“In more and more companies, managerial decisions rely less on a leader’s ‘gut instinct’ and instead on data-based analytics,” noted Erik Brynjolfsson, Lorin M. Hitt and Heekyung Hellen Kim in their research paper Strength in Numbers.
The paper highlighted a “data revolution” taking place across industries. At the time of the research, the Information Systems required to gather such data were designed, in the main, for large enterprises. However, over the past decade new business applications have evolved that deliver powerful data gathering, mining and reporting capabilities to mid-size and growing organizations.
The advance prompts an obvious question the original research answered: How does data-driven decision-making impact company performance?
Productivity, profitability and market value
To answer the question, Brynjolfsson, Hitt and Kim looked into the productivity, profitability, market value and the level to which 179 companies used data to make decisions. They crunched the numbers. And they found firms that employed data-driven decision making:
- experienced hikes in output and productivity of around 6%
- were more profitable
- and enjoyed greater market value.
It’s likely that with increased digital adoption that the opportunities to both capture and leverage data within a business have increased considerably inline with the benefits of using that data to make informed decisions.
“Data-driven companies… have shoved aside traditional players among the world’s most valuable companies” Boston Consulting Group
All you need is data – or is it?
Data is useful – but it can only aid decision making when it’s put into context. For example, tools such as Web Insights become more powerful when you can see behavioral data, e.g. web page visits or downloads, alongside the status of the relationship that your organization holds with an individual, e.g. are they a customer, a new prospect or a prospect already engaged in a sales cycle. What information do you already have about them that can help to add value to the insights you’re able to derive?
Few people today dispute the benefits of data-driven decision making. Facebook, Amazon, Google, Airbnb; forward-thinking multinationals have been cashing in for years. Today, companies of all sizes stand to benefit.
How to begin capturing your most valuable data
Data is usually captured in a huge number of ways across the organization, whether deliberately or otherwise. Often, managers may already be making data-driven decisions – but based on departmental or functional data only. It’s only when tools like CRM are used across marketing, sales and customer service that you can add an extra dimension to your data by putting it into the context of your wider business.
Today, it’s only broad-featured CRM that can record every touchpoint on the customer lifecycle. Marketing efficiency. Paths to purchase. Sales triggers, product uptake, customer satisfaction; geodemographic information, you name it. Just think of the benefits on offer. With considered analysis, you can gain full visibility of your demand funnel. You can see the entirety of your customers’ lifecycles. Customer success teams can pick up from sales teams, who can pick up from marketing in turn. Your company becomes a well-oiled machine. All thanks to shared access to data held within one CRM system.
And when scrutinized, the same data reveals the consequences of actions. It reveals what might happen should you redistribute marketing budgets, for example, or revamp your product roadmap. It shows you where specific paths lead.
When you know where specific paths lead, you can reach some enviable destinations.
‘Workbooks allows me to understand what is working well and what needs attention. This helps me focus my time on what matters, where my input is required and where I can add value.” Nathan Aspin, MD, Aspin
Using CRM data to make decisions
Improved data insights and better decision making is one of the key drivers for business leaders to invest in CRM. To ensure you get maximum value from the investment, there are just some key considerations…
Start with the end in mind
First, work out what you’d like to measure or achieve. Increased loyalty? An increased conversion rate? With a goal (or set of goals), you can start to think about what you need to measure – and the data you need to collect. You can then configure your CRM to capture the data you need.
Value the data
Mining data isn’t always easy. But the juice is usually worth the squeeze.
Be clear on the value of data when you begin hunting it down. This should be obvious, once you’ve set your initial goals. Recognize data’s worth and ensure that this recognition is embedded throughout the entire organization; it’s a valuable business asset. Also, while obvious ensure that the data you’re capturing is managed in a compliant manner.
Gather data at every touchpoint
The possibilities for data collection are vast and gathering too much data can become as problematic as not having the right data. As a minimum, configure your CRM to gather web data, social data, event data (both virtual and in-person), data from prospect and customer interactions, sales and financial data and data from product use.
The more relevant data you capture the clearer things can become. For a full picture, you need to collect data throughout the customer journey – from marketing right through to post-sales services.
Promote uptake – instil a data-led culture
To help you gather CRM data, enlist your people. Ensure everyone inputs data as necessary and that they understand the reasons why. Sales team data, for example, is critical.
Encourage everyone to capture data. It’s crucial. Lack of adoption can jeopardize or even destroy data projects. Ensure there is data governance in place: data needs to be collected in a structured way so that you can easily and effectively analyze it, dice it, report on it and glean insights from it.
Monitor your business health
Gaining insights from your data is not solely about trends and future planning, it is also critical to understanding what is working for your business and what isn’t. True data-driven decisions come from reviewing what you have done so far and identifying where you could have improved, helping you to understand where investment should be increased and which initiatives or product lines aren’t performing and should be cut. Data-driven decision making is about getting a better understanding of what has happened to define how best to plan and execute going forward.
You can also use data as an alarm with reporting triggers set to alert you to changes in performance. Monitor KPIs such as marketing ROI, cost of customer acquisition, lifetime customer value, sales performance, conversion rates, churn rates and customer satisfaction. They’re starting points. For more, take a look at our whitepaper on the subject.
Create a single view of the truth
Using just one platform to capture data is key to providing a 360-view on your business. Often, different teams may use different systems, spreadsheets or applications. Different systems mean different datasets and that makes analysis challenging – unless of course you have the luxury of a team of data experts. When you are able to hold all data in just one system, you’ll far more easily be able to identify patterns, highlight issues and spot trends without the need for highly skilled data professionals.
To align teams, share your vision. Ensure everyone understands their role in achieving a communal goal. Make data capture part of your culture. When people understand why they’re doing something, securing buy-in isn’t so tough.
Using data to succeed in a rapidly changing market
Data-driven decision making comes into its own in rapidly changing markets.
In dynamic markets, challenges emerge from all angles. Data helps you spot upcoming challenges or trends and plan accordingly.
Similarly, data reveals a lot about your prospects and customers. Data shows you which customers and prospects you can help, how you can help them and when you can help them. It facilitates personal, relevant and timely communications – all of which means you get more for less. More sales. More happy customers. Less spend.
When used strategically and deployed across functions, CRM gives you (and wider management teams) full business visibility. CRM can provide you with investment insights which can also improve shareholder value. It’s this level of data confidence that grants teams control in uncertain times, and its value shouldn’t be underestimated.
For more information on using CRM to make data-driven decisions, download our free whitepaper on data-driven decision making now.