You’ve read the publications tossing around the big business buzzwords; things like predictive analytics, artificial intelligence, and machine learning. You’ve maybe even tried to incorporate some of this new technology into your organization’s operations and strategy. But have you done everything you can to wrangle data and find the insights that reliably drive revenue?
More often than not, the answer leaders give when I ask this question is “no.” And it’s even more commonly so in the B2B world.
B2Bs are held hostage by this misconception that big data only applies to consumer brands. They feel that their audiences aren’t large enough to warrant data analytics. But the reality is that any business—big or small, B2C or B2B—can use data science to grow sales.
And you don’t need to spend millions of dollars and several months (or years) building out your data infrastructure. You can start now, with what you have. But you must have the right mindset in place. In this article, we’ll discuss three mindset shifts you’ll need to leverage data successfully and turn it into dollars.
Our Growth Mindset Assessment can help you quickly assess your readiness to grow using data. It provides a real-time customized report with things you can do right now to grow sales.
Mindset Shift 1: Be Hypothesis-Driven
An overload of data can paralyze us. We have mountains of it, how do we put it to work for us without feeling overwhelmed? How do we get by without the expensive data warehouse project? How do we decide which data sources are worth looking at?
The way to squash these doubts is to be hypothesis-driven. Start with an assessment of what’s working and what’s not. Then, come up with theories as to how you can grow your business. Next, determine which data sources and analytics tactics can help you prove or disprove your premise.
For example, let’s say you have a recurring revenue component to your business. Maybe you’re a B2B publisher, or an SaaS company, or an office supply company that offers to autoship refills of products.
You realize your renewal rates are down. So, you brainstorm some possible reasons—or hypotheses—for this trend:
- The renewal process is too complicated.
- Our subscribers aren’t engaged enough to build habits around our offerings.
- Or, our pricing is not in line with the market.
If you suspect your renewal process is too complicated, that opens up a lot of questions around the process. And those questions direct us towards the data points we should be assessing.
How are customers responding to renewal emails? Are you seeing responses to your direct mail campaigns? Do they react to on-site messages? Is your outbound sales team hitting the pavement hard enough?
For each renewal channel, are customers beginning the process but not making it through? Or are they not even starting? Where exactly are they dropping off? What is the renewal rate for members with credit cards on file and autopay set up, versus “bill me” clients?
When we know what questions we are trying to answer, the data requirements are much clearer.
As an example, a B2B publisher in the accounting space was experiencing issues with its paid subscription renewals. We crunched the numbers and found that the biggest issue was subscribers who didn’t have a credit card on file and didn’t respond to emails. Taking a closer look at the data, we found that the average subscriber’s purchase order process (i.e., the amount of time it took their organization to get the subscription purchase approved) was longer than the publisher’s renewal process.
To address this bottleneck, the publisher provided incentives to switch to a compliant credit card auto-renew process that only needed to go through the purchase order process once. Plus, we built a streamlined online renewal process that eliminated more than half the steps.
We also started the renewal processes sooner and across more channels. By engaging new tactics, like outbound sales, we were able to reach subscribers long before we reached renewal crunch-time. As a result, the publisher accomplished a 60 percent improvement in their renewal rate, worth millions of dollars.
Mindset Shift 2: Look for Something No One Else Is Doing
Best practices have their place in the world. If you’re facing a problem that’s new to you, they’re a great place to start. But the trouble with best practices is, if you follow the same best practices as everyone else, you will realize no tangible value. If everyone relies heavily on video marketing, that tactic will get saturated. If everyone lowers the price, there will be margin erosion across the board.
When you want to grow, you’ve got to find the insight no one else is paying attention to. And you do that with data. Usually, this means finding an underserved niche to build upon within your audience. Sometimes, it’s about finding an underleveraged sales or marketing channel. If you use data to find ideas no one else is noticing, you’ll have an instant competitive advantage.
Discovering a new opportunity could mean moving into an adjacent space where your competitors only dare to go. We wrote a whole piece about the art of expanding into adjacents, and we served our own business model up as an example. Unsurprisingly, we use data to drive our business decisions, and in crunching our own numbers, we noticed the opportunity to expand into new customer segments.
For a company in the beverage space, we found an underserved semi-professional segment within their audience. From there, we launched events and products squarely targeted at this sub-niche. This added over 30 percent revenue to the business.
With a client in the trucking space, we discovered they were overlooking the female trucker demographic. By designing special email newsletters, trainings, and events specifically for this segment, they created lucrative incremental revenue streams.
For a company in the business services space, we found that Facebook was a neglected channel. Once optimized it, Facebook delivered a cost per qualified lead 30 to 40 percent lower than one from the more popular B2B site, LinkedIn.
What possible sub-groups exist within your audience? What new channels can you try? Go out and use your data to find them.
Mindset Shift 3: Be Willing to Fail and Learn
If you get upset when something fails, then, I’ve got bad news: You’re not going to thrive in the world of data. However, not all failure is created equal. There is a right way and a wrong way to fail, as outlined in this article from Harvard Business Review.
Data helps us fail by design. It gives us confidence that what we try is more likely to work than not. But the reality is that no model is perfect.
Sometimes correlation makes us assume a causality that isn’t there. Other times, an external factor changes the system. Occasionally, problems are so complex that data alone can’t solve them (like how IBM’s Watson had no problem competing on Jeopardy!, but when asked to assist with treating cancer, it famously failed miserably).
Once you have a hypothesis supported by data and a distinctive way to compete, you need to think about how to test and learn. We recommend maintaining a learning agenda. By tracking all of your experiments, the goals for each, and how they’re going, you can identify opportunities to gather even more relevant data and get to the heart of what’s working and what’s not.
Resist the temptation to blame your team. Instead, ask, “What can we learn from that experiment that will help us design a better one?”
Data science is not just for B2Cs. When used correctly, B2Bs can leverage their data to find and exploit opportunities for growth. By getting into the right mindset—one that embraces a scientific approach, looks for novel opportunities, and is willing to fail and learn—you can find success in using data to transform your B2B for the better.
About the Sterling Woods Group, LLC
The Sterling Woods Group’s mission is to help clients make sense of their data to predictably grow sales. We apply data science to help you optimize your sales funnel, improve your marketing ROI, launch new products successfully, and enter new markets profitably.
We use a hypothesis-driven, data-supported methodology to discover insights that no one else is paying attention to. Then, we help you assemble the right sales strategies, marketing plans, technologies, and resources to seize this opportunity.
About the Author
Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Starting his career at McKinsey, his focus has always been on embracing digital technology and data science to spur strategic growth.
Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.
He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.
Rob lives outside Boston, MA with his wife, Kate; daughter, Leni; and black lab, Royce.