Your business data has interesting stories to tell, if you know how to turn all those spreadsheets and sales reports into insight and action.
Business analytics aren’t just for the big end of town – even the smallest business has data with secrets to reveal if you know how to listen. There are plenty of expensive business analytics tools out there. But, you’ll also find more affordable online resources (e.g. Klipfolio and Microsoft BI) to start you on the path to becoming a data-driven business.
The best approach for any business is to start small and get a few runs on the board rather than trying to do everything at once. One of the keys to being data-driven is to determine which are the top 5 metrics within your business. Learn how to measure them, understand which levers affect them and appreciate what you can and can’t control. Industry benchmarking metrics (financial and non-financial) are also a source of ideas on what key metrics to measure and monitor.
Another key to being a data-driven business is learning how to sift the wheat from the chaff. Know what’s important and how to distinguish between trends and anomalies. Using the 80:20 rule will assist. Without this focus you can find yourself chasing the small stuff, which is why it’s useful to determine the most important metrics and make them your focus.
Obviously you need to keep an eye on your basic financial health. Track key statistics such as revenue, operating expenses and cash flow. Other statistics such as sales funnel conversion rates and customer churn are also telling.
Monitoring your business’ vital signs helps ensure you stay in the black. But the key metric that determines your long-term success might be something more difficult to measure such as customer lifetime profitability.
Understanding which are your most valuable customers, and whether you’re doing the right things to attract and retain them, is the kind of valuable insight which can take your business to the next level. Listening to this data can help drive all your business decisions and focus your efforts in the right areas. Improve the bottom line by working smarter rather than simply working harder.
Once you know how to interpret your business data you can use it to refocus your marketing spend, customise your special offers, realign your customer retention efforts and even change your mix of products and services. This will improve the metrics you’ve determined are the key to success.
It takes time and effort to master but listening to your business data, and understanding what it’s trying to tell you, can help put your business on the right path to both short-term gains and long-term success.