Do you know the difference between data and metrics? Data will do little for you until you transform it into the metrics that directly correspond with your firm’s imperatives. Leveraging those metrics to support and inform your decision-making process is what business analytics is all about. Ultimately, business analytics can help you grow faster, be more profitable, and improve nearly every function of your business, from call center operations to customer satisfaction, from marketing performance to product innovation — and more!
If you want to know how to begin fueling better decision-making with business analytics, read on for a primer on getting started.
Step 1: Prepare for a Culture Shift
Buckle up! Shifting your decision-making from observational to analytical is a massive culture shift. There will be significantly fewer decisions based purely on someone’s “gut.” And, say goodbye to the traditional “Let’s do what I think” decision-making approaches ingrained in so many businesses. Implementing a business analytics process changes how your business operates, and everyone will need to get onboard. You’ll shift from hierarchal decision-making among the few to empowering diversity of thinking and creating an environment in which everyone with access to information and metrics has the ability to influence decisions.
Applying business analytics to decision-making is the path to innovation — to real, concrete, meaningful change. And change, after all, is the way forward. Henry Ford perhaps said it best: “If you always do what you’ve always done, you’ll always get what you’ve always got.” No one wants that. With business analytics, everyone can lead the charge to change.
Step 2: Define the Right Metrics
There are a host of traditional metrics, or key performance indicators (KPIs), that can be effective at supporting your problem solving. But the real question is: What are the right metrics for your business? True business analytics isn’t all that effective when taken with a cookie-cutter approach. It’s not one-size-fits-all, or even one-size-fits-most. Metrics need to be customized to fit your business, your industry, your advantages, your limitations and constraints, and your goals and challenges. If not, business analytics won’t yield the answers that are right for your business. And, failing to focus on a narrow set of the right metrics can also be paralyzing.
One specific area to consider is about maintaining a careful balance between efficiency and effectiveness in marketing — in other words, between the cost of acquiring a new customer and the volume of customers you can acquire. Which is more important? There’s no “right” answer, only the answer that’s right for your business. For example, a customer acquisition strategy using the lowest cost per customer may seem like the best method — and therefore the best metrics to analyze and track. But it may not produce the results you need. Given your fixed costs and necessary scale, that method may only produce, say, 40 customers. If you need 100, you’re not even halfway to your goal. That’s why it is critical to ensure your metrics successfully position your business analytics to generate the answers — and the results — you really need.
Step 3: Define the Problem and the Objective
This seems obvious, but it’s a step many businesses don’t get right — or struggle to do consistently. It’s so easy to want to dive into all that data! But if you jump before you’ve defined what you’re looking for, you’ll not only waste a lot of time, it’s also likely you won’t find what you’re looking for. You may jump into a haystack and come out with a needle, but what if what you needed to find was the thread? It takes a disciplined, intentional approach. But the good news is: It can be done!
The path to successful business analytics starts with clearly and specifically defining the problem you need to solve as well as the objective or desired outcome — what is your ultimate goal? Those answers shape both how you approach data collection and align your metrics to fuel the decision-making process. For business analytics, successful goal-setting enables your journey toward successful results.
Want to learn more? Keep an eye on Spinnaker’s blog over the next several months as we explore business analytics and its importance in delivering real bottom-line value across your business. Follow Spinnaker on LinkedIn and receive updates in your LinkedIn feed.