The Importance of Data in Effective Capital Allocation for Ecommerce

– Many ecommerce companies are wasting money by not collecting data on their marketing efforts, such as paid ads, email agencies, ad agencies, influencers, and CRO.
– Most CMOs do not allocate capital for data, even though it is the only play that can improve the efficiency of the entire marketing stack.
– Without a data strategy tied to revenue and overall business trends, companies are making decisions based on hunches and guesses, which is ineffective and costly.Implement a data strategy to collect and analyze customer data in order to improve marketing effectiveness and allocate capital more efficiently.Let’s talk Capital Allocation – If you’re spending money on paid ads, an email agency, an ad agency, influencers, and CRO, and you’re not collecting data, there is a 100% chance that you are wasting money and do not have an effective means of capital allocation. So while you think you’re doing the right things and everything people are telling you to, you’re actually not. Most ecommerce companies don’t have a data play. Most CMOs don’t ask for any capital allocation for data. Yet it’s the ONLY PLAY that affects all of the above and has the power to improve the entire stack’s efficiency. By the way, CFO friends, data with emails is a standalone asset that actually appreciates in value just by collecting it. But only if there is data attached to it. Now total up what the average cost of those things are for a $1 million revenue business. $250k on ads, $24k on an agency, $24k on an email agency, $25k on influencers, $24k on CRO (rough math, these costs continue to rise also). That’s just under $350k in spend on marketing. And you still don’t know where your best customers come from, what makes them your best customers, what profile properties make up the best customers, what matters to your customers, buying cycles of your customers, what ads to show to your customers, what things to include in emails to your customers. All the people and spend you’re doing are hunches and guessing done on a whiteboard. This is madness. I love companies that I talk to and are spending $30-40k a month and happy to do so, but have no idea about their unit economics, levers, or anything outside of running ads and hoping for the best. (These are the ones that want to get to $250k per month spend in the next year – let that sink in). Business is about positioning your products within a market. It’s about understanding who your audience is and what matters to them. How anyone can do this successfully without a data strategy floors me. How anyone can say they have a data strategy that doesn’t tie directly to revenue and overall business trends blows my mind. 50% of people that sign up will never open an email. You are spending money on an asset that provides zero value, provides zero insights, and is heralded as a KPI that shows “growth” (we accept a 30% open rate as being high)I don’t know how to make this any clearer to you lot, if you’re an ecommerce company and you’re just collecting an email and/or hoping someone provides you a phone number next you’re allocating capital in the least effective manner possible.This should be a no brainer because you are recovering value from an existing underutilized asset which requires nothing more than swapping out your sign up form. 96.33% is the form completion rate for forms asking for 5 data points over the month of February for our test website. Waiting on this costs you more than you can imagine.#marketing #ecommerce

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