Data has become a huge topic over the past decade. Everywhere you turn someone is asking to collect your data. But what exactly is data, and how can you use your business’ data to drive growth?
Whether you realize it or not, you already have a lot of data on your business. Every time you record a sale, file an invoice, or take inventory, you have created data that can be leveraged to better understand your business. The challenge becomes understanding how to make use of that data. I have outline some of the things I think about when I approach data below.
Getting Organized:
My first priority when starting with a new set of data is the data architecture. Clean, organized data is critical to running meaningful analyses. Once the data is organized well, a whole host of possibilities open up.
Part of building organized data is determining the key metrics or KPIs (Key Performance Indicators) that your business relies on. In certain cases, that may mean defining new KPIs that fit your unique business–a therapeutic massage business will have different success factors than a handcrafted chocolate business.
Another big asset is creating attribution. Attribution is the process of defining categories that break your data down into meaningful groups. In other words, attributes reflect the ways you think about your business. For example, a pet adoption agency would attribute whether each pet is a cat or a dog. They would also consider attributing things like weight and breed. This helps the business better understand which animals are most and least likely to get adopted, and better tailor the approach to ensure all pets find a loving home.
Putting the right elements in place, like the ones outlined above, sets a business up to answer questions big and small that will help create clear, actionable objectives. Because of that, I recommend everyone start with data that has been cleansed, organized and which has the right building blocks.
Analysis:
It is generally the case that the more aggregated the data, the more reliable the results. I always recommend starting from the top down. A tops down trend analysis takes a bird’s eye view of key metrics, which helps establish objective trends. Even as experts in our businesses, we are all prone to certain biases, so taking an objective, data-backed look at business performance can illuminate important details that could otherwise go overlooked.
In my experience, top-down trend analysis almost always merits going a level deeper–once we establish the trend, it’s hard not to become curious to understand what is driving it. Thoughtful analysis opens the ability to understand the synergy between different KPIs, and as a result, how to maneuver your business.
Actions:
Ultimately, the point of data analysis is identifying what steps should be taken to make your business stronger. The insights provided will point to actions, which in turn enable you to build a stronger, more stable business. An important remaining step is to create ways to track how those actions have impacted the business so you can test, learn and repeat, amplifying your outcomes.
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If you find yourself at a crossroads, unsure how to take the next right step for your business, the data you already have can likely illuminate a path forward. As we know, knowledge is power. If you are unsure how your data can work for you, feel free to reach out for a free consultation!
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