Data Driven Strategy

Data driven strategy can improve your business decision making. Data can be obtained both internally (customer data, sales data, marketing data) and externally (demographic and industry statistics). It is vital to follow a process: • Identify the data needed for the decision • Decide on benchmarks • Collate the data and benchmarks • Use the Data as a tool to aid decision making
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Data driven strategy can improve your business decision making. Data can be obtained both internally (customer data, sales data, marketing data) and externally (demographic and industry statistics). It is vital to follow a process: • Identify the data needed for the decision • Decide on benchmarks • Collate the data and benchmarks • Use the Data as a tool to aid decision making

Harness the power of internal and external data to supercharge your strategy.

We are surrounded by increasing amounts of data.  Your business likely holds:

  • two white printer papers near macbook on brown surface
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    customer information (addresses, ages, gender)
  • business history (sales trends, visitor numbers)
  • marketing metrics (number of page views)

Big Data

Thanks to the internet, it is easier than ever to access a range of demographic and statistical information for communities and industries.  

A word of warning:  it is easy to fall down a data rabbit hole and end up in a situation where you can’t see the wood for the trees.  Before searching for data, clarify what you need it for. 

Data Driven Strategy Process

The following four step process can help you to identify the relevant data and use it to drive your strategic decision making.

  Step One – Identify the data needed for the decision

Data is valuable when it adds to the decision making process, otherwise it can create confusion and slow down decision making.  

Identifying the data needed for the decision involves clarifying the question that you are asking.  The data needed for a decision to move into a new geographical service area is different to the data needed to decide whether an additional service type will appeal to customers in your current location.  In the first example, external data such as population demographics (i.e. does your customer exist in the new location) is the key data source.  In the second example, internal data gathered from customer surveys and focus groups will led decision making.  

Step Two – Decide on Benchmarks

Benchmarks help you compare your data with external data or with previous internal data (e.g. a comparison of 2021 sales with 2020 sales).   Benchmarks include:

  • performance compared to rest of industry
  • performance against previous years
  • number of people in certain demographics (e.g. the % of people in the area participating in a particular activity)

They can also be used to create decision conditions.  If you are considering expanding into a new geographic location and in order to be financially sustainable you need to sell to a minimum of 500 people over the age of 65 and your current conversion rate is 1 sale per 5 people targeted then a benchmark for the new geographic location could be that its population of over 65s is greater than 2,500.   

Step Three – Collate the Data and Benchmarks

There are multiple ways that data can be collated.  Excel can be used to create charts and for more complex data analysis, using the Analysis Toolpak.  Data providers such as .id and the Australian Bureau of Statistics provide the option to download charts.  A simple table can be sufficient to provide the collation of data. 

 

Step Four – Use the Data as a Tool to Aid Decision Making

Using the example of moving into a new geographic location from Step Three,  Location A showed that there was 5,000 people aged 65+ and in Location B 15,000 people aged 65+.  Based on that, you may think it is an obvious decision to move to Location B where the potential market is bigger.  This is the challenge of data driven strategy, the need to be mindful that you don’t blindly follow one metric.  While the size of the potential market is an important consideration, so are details such as purchasing preferences, income levels and access to suppliers.  

Key Take Aways

  • Data driven strategy can improve your business decision making
  • Data can be obtained both internally and externally
  • It is vital to follow a process
    • Identify the data needed for the decision
    • Decide on benchmarks
    • Collate the data and benchmarks
    • Use the Data as a tool to aid decision making 

Data Driven Strategy

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