Data Analytics…Big Data…Sabermetrics
With the success of the book and movie, Moneyball, a few success stories in the retail world (Amazon and Wal-Mart), and a lot of hype from the consulting and technology industry, data analytics has become a buzzword in the C-suite.
The goal of data analytics is to properly evaluate and model the data your company collects on sales, customers, marketing, profitability, etc. in order to spot a growing market segment or business opportunity and make your company more profitable.
The holy grail of analytics is to match what Amazon, Google, and Wal-Mart have done in using analytics to transform their industries and reap substantial profits.
Alas, the vast majority of companies, especially small to middle market businesses, are a long way from being one of these companies.
However, with a few simple tricks and a little work, nearly all companies can begin today to collect, analyze, and put to use data that helps make their company more profitable.
How to Begin
Follow these three simple steps to:
- Begin to analyze and use your data more effectively
- Prepare your company for a more comprehensive data analytics initiative
1. Determine the Questions
The first step is to brainstorm the most important questions that you want answers to. For the purposes of this exercise, do not worry if you do not have the data to answer these questions. Such questions might be:
- What is our most profitable / fast growing market?
- Over the last year, which product or service has become more or less successful and profitable?
- Who are our most / least effective salespeople? Why?
- What is our most / least successful marketing strategy?
- Which customers are most / least profitable?
2. Start Collecting and Reviewing the Data
Once you have determined the key questions. Begin to collect the data that you currently do not have, but will need in order to answer the questions above. In this step you do not have to buy new software programs. Small steps are often big leaps forward. Some examples:
- Ensure that your salespeople are tracking their contacts in a consistent format, including data such as the market the customer is in.
- Ensure that your salespeople create daily / weekly sales reports (even if in Microsoft Word) that can be collected together and searched.
- Create quote, job, project tracking system that includes details about the market, the end user (final customer), and the reason they are buying (if possible to collect).
- Track and register how and why people initially contact you to see the efficacy of different marketing initiatives.
In collecting the data, you might want to follow the “keep it simple” model of Tesco, a British supermarket chain which pioneered the use of supermarket club cards:
Instead of building the largest data store it could, Tesco initially set out to build the smallest store of data that would give useful information. [Quoted in the book: Scoring Points: How Tesco is Winning Customer Loyalty]
3. Consistent IT Systems and Formats
You need to get your data consistent and able to be assembled in one place in order that it can be compared and analyzed. For larger, multi-site organizations, this can be a big challenge. It is usually the first step that the data analytics consultants will do in any event.
Once you have the key questions (which may change over time) and the data assembled in a consistent analyzable format, you are 80% of the way there. You will likely have a lot of actionable data that you can work on to improve your business. Only over time as the questions get more subtle and the required data collection becomes more refined, will you need to bring in the data analytics experts.
Until then, happy analyzing.