How to make a company data driven. Is data at the heart of strategic decisions?
A data driven company? Yes, digital transformation can transform a business and all the decisions of company managers can be based on reliable precise data.
The advantages of a data driven company
There are numerous reasons for transforming business and corporate decision-making processes using data. Statistics show that organisations with a strong focus on using data to support decision making have proven advantages over their competitors. A much-quoted report – and rightly so – by the McKinsey Global Institute shows that data-based companies are 23 times more likely to acquire customers, 6 times easier to retain customers and 19 times more likely to be successful compared to their competitors.
Among the benefits of a data driven company are:
- Improvements in the quality of decisions, which are based on objective information – Business decisions, which sometimes are based on subjective experience and experimentation, are no longer made without the back up of solid evaluation, based on data. From choosing the visual features of a new product (no more meetings to choose a Pantone background color) which can be decided following A/B tests done by users, to strategic decisions on the development of new products or markets. Appropriate data collection, cleaning and analysis enables key evidence to be incorporated, produced using specific tools, which provide managers with certain facts to support strategic decisions. Data-driven companies invest in the right IT infrastructure and staff and implement governance processes that permit extensive and shared use of a company’s entire data set.
- Growth in the efficiency and the effectiveness of business and marketing decisions – Good integration of data and data analysis in the company makes it possible to improve the quality of the decisions made by an organisation’s key managers when identifying new business opportunities for the company, and it thus becomes more efficient and effective compared to competitors. Data analysis plays a key role in management decision-making. There’s more: careful analysis of data allows companies to focus on the development of products and services that really meet the needs of the user. Data is the basis for the design of the User Experience offered by a new product, which is designed exactly on the specific needs of customers, defined by collecting and evaluating large data sets, captured from the internet using SEO and Web Analytics techniques and by qualitative analysis, through surveys and focus groups.
- More profitable – Data becomes the new revenue generator. Continuous improvements to internal processes within the company are made, the departments most involved are strengthened, for example logistics or customer service, costs are optimised, and improved business forecasting feeds the decision-making process. Therefore, a data-based organisation can outperform the competition with data driven strategies fostering processes of innovation both within the company and in the customer journey and the user purchasing funnel. The marketing department will have reliable facts about the characteristics of the customers that most appreciate the products or services and about those who can potentially be more easily reached using lead generation and lead nurturing activities. Production and logistics managers will have reliable facts on which to base purchases, and organise product storage, and information on the periods when it will be necessary to strengthen certain services, such as shipping or the call center, while the HR department will be able to optimise shifts and the recruitment of professional staff when department’s need strengthening.
- Make your company ready for change – One of the best reasons for supporting the adoption of a data-based strategy is that it reduces the time taken to make decisions. In highly competitive industries, companies that can change quickly are the least affected by the choices of their competitors. Monitoring information such as sales data and industry trends improves the customer knowledge base without relying on a single source, which helps anticipate movements in the market and enables the prompt targeting of strategies towards new objectives.
Data, where to find it and how to select it?
Managers often ask themselves where they can find the data that can provide information to support decisions and improve the company. The truth is that in many cases the data is already available in the company, but there are no procedures for collecting it, cleaning it, making it homogeneous and analysing it, including when it comes from different sources. The age of storing data in silos that have no connection with each other must end.
The web is a huge data set
Appropriate skills are required, from either inside or outside the company, to carry out Web Analytics activities, which allow data to be extracted from the web, through intercepting the most searched keywords regarding the business, the content most popular with users, the queries most used on search engines and the sites that are the most consulted in the sector. SEO professionals will also pay attention to data from the corporate website, which provides a wealth of data on the requirements of users who consult it, including the content with the most visualisations, searches within the site and much more.
Data Mining activities
Then data mining activity takes place, carried out by linking data sets from the above mentioned work and from the SEO audit, with information found from social networks, the corporate CRM which records the purchasing behavior of customers and the data set from the activity of lead generation through landing pages or forms to subscribe to the company newsletter, if such data is available. Other sources include sociographical and psychographic big data made available by social networks and other databases. It is then a question of processing the data, making it homogeneous even though it has been collected in various formats and screening out the data that is not relevant to the objectives set. All this is carried in compliance with Privacy Policies, which generally provide for the collection and storage of consent and the protection of personal data, so as to avoid the heavy penalties that the Western world, Europe and the United States, as well as other countries, have introduced to protect the personal data of users.
The company report
The data analyst is then called upon to carry out the most complex part of the process, that is, the analysis of the data to identify trends and reliable information, applying the techniques of business intelligence. A report will then be produced that includes an analysis of users’ behaviours and needs, transforming them into information, produced in a form that is comprehensible to the managers of all the departments in a company. It is only at this stage that the correctly analysed data becomes a fundamental resource for the company, providing reliable objectively recorded facts that can support strategic decisions and projects to develop markets and the business.
A data driven business requires a change of mindset
Prior to any digital transformation process, including one that transforms the organisation into a data driven company, it is essential to adopt and communicate a data-based corporate culture, to all departments and operations. In essence, a change of mindset is required that will affect all top managers and involve all human resources.
When each department manager has access to reports with quality data on the market, on business results and on tastes, preferred communication channels and customer behavior then innovation in products, business processes and marketing campaigns can take place.
Effects on human resources
Lastly in a data driven company it is necessary to redesign the organisational chart, reinforcing the departments asked to manage business intelligence functions, who will also need the necessary technology. Recruitment and ongoing training of data analysis professionals is one of the most complex functions of HR managers. Product development managers are also called upon to have expertise in using data as a vehicle to drive innovation. Finally, marketing managers are called upon to have daily contact with the data collected from the web and the market, to assess whether the planned campaigns are effective and built on the user and his needs.
To disseminate the new mindset, which allows data to support decision-making processes, it is necessary to provide training to strengthen staff skills and integrate this new culture in all activities that are at the heart of the company’s operations.