By: Erin Martin-Serrano
Big data has become a buzzword in the field of data analytics as more companies seek to harness the seemingly endless amounts of information that they possess to improve their profitability. While small to medium-sized companies may not have big data analytics, their ability for making data-driven decisions remains a key factor in the company’s success.
Data-driven decisions enable people to make course corrections that leave a positive impact on the business and align with their goals. While big data is not required, the focus on which sources of data to analyze is. Outlining the right process for the size of your business will get the maximum return on investment (ROI). Here are important steps to follow which enable better data-driven decisions for both S&M businesses.
Identify and be specific on areas to improve
Being specific will help define the focus of your efforts and avoid being sidetracked from your goals. Starting with a broad topic such as quantifying customer satisfaction might be a good starting point but that is only scratching the surface on discovering insights.
For example, a past client of mine wanted to determine how to prioritize their assets. After reviewing the book value of each asset, I realized that it did not identify which asset generates the highest customer satisfaction or revenue. Simply knowing which assets are the most popular with customers does not provide a financial number to its true value. To explore further, the client and I assigned a rating system to all aspects of the asset: financial book value, customer ranking through surveys, customer traffic, maintenance costs, and the physical condition of the asset.
Define metrics and a rating system
Take each identified metric and list them for consideration in the rating system. For example, here are some methods that I have used:
- Most popular assets – customer ranking via surveys and customer traffic.
- Customer traffic – the business physically counts people who used the asset.
- Financial book value – review financial statements and assign ranking values (1-5).
- Physical condition – another rating system of 1-5 where 5 is “like new” condition and 1 represents “major overhaul required”.
The rating system for physical condition was assigned by the head of maintenance for each asset. Having competent and relevant members of the organization developing these metrics will provide more accurate assessments and a better understanding of the process.
Gather the data
Once the rating system is set with all known assumptions captured, the next step is to gather the data. During this step, it is important to use the same capture method for each asset to maintain consistency in reporting. In other words, if you are using machine learning to count overall traffic for one asset, do not use an employee to count for the other ones.
Establish a frequency
Once enough data is captured and reviewed, then determine how often to repeat these assessments in the future. This may be each change in season or every business quarter. There can be flexibility in picking a frequency meaning that can be adjusted as required to facilitate improvement.
During the review stage, the finalized prioritization might come as a surprise. The enjoyable part of data-driven decision-making is that you can objectively consider what to focus on that will improve the bottom line. For my past client, the asset with the highest book value was not the most popular with customers but it received a lot of focus from financial reviewers. After gathering data, a data-driven decision can be made on where to invest capital first to where it would have the biggest impact on the overall business.
Data-driven growth and improvement
S&M businesses can benefit from creating a process that fits their size of organization and making data-driven decisions which increases profits while underscoring the true value of an asset. Access to big data is not needed here. Outlining the minimum metrics, data sources, and what you want to improve will reap valuable returns and business insights.
Name: Erin Martin-Serrano
Position: Director of Business Development
Company: Hedgehog Technologies