There’s a myth that robust data analytics programs are something that only large enterprise corporations can afford. In reality, data capture and analysis is one of the most effective ways to increase top and bottom lines for businessed of any size.
Here’s a look at why that is, what happens when businesses don’t invest in data analysis, and how businesses of any size can do more without breaking the bank.
The Inefficiencies of Untapped Data
Every business generates data directly or indirectly, every second of every day, from every department (sales, social media, facilities, customer service, IT, etc.). Together, these data points paint a picture of the opportunities that deserve more attention and resources—but to be able to act on these insights, businesses must have a system for monitoring and responding to their data.
Let’s look at two examples:
First, imagine a B2B services company with excellent product reviews, a robust client list, and a healthy prospect pipeline. Despite its happy customers and the strength of its offering, the company is struggling with cash flow.
As it turns out, the problem is late invoice payment, caused in part by the fact that the company only accepts payment via check. Clients accustomed to online payment options keep putting off mailing the paper check, meaning the company isn’t getting paid when it should and is spending too much time and energy tracking down late payments.
A bird’s-eye view of company data would highlight this problem. Without making any major investments, the company could launch a policy of offering early-payment discounts. These would inspire clients to pay on time each month, which would ease the cash flow problems.
With a small investment, the company could implement a digital payment portal to streamline payments and increase cash flow. This would no doubt pay for itself quickly, as payments started to come in on time and the company was able to plan growth and other investments more confidently.
Now picture a B2C e-commerce company whose sales have plummeted in the last month. The marketing team is trying to figure out what went wrong. It investigates whether any key product pages have dropped in organic search results, whether new entrants are outbidding them on SEM, whether traffic has dipped from social – but there’s no smoking gun.
Meanwhile, the problem is that a bug in the shopping cart code is making the checkout page load too slowly, which is causing customers to abandon purchase transactions.
Data awareness could help in several ways:
• Real-time website analytics would alert everyone to the conversion drop-off as soon as it happened (rather than at month’s end), preventing weeks of lost revenue.
• A website performance monitoring tool would identify the problematic code even before marketing saw a dip in conversions.
• Together, marketing and IT could identify the underlying issue and prioritize a fix ahead of any other planned updates and releases.
In both cases, the simple act of interrogating existing data sources leads to clear, simple solutions for serious problems.
How Businesses Can Capture, Analyze, and Act on Relevant Data
Businesses hoping to benefit from data insights must institute a data-driven organizational culture, which typically requires the following:
• Require data savviness from all team members. In lean organizations, employees have to be able to perform their jobs, interpret the data that measures their performance, and adjust what they do accordingly. All businesses should make an effort to hire and train for this capability, even in roles that aren’t explicitly dedicated to data analytics.
• Require decisions to be data-driven. Leaders at all levels should require data-fueled reporting on relevant growth metrics. This helps ensure that decisions aren’t made on “gut instinct” and that limited funds get spent where they can have the most impact.
• Establish inter-department communication channels. This ensures that leaders from throughout the business can compare findings and help the business as a whole achieve growth goals. Problems and solutions are rarely isolated to a single section of a business, but teams often become siloed, especially in growing organizations where processes might spring up ad hoc because there is no overarching sense of purpose. Being deliberate about inter-departmental communication can relieve this problem.
To empower data-driven employees, businesses can lean on top-quality, low-cost tools (like Google’s Search Console) that capture and process the data businesses generate.
Every Business Can Be Data-Driven
Data is everywhere. In the digital age, we create data with nearly every action we take. Businesses looking to make more strategic investments in their growth, discover efficiencies in their operations, and iterate faster on their products and services can do so by finding ways to capture, interpret, and act on the data they produce.
By doing that, any business can get a better picture of its strengths, weaknesses, and opportunities to improve revenues and decrease operating costs.