Data is everything. And you definitely already know that the best decisions are backed by data, so using data to drive business growth should be an absolute no-brainer. But how can you do that? What does using data for your business even mean?! We’ll explore these questions and much more below.
What is Data?
This is a great place to start–knowing what data is can help you determine exactly what kinds of data you have in your company, the kinds that could be of value to you, and what to keep an eye out for. Simply put, data is information that has been collected or ordered to serve a particular purpose, usually drawing conclusions. Data can come in all shapes and sizes, but let’s cover six of the main ones:
Quantitative data: this type of data is numeric in nature, such as numbers, percentages, and units of time. For studies where results are measurable, quantitative data is very useful.
Qualitative data: on the other hand, qualitative data describes the characteristics of a subject in non-numeric formats, such as descriptions, words, or images/videos. Results of a focus group, which are written answers, are an example of qualitative data.
Nominal data: this kind of data is useful for grouping information, such as when you’re trying to separate survey participants by sex, age, or other variables.
Ordinal data: as the name suggests, ordinal data is used for data that has a specific order to show a certain trend or performance. This order cannot be changed, as the purpose is to use the predetermined order of the data for a specific use, such as determining the winner of a race or the highest SAT score.
Discrete data: working uniquely with whole integers, discrete data can’t be separated into parts and instead is used to help businesses place product orders, review worker performance, or determine company growth.
Continuous data: this type of data can be broken down into smaller parts and used to determine more specific matters, such as production or delivery time.
All of these different types of data come together to form valuable insights that can help businesses make the right decisions.
Why is Data Important?
We’re glad you asked! Data is absolutely essential to business success because it allows companies to place reasoning behind their decisions and back up their choices with actual facts. And when we refer to “data,” we’re referring to a wide range of sources: statistical information, analytical data, customer insights and feedback, sales number, and practically any other information that a company has.
And why is this data so important to businesses? Companies that use data to make their decisions:
Benefit from easier decision making: it’s a lot easier to make the right decisions when there’s data backing your decisions. For example, if you’re deciding between two different marketing strategies and past data shows you that one was much more effective than the other, you’ll be able to back up your decision with evidence from the last time a similar strategy was executed.
Have higher revenue/profits: apart from the fact that data-driven decisions tend to be more lucrative as they are thought out and well-planned, companies that use data to make their decisions can help companies optimize their product/service offering and predict future sales.
Are better at problem solving: trying to solve a problem with little to no information can be quite the challenge. When presented with a problem, companies can use past data to evaluate different options and choose the best possible solution.
Personalize the customer experience: data isn’t just about numbers, using customer data to track what they’ve purchased and searched can help you better anticipate what your clients will want in the future and cater their experiences to them specifically.
Now that you’re familiar with the different types of data and how it can benefit your business, let’s explore just that: using data to drive business growth.
Using Data to Drive Business Growth
Ask anyone successful how they’ve reached that point and they’ll all have the same answer: using data to make smart business decisions. And while there are entire careers dedicated to simply analyzing data, let’s explore a few simple and easy ways you can use data to transform your business’ growth.
Explain the value of data to your colleagues: using data to make decisions is only valuable if everyone decides to do so. Choosing to be a data-driven company means that all employees are dedicated to making the most of available data and, most importantly, backing up their decisions with strong data.
Define KPIs and benchmarks: using data for decisions is great, but ensuring that you have measures in place to evaluate your results over time is also key. And speaking of key, identifying key performance indicators and benchmarks is necessary to check out your growth and help future decisions be even stronger.
Learn how to collect and organize data: as you saw above, there are lots of different types of data. And even though you might struggle to filter through the information and see what is actually of use, choosing the right data to study will make all the difference. Decide what’s important to you and your company and then focus on that specific information.
Analyze the data properly: data analytics is an entirely separate field; there are professionals who solely analyze data. It’s complicated and requires study and experience, but these are five steps to properly analyzing data:
Define your question and goals: why are you analyzing this data? What conclusions do you hope to draw? What do you hope is your end result? Answer these questions and you’ll have a better idea of what you should get out of the data.
Collect the data: now that you know what you want to accomplish with your data, start collecting the data based on what you need to have to make your decisions. If your goal is to provide customers with the ideal online experience, then make sure you collect data regarding what they’re searching for, what competitors offer, and customer demographics.
Data wrangling: with all the data collected, it’s time to make sure your data doesn’t have outliers, null values, or incorrectly recorded information. It can be quite tedious and boring, but cleaning up your data for analysis is just as important as the analysis itself.
Decide your type of analysis: there are lots of ways to analyze data and choosing the right one depends on what you wish to accomplish. Research possible options and choose the best one for your desired solution.
Interpret the results: you’ve collected, cleaned, and analyzed the data: it’s time to interpret the results! You may need to visualize the results in graph form or display it in charts; this depends on your specific data set and, of course, your audience.
Data is an incredible way to ensure your business decisions are properly made and with just a little bit of time and dedication, you and your team can be well on your way to data-backed decisions that will spur business growth. Sounds like a dream, right?! At Ironhack, our Data Analytics Bootcamp is designed to ensure that you enter the workforce with the proper tools to both identify, collect, and analyze data. Interested? Check it out.