Solid Thinking

Spotted today in the NZ Herald: Kiwi Data Warehousing Soars.

What does  mean to us?

If anything, recession taught us something by looking at the trends faced by the advertising industry. Most pronounced in the offline advertising, companies are rushing to cut their marketing budget by a large amount. They chose to hunker down in the bunker waiting for the artillery barrage of credit crunch to pass away before poking their heads again.

Interestingly, some went exactly the other way around into panic buying mode. They base the sales on percentage concept, where if the conversion rate goes down then in order to maintain the sales volume the base audience number must go up. This “panic sales defense” move lead to massive increases in marketing spend that returns no sales increases.

Why exactly these things happened?

The primary cause is that a lot of businesses, especially in the “calm New Zealand where time forgets”, neglect the importance of information. In particular, a lot of them do not bother to try to know their customers. For most conservative businesses, any sales is as good as the other. For instance, a lot of businesses spend tens of thousands of dollars on their websites without bothering to spend a few hundred dollars to get good analytics software such as Google Analytics.

But knowing your customers is paramount to your marketing efficiency. Google Analytics, for example, can be configured to attribute your sales to where the customers are coming from. With this you can recognise which source is valuable and which is not so that when it comes the time to cut down some marketing budget you can be sure you are cutting the right one.

Other useful analysis include customer behavior, such as what do they buy, what are the most favourite products (= promotion opportunities), what are they searching for that made them leave your shop (= product gaps), etc. Social media such as Twitter and Facebook also allow you to engage your customers to gain their trust, and most importantly, feedbacks. Not only that, they also form a free 3rd party data warehousing, where you can conduct data mining to see what people are talking about in relation to your, or your competitors’, products.

With free tools such as these and storage data space becoming cheaper every day, data warehousing and data mining should become a common business practice. It should even be a crime to run a business without thinking about who your customers are.

If you can snipe your enemy from a distance, why blindfold yourself and charge with a short rate inefficient scatter gun?