By: First Union | Date:
Is Your Small Business Using Data the Right Way?
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You are at a company meeting where a department head is offering by way of a multitude of metrics an overview of where you stand and where the company needs to be headed. Then invoking the phrase "based on the data," the department head proceeds to outline what products need pushing and how much more the company ought to be spending on accompanying ads. The problem, however, is that this particular team leader failed to dig deeper into said data and consequently, these conclusions are flawed.
Had they gone a bit deeper they might have discovered that by pushing more of product X, you will be taking the focus off of more important long term sales goals; not to mention, how the ads are currently deployed are working fine for retargeting but falling way short in terms of cold traffic.
Data is now so pervasive that many businesses are falling into the trap of letting the data drive their decisions. It is understandable; the data is right there in front of you, it is something you can see. But many are not realizing that relying too heavily upon said data could also become a weakness over time. In many cases, companies are looking at data in a vacuum, that is to say, without the proper context surrounding it, and this is where it becomes dangerous.
How Decisions Based On Data Can Often Lead Us Astray
Let's use the example of new home construction here. If you are going to build a house, what are the primary steps you'd take? First off, you would probably enlist an architect to generate a blueprint for that house design. Without any sort of a blueprint, you are just blindly going about the process and the result, likely not the most structurally sound.
You also want to survey the terrain; what sort of ground conditions are there? Meet with building and zoning to determine what kinds of restrictions and codes are going to come to bear on the project. In other words, you need to take care of the broader issues at hand before you go out and buy roofing shingles or lumber packages.
Now apply this same idea to your business…Rather than start bringing together all sorts of random data and trying to make any sort of sense of it, you need to begin with a bigger, more concrete picture. Simply gathering data based upon assumptions you've made is going to lead to a relatively shaky foundation for your future marketing efforts.
And it's not just small businesses who are guilty of plunging into the data-driven pool too hastily. Recently, Adidas' global media director confessed that they had over-invested in digital ads because they were focused on the wrong metrics, and they did so at the expense of longer-term brand building.
So how do you know what the "right" metrics are and thus employ the most relevant data accordingly?
Arriving at Better Data-Driven Decisions
First of all, one of the key ingredients to a successful data recipe: understanding your market. For this, you have both primary and secondary resources at your disposal. As far as those secondary resources go, you want to focus on market size, willingness to spend, and the market's overall momentum. The most important piece of this is to have a broad picture understanding of the type of market that you're entering into.
When it comes to relevant primary resources these include such things as simple conversations with customers, surveys, social media feedback. The key is to get as much information as you can from these primary resources so that moving forward you are armed with that which can help you make smarter data related choices.
Let's say you are choosing to interview customers and thus gain an understanding of your market in that way. A couple of things to keep in mind…You probably want to stay away from focus groups as these aren't indicative of how actual people buy. Be deliberate in the interviewees you choose; that is to say, make sure they are genuinely representative of your target market from a demographic standpoint.
After interviewing a core group of consumers, you can then use the insights gained to help create a survey that could potentially be utilized on a broader scale with a larger sample audience.
The next step after understanding the market is to build a strategy. Fundamentally speaking, by this point you should have painted a pretty vivid picture of your specific market. So what's next…creating a strategy that arises out of the qualitative data you've collected.
What we see time and time again is businesses using metrics as the reason for their strategy as opposed to that which is meant to support any strategy. This is what can lead to problems over the long term.
The next phase: this is where the data comes into play. You are using data though as support, not as the impetus behind your initiatives.
Ask yourself what metrics could potentially point to the type of meaningful growth that you want to see happen within the company. Some key questions:
- Who will use this data?
- In what way might it be used?
- Is it actionable?
When you do take the time to seriously answer such questions, you will have a better handle on the types of metrics that can help you reach your desired goals.
First Union Lending has worked with many small businesses as they look to revitalize and introduce a new, more robust marketing campaign. We can certainly do the same for you. Our short term loans, lines of credit and business cards, among other programs, are custom-tailored to suit your needs—no one size fits all approach with us. If you need extra cash, for whatever project, we'd love to discuss your available options. Call today and let's get started!