Data is a valuable asset for any business. It drives the decision-making process and provides insights into how to best structure your business operations going forward. A well-designed data strategy will provide you with a significant return on investment (ROI).
Data-driven decisions can improve the performance of your business, optimize all marketing campaigns, and support growth. Data is all-powerful when it comes to business growth. The reason behind its power is that it quantifies everything, thereby, letting us work with concrete numbers.
As marketers, we are often concerned with business metrics and KPIs that can help us refine our strategies and campaigns and better gauge or even predict their success.
This article will discuss data and how you can use it to fuel growth — not just the growth of your company but also your own personal development as a marketer.
Data-driven decisions are decisions that are informed by data and are easily verifiable. What does this mean for your business?
The benefits of data-driven decision making are clear:
- You make better decisions
- You increase your likelihood of success with any project you undertake
- You minimize risk and avoid wasting resources
- You reduce costs and increase revenue by making more intelligent choices
Businesses that have access to data and analytics have a distinct advantage. A thorough understanding of customer behavior, as well as having insights into the overall health of your business, allows you to make data-driven decisions that improve your bottom line.
If working with data is not your forte now, you can easily acquire the skill to excel at this crucial business skill. With online programs proliferating, you can easily enroll in an online MBA to develop the business smarts to get your business up and running, and poised for growth.
Here are some actions companies can take to accelerate the rate of revenue growth with proper data analysis.
Identify Business Objectives
It’s impossible to grow your business if you don’t have a clear idea of what you want to achieve. Data-driven decision-making can help you identify where you want your company to be in 5, 10, or 20 years from now, and how you’re going to get there.
Set goals, develop a strategy, and track your progress based on hard facts and raw data. For example, if you’re trying to expand into new markets, use data to determine whether a new branch or simply an online store would be more effective in reaching the target customers.
Growing your business requires an ability to constantly improve efficiency without sacrificing quality or customer service. Data-driven decision-making allows you to identify areas where your company is wasting resources, including time and money, so you can streamline processes and reduce expenses.
With access to the right information, companies can reduce errors, eliminate bottlenecks and increase revenue.
Measure your success
The first thing you need to do is measure your success. What are your most important metrics?
For B2B companies, metrics like customer acquisition costs, lifetime value, churn rate, and referrals are key. For B2C companies, metrics like average order value, conversion rate, new vs. returning customers, and average revenue per user should be tracked carefully.
You also need to create a system for measuring these metrics in the long term as well. If you don’t have one already, set up Google Analytics, so you can see where your traffic is coming from and what pages on your website have the highest bounce rates.
Set up systems to process transactions,so you can track important metrics like order value and revenues. Also, set up processes for collecting feedback from customers in order to track customer satisfaction.
Are you asking the right questions based on your business needs and goals? For example, if you’re having issues with customer acquisition, your assumptions may lay blame on the landing page design or messaging.
Or, if you’re trying to drive more newsletter subscribers, maybe you think it’s because the color of your CTA button is off or your popup isn’t showing up at the right time.
Identify right data sources
Smart e-commerce entrepreneurs are using data from their customers and their businesses to inform their company’s course correction. When you use data to guide decisions, you can be more confident that your efforts will pay off.
To get started, identify data sources. The most obvious place to gather data is by identifying customer behavior — what they buy, how many products they buy at once, whether they return items, how much time they spend browsing your site, etc.
You can track this information in Google Analytics or other analytics tools, and then use it to make decisions about how you position products on your website and how much inventory should you have stacked at any given time.
But customer behavior isn’t the only relevant data source. If your business is part of a larger industry, take a look at the data trends for that industry. For example, if you sell baby and toddler clothing, look up the birth rates in your state and region.
Clean and organize data
The first step in using data to make decisions is to collect, clean, and organize your data. The larger and more complex your organization, the more important this step is.
For example, if you’re a small business owner with a few employees, you’ll likely be able to keep track of your data on spreadsheets or in a customer relationship management (CRM) system. And you may not have enough information to warrant investing in a dedicated analytics software program.
However, if you’re part of a large organization with multiple departments and hundreds of customers, you’ll need a more robust system that can handle your data from different sources. You’ll want to hire someone with the skills needed to set up and maintain your database, so you can run reports and extract insights from the data.
Inaccurate information leads to incorrect conclusions and bad decisions. Cleaning up your data means removing duplicates, correcting errors, and improving consistency in your records. As an added bonus, this cleaning saves time by eliminating the need for manual tasks, like copying and pasting information into reports.
Automate processes so that appropriate actions are initiated when predetermined conditions are met, without requiring human intervention. This can include things like sending follow-up emails after a purchase or scheduling shipments based on inventory levels.
Measure performance against key metrics so that you can track progress toward your goals.
Data-driven decisions can be one of the most effective ways to fuel growth. It’s a great way to eliminate the guesswork and focus efforts on what truly matters and works. But using data isn’t just for large companies and businesses. Using data strategically to boost your brand will help you grow, even at the start-up phase. Regardless of where you are in your business journey, knowing how to use data will be an invaluable skill.