Some business leaders swear by trusting their gut, but in reality, data-driven decisions are far more reliable. Accenture found that data-driven organizations experience over 30% growth per year.
It’s clear why so many companies are starting to take data more seriously than ever before. Data analysts went from being an obscure role to a must-have in any company wanting to grow fast. Whereas CFOs were once primarily focused on managing expenses and keeping the books balanced, today they play a central role in business strategic planning.
Humans simply cannot process data as rapidly as a machine can, but they still have important roles in deriving conclusions and choosing the best course of action. Some founders feel most comfortable with using a hybrid approach, where they take into account both the data and expert opinions to make their final decisions.
The big tech companies may have thousands of people whose only job is to sift through data signals to feed results upwards, but not everyone has this luxury. You must make the best use of your limited resources to extract the most value from your data as you can. There are readily available tools and practices that can make this easier without breaking the bank.
Use the latest data for forecasts
Many companies don’t have a master plan for how they are going to use financial data when they start. This can lead to a confusing mix of multiple sources of truth that add significant amounts of pain to the process when trying to create the most accurate reports and forecasts.
If you use Excel for your forecasting and need staff to manually copy in the latest data, the potential for human error is so large that it’s borderline unacceptable for making key decisions on a rolling basis.
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It’s even worse to skip this process altogether and make forecasts based on out-of-date information, because the results are meaningless. It could lead you to have false confidence in the path you take when the right data would show you numerous red flags. If your competitors have better inputs to their forecasts then they will also receive better outputs and you’ll fall behind.
Luckily there are solutions to help you to create forecasts using the latest data, such as using DataRails. This financial planning and analysis (FP&A) software package allows you to pull data from multiple external sources into Excel automatically and provides live data updates so management can always be sure they are taking the best course of action that’s possible at that point in time.
It significantly reduces the scope for human error and frees up time for analysts to do what they do best instead. DataRails also contains enhancements for modeling using AI to help make even more accurate predictions.
Empower your analysts
Analysts are the crucial link in the business between the technical and non-technical staff. It’s not uncommon for people in decision-making roles to be primarily non-technical, and this makes it even more important to ensure your analysts have all the tools they need to maximize their productivity.
It doesn’t take very long before a data team can start to experience communication issues because of the nature of how much deep knowledge is needed about different data sets to do tasks in an optimal way.
This information asymmetry can become a real problem as analysts make the wrong choices simply because they were unaware of what their colleagues had been working on.
Atlan is a solution designed to harmonize data teams, so they can work together as one unit with a shared repository of knowledge. Think of it like Slack for data teams, as they can quickly share repositories and analysis projects in a way that keeps everyone on the same page and thus makes everyone more productive with less time wasted.
Track employee data efficiently
For many businesses, their most significant cost is their employees – especially in a world where more people are working remotely. This makes it a prime area for optimization and data can help significantly in this area.
One of the most difficult situations is where a company has grown faster than expected and the initial systems that worked for five employees struggle under the weight of 50 employees. Trying to track people manually can add unnecessary overhead and waste valuable time.
Yet it’s still important to understand how well employees are performing and whether they are meeting their targets. One solution for this is HubStaff, which allows you to track all employee data in one easy-to-use place.
This puts an end to using a million spreadsheets and instead, HR staff can create reports easily to get both the big picture overview and to shine a light on what individuals have been up to. This makes it easier to spot underperforming – or under-engaged – employees and to reward overachieving employees, leading to better staff morale.
Model potential revenue streams
It’s unfortunate that leaders can sometimes see data only as a way of analyzing past performance and extrapolating to the future rather than a way to help guide expansion.
Today’s data teams can look beyond just internal data to analyze wider market trends and spot opportunities for lucrative ways to increase revenue.
A great example of how FP&A data experts can grow a company’s revenue is through Amazon. The team there modeled the Prime program and determined it would be a runaway success. They were right, as it now has over 200 million paying members. Without data, the decision was far less obvious at the time.
Other firms can ask their teams to analyze market data to come up with predictions of how profitable a new venture or project could be. The modeling skills and data knowledge don’t have to be backend functions, they can be right at the forefront of the innovations a company attempts.
Segment your customers
You don’t need to be told about the importance of customer satisfaction. If you can keep them happy, they are more likely to be loyal, which directly impacts your bottom line. This indirectly grows your business through the strength of word-of-mouth recommendations.
To truly conquer customer satisfaction, though, it’s important to understand that your customers are not one heterogeneous group and they often form distinct segments depending on a variety of factors. Kissmetrics is a tool that allows you to easily segment your customers and customize your engagement with them to match the signals they have given you.
For instance, if someone hasn’t opened one of your emails in a while, then it could be a good idea to send them a personalized discount code to let them know you miss them. Alternatively, if you see there is a segment that is highly engaged and likely to purchase often, you can send them emails more frequently with less chance of repelling them.
It’s a smart way to automate the data processing of customer data to lead to optimal actions. The best part about this is, you need only a small team to manage the automation rules because the heavy work of segmenting customers based on their unique data points is done by the service itself.
Using data to drive financial decision-making isn’t just for tech giants, as companies of all sizes can implement strategies that help them to grow their business. Today there are solutions that can greatly empower data analysts such that they have more time to focus on how a choice affects the business, rather than manual tasks that could be easily automated.