This Is What We All Get Wrong About Data in Business
Stop throwing away your data!
PHOTO CREDIT: Getty Images
Data is the new social media. What do I mean by this? Back when companies were first jumping on the social media bandwagon, every entrepreneur was obsessed with creating Facebook pages and Twitter accounts for their business. What these entrepreneurs didn't understand is that it's not enough to just have a social media account. To create actual results, you actually have to update your social media channels with valuable, engaging content.
Fast forward a few years later, and we're repeating the same cycle again--only with data instead. And here's what many people tell me about data: "If you're not measuring everything, you're doing it wrong."
Well, that's BS. If you just collect data just because you think you should, you might as well forget about data in the first place. But on the other hand, if you can correctly analyze and apply your data, you can rapidly improve your business's systems and create amazing results. In fact, data is key to running a company.
At my company, I've used data to guide me in deciding who to hire, where to advertise, how to cut costs, and more. For example, by tracking where our new customers are calling from using CallCap (a call tracking service) and our internal CRM, we managed to identify that Yelp reviews made us $1 million in new sales over just 10 months.
Here are four steps you can take to be better at data as well:
1. Collect data that will solve your key challenges.
Before you start collecting data, speak with your team and understand their key challenges at work. That way, you can decide together on what data they actually need to solve these issues.
This will also get their buy-in when it comes to building a data-driven company culture. For example, let's say your marketing team works with a wide range of affiliate partners, but they're finding it difficult to evaluate the effectiveness of each specific partner. What you need data-wise is then tracking each affiliate source and see which converts the best.
2. Define the most important metric.
Instead of measuring too many things, focus on your most important metric. Without this singular focus, it's easy for your team to get overwhelmed, and lose sight of the big picture. When trying to decide on your own company's most important metric, think about your main objective (it could be growing revenue, increasing brand recognition, or something else.)
Then, among the many metrics you could measure, pick the one metric that will create the most results for that goal. For example, your most important business goal is great customer service. Customer reviews would be then the most important metric you track.
3. Create KPI Performance Indicators (KPIs) for your teams.
Creating and tracking the right KPIs will help your employees reflect on their own performance, and help you fine-tune their efforts as well. At the same time, it will let you know which employees are A players, and which employees are underperforming. For example, if your sales KPI is 10 sales per day, and one employee is killing it with 20 sales, that person is a clear winner.
4. Build a data-driven culture.
A data-driven culture is when you make decisions based on data, not hierarchy. That helps you make far better decisions than ego-driven opinions ever could. How does a data-driven culture work? Whenever anyone shares an idea or opinion, make sure that they have data to back it up. For example, you're coming up with a new marketing initiative, and the CMO prefers option A, but the new intern prefer option B and has the data to show why B is better. Then, you should go with B, no questions asked.
Finally, I love this analogy on data: having access to only raw data is like being thirsty while you're surrounded with ocean water. But if you have the tools and processes to extract raw data, then process it into powerful action, your company will be a machine in no time.