
2. Our most popular analytics tool has an 88% error rate
In The current state of business analytics, SAS identified that the most popular tool used for business intelligence was spreadsheets. Not only that, their usage is increasing (see below).
The worst part though is spreadsheets are widely known to carry a very high error rate with this study claiming that 88% of spreadsheets contain errors.
3. Most people are addicted to vanity metrics
Studies continually show that small business owners focus their analysis on vanity metrics.
- In this study, Baynote found that the number of likes on Facebook and number of followers on Twitter are considered the top measures of social media success.
- This survey by Get Response of 500 small business owners found only 1/3 are paying for publishing / analytics tools.
- This eMarketer survey found that only 16% of marketers (650 surveyed) can track the impact of social media on revenue and most favour ‘soft metrics’ like the vanity metrics on the right.
- This Pitney Bowes survey of 750 small business owners found that 73% don’t measure their email marketing metrics.
- Eric Reis the author of the Lean Startup says “Most analytics packages are configured by default to provide mostly reports on vanity metrics” see more on his post on the 4 hour workweek blog Vanity Metrics vs Actionable Metrics.
So while we are measuring some things we aren’t focusing on the actionable metrics that can help us make better decisions.
4. Data is growing 44 times in the next decade
This report suggests that data will soar 44 times over the next decade. Cloud adoption is exploding and more and more data is available to be analyzed.
This represents both an opportunity and a challenge.
The Intuit 2020 report and many other sources report that “Those who become proficient in collecting, managing and analyzing this information will gain competitive advantage.” INTUIT 2020
Of course by definition, those that don’t will be left behind.
5. We aren’t spending time on analytics
Here’s part of this infographic by Longer Days reporting on the 2011 Small Business survey by Intuit.
Not a whole lot of time being spent on analytics!
The 2011 Routes to Market Survey shows that medium businesses are more than twice as likely to use them with 16% uptake among small business owners compared to 33% among medium business owners.
Where to start?
Check out our actionable analytics email course to help you track the numbers that are most important to your business growth.