Using data to improve your business

The up swell in the use of digital applications means that small businesses, knowingly or unknowingly, have access to huge amounts of data. This data can tell you a great deal about how your business operates and how existing and potential customers interact with you.

Understanding this data can deliver significant business benefits, such as understanding how costs can be reduced, revenue increased and how to enhance your customer’s experience.

Importantly data not only allows you to understand what’s going well or not so well but it also allows you to understand why.

What can data tell me about my business?

Data can tell you a great deal about your customers

Data can allow you to understand who your most valuable customers are, how they interact with you, how you can reach more of them and what they value most about your business. Data can help you to answer the following questions about your customers:

• How did they find you?
• What do they buy?
• How do they shop?
• When are they most likely to drop out?
• Why do they drop out?
• What do they value most?

Understanding these questions will enable you to deliver more value to your customers through reengineering your end-to-end customer journey.

Data can help you to put your resources to best use

Businesses can unknowingly waste lots of money and resources by focusing on things that deliver limited impact. This could be through focusing on things that customers care little about or on marketing tactics that don’t get noticed. Many businesses do not recognise that these issues exist as they do not collect and interpret performance data.

Data allows you to understand your customer journey better, for instance:

• tracking data analytics on a marketing campaign will help you to identify the messaging and advertising options that are driving the most awareness and interest
• understanding if there are touchpoints in the buying journey where customers are more likely to drop out
• identifying potential bottlenecks that may exist across the customer journey.  

Financial data can help you to understand the costs involved in delivering different activities across the customer journey. Questions that data will help you to answer include:

• Are there any areas that are adding significant costs?
• Does this cost add value to the activities that matter most to the customer?
• Could this cost be reduced or eliminated?
• Could resources be put to better use?
• What would this mean to the attraction and retention of your customers?

Data therefore allows you to better understand what’s going well, and not so well, and to focus your resources on performance-enhancing activities.

How to free cash tied up in stock

Data can help you to better understand stock patterns and when you are likely to require different types of stock. Depending on the type of business, improved inventory and stock management can significantly improve cashflow and eliminate some of costs associated with damaged stock. Data will allow you to better understand:

• If you are at risk of running out of stock
• when you are likely to require different levels of stock
• when to order stock to fulfil requirements
• how external factors such as weather, seasons, school holidays and other trends effect demand for stock.

How do I understand my data?

As is the case for most businesses, you probably have data stored in multiple places. Systems and applications that collect useful data include:

• CRM Systems,
• website analytics,
• stock and inventory management systems,
• accounting software,
• ecommerce platforms,
• social media management platforms,
• email marketing applications, and
• sales management systems.

The data held in these systems is however dispersed and in its current form difficult to understand and interpret. This is where Data Integration Tools come in to play.   

APIs (application programming interfaces) allow applications to communicate with one another and therefore allow data to be transferred between systems. This means that many common systems such as Salesforce, HubSpot and Microsoft Dynamics (to name a small few as many similar systems are available) can draw data from your various applications and store it in one place allowing you to more easily analyse and report on your data. Chances are that you are already investing in systems that you could use to draw data together and make sense of it.

Making sense of your data works best when it sits within a data strategy. The data strategy will help you to make it clear what you want to achieve from your data, how you will manage it and how you will comply with regulations.  

It’s worth considering if external support could help you to develop a data strategy and to support its implementation. The University of Worcester run various courses in Data Science and may be able to provide interns, placements and student projects.

Tool: the 5 Whys

Data will tell you lots about your business, particularly what’s going wrong and what’s going right. Often this will make problems more visible but will not always identify what’s causing the problem.

To fix a problem it’s important that you identify and treat the root causes. A highly effective tool to identify root causes is the 5 Why’s. Using your data to support you, follow these simple steps:

1. In a group, agree on a problem statement and write it in the middle of a piece of paper
2. Mind map ideas on what could have contributed towards the problem (the potential causes). Once you’ve agreed on the contributing problems gather any data that’s associated with each one of them
3. For each contributing problem ask the question, ‘Why’ did this happen? This will begin to identify other underlying contributing problems. As before, for each of these newly identified contributing problems gather any data that could provide a deeper insight.
4. Repeat this process by asking ‘why’ a further four times to unearth the real root cause of the problem.