How to Use Business Data to Your Advantage
Google used to be known for its brutal job interviews. According to “Business Insider,” you could expect to be asked things like, “How many golf balls can fit in a school bus?” or, “Why are manhole covers round?”
Some of their puzzling questions required a great deal of mathematical computation. Others were deceptively simple.
It would appear that the point isn’t to find the right answers, but to test the applicant’s ability to remain calm under pressure, demonstrating their intellectual acuity and problem-solving skills. (Or perhaps how humbly they admit their utter confusion and ask for a calculator.)
I was once asked the manhole question. The answer is as simple as it seems. It’s round so it doesn’t fall through the hole. But I promise a million other things race through your mind when asked that question during an interview.
Managing your data is a lot like the manhole question. It’s deceptively simple.
First, data is just information. It’s information you already have, for the most part. For example, how many roofs have you sold in the last 5-10 years? How many roofs have you bid on in the last 5-10 years? What are the addresses for these sales and leads?
This information, if used correctly, can be extremely valuable to your business.
Proper placement of marketing dollars
Depending upon how you source your leads, they can come cheaply (i.e., social media, word of mouth, etc.) or drain your pockets (i.e., direct mail, home shows, etc.). Assuming an average cost of $200 per lead, you want to spend your marketing dollars where you have the highest lead value.
Lead value in relation to sales can be calculated by multiplying your average sales price by your average closing rate.
Use your data to evaluate which market, zip code, or neighborhood has the highest lead value. Depending upon how targeted you prefer your analysis, these geographic areas can be as large as a suburb or as small as a subdivision. The result is not always what you might think. The poorest areas you service can sometimes outperform the wealthiest.
Then, take it a step further.
Track your lead sources, conversion rate, job size, and referral rate by lead source. A lead source can provide countless opportunities. But, if they aren’t good opportunities, you could just as well be spending your time counting golf balls in school buses.
Proper goal setting and forecasting
As you begin setting sales goals for 2016, you need to know where you’ve been. As noted by poet and Harvard graduate Wallace Stevens, “Accuracy of observation is the equivalent of accuracy of thinking.”
For instance, don’t set a close-rate goal of 40% if your historical records show that you’re tracking 25%. (By the way, the national average is 20%.)
And don’t set an average job-size goal of $10,000 if the market only supports $8,500.
Know your numbers. Accurate numbers will yield realistic goals.
Let’s say your top sales person hopes to sell $2 million in 2016. If you know that his historical close rate is 15% and your market will support an average job-size goal of $9,000, then it’s a cinch to determine he needs around 1,500 leads to have a successful year. If he’s not capable of running up to ten leads a day, this goal might be unreasonable.
If you’ve followed closely, I owe you two answers:
First, how much is your data worth? This question was notional. The answer will vary for every company reading this blog post, and it cannot be quantified. Bottom line: if you can increase your lead value by exploiting your data, then that increment is certain to affect your profits. Your data is valuable.
And, finally, there were about 500,000 golf balls in that school bus!
GAF will be hosting a goal-setting webinar focusing on how to use past data and historical numbers to set goals that make sense. We will talk about how to systematically set, track, and achieve goals for 2016, and how to spend your marketing dollars wisely. We hope you will register by following the links below and get your business on track in the New Year.
Monday, December 7, 2015:
11:00 a.m. EST – Goal Setting
Thursday, December 10, 2015:
11:00 a.m. EST – Goal Setting (repeat)