How Nate Silver Can Save Your Business

On election eve, every media outlet was talking about how close the Obama-Romney race would be. Not Nate Silver. He had been steadily raising Obama’s probability to win every day leading up to the election. Even as Fox News was covering the election, Karl Rove was claiming that Romney will pull close or even win, the numbers he was looking at told him so. At that point Silver had Obama as a 90+% lock to win. When it was all said and done, Obama won by 126 electoral votes and the guy with the numbers, not the ideology, looked like a genius.

Why had the rest of the media gotten it so wrong? For the same reason so many business owners get it so wrong – we only want to listen to the numbers we want to listen to. Nate Silver is a numbers guy, he processes all the numbers he gets. The media sees a left leaning poll and a right leaning poll and they will give more credence to whichever one supports their ideology. That’s why Nate Silver gets it right and Karl Rove is flabbergasted that the numbers he wanted to believe in didn’t match reality.

The election was certainly a wake up call for the media but it should ring true with business owners as well. No, not because of taxes. Because we all look at analytics, social media followers, sales, budgets, expenses, and tons of other numbers and try to fit those into the narrative we’ve built for ourselves. Instead, we need to resign ourselves to the fact that numbers don’t lie, only people do – often to themselves.

Most businesses have only one goal – more money. Everything you do has to somehow bring in more money. If it isn’t, you’re doing it wrong and you are lying to yourself about how much value all that effort you put in is worth.

Analytics

First, if you’re simply looking at analytics, not analyzing them, you may as well not use them at all. What you call “good traffic numbers” could easily be untargeted hits that won’t turn a profit for your business. You have to consider what the numbers mean to your business – where is the traffic coming from, where are they landing, how long are they staying, etc. Traffic is not the goal, sales conversions are. Mitt Romney led in many national polls but his massive lead in places like Oklahoma didn’t matter, only the ones in states like Ohio and Florida did. Don’t fool yourself into being married to the traffic numbers if that traffic isn’t doing anything for your bottom line.

Social Media

What you call a “good social media following” could easily be a bunch of people that simply skim over your content daily or followed/liked your page only to get an offer. The number of followers can give your ego a good boost but, as with analytics, if you aren’t engaging the right people, the number of followers simply doesn’t matter.

Sales

What you call “good sales numbers” could easily be wasted opportunities to upsell customers, sell them more, or at least get them to refer their friends. For all the effort you spend on marketing, content, and everything else, consider how much return they bring back versus a simple thank you email to an existing customer or a discount offer for referring a friend. Stop acting like a big multinational with a huge marketing department, focus on the basics and stick with what works for you – not others.

Figuring Out Your Business Formula

You hear business numbers guys talk a lot about return on investment. Probably because it’s the only real number that matters. If your investment of time and/or money isn’t paying off, why keep throwing money at a losing hand?

As a small business owner, you’re also strapped for time and cash which means you have to be very selective about where you spend both. This is where most business owners shoot themselves in the foot. We tend to build our strategies based on what works for others. Just like CNN and Fox News, though, all the case studies you read are simply there to support an existing viewpoint. Your own numbers never lie and never lead you down the wrong (and expensive) path. Stop trying to make things fit into “how you want things to be” and realize that the numbers are truly all that there is.

  • hullsean

    Great post Nicholas. So true it’s not always easy to – like Nate Silver – trust the numbers. Even more important is to look behind the numbers for underlying value. Good post

  • http://www.copy2contact.com/ Nicholas Maddix

    Thanks, Sean. It’s so easy to go only by gut feel, but the data doesn’t have the bias of your past experience!

  • hullsean

    A year ago I didn’t know what conversions were and rarely used analytics. I always wondered where or how people found me. Also I wondered if blogging was doing any good for my business. Is it worth the time spent?

    I setup conversions and started tracking which articles (types of content) drove conversions and thus generated sales leads of some kind. Now I track it all, from external conversions – when I get a phone call – to newsletter signups, opens & clicks, about page views, whitepaper downloads, twitter followers and klout score.

    I collect all those numbers monthly in a google docs spreadsheet, and it automatically calculates what I call my “iheavy Index”. Then graphs that. It has helped me visualize all my social media efforts.

    Now I can see what’s worth spending time on and what it’s value is to my business.

    I should do a blog post on that total-biz-index.