Data: Why it is important for business growth

In God we trust, all others must bring data, says W. Edward Deming, cementing the invaluable place of data in modern day business operations. But data gathering and analysis is not fun. It is an almost endless process of recording and reviewing files, facts and figures. In extreme cases of ignorance, data could be likened to flavorless residue most businesses discard.

However, no matter how mundane data may seem, it is priceless. Data is an aggregate of individual and collective experiences with great insights. Everything a person does is valuable data. And with it, businesses cannot only predict customer needs, they could surpass expectations. Hence, to say data is the most valuable tool for business growth is an understatement. In fact, if cash flow is the life of a business, data is steroids!

Every business, small or big, generates data one way or the other.

But in Africa, there is an assumption that businesses do not generate data. As a result, data paucity is a reality on the continent. This is false. It is also unrealistic. Every business, small or big, generates data one way or the other. Every activity within a business – every purchase, complain, payment, return – all constitute data. The problem, however, lies in the inability of businesses to effectively capture, analyze, and use the data.

From Data to Money

It is quite disturbing to find companies sitting on a massive amount of data and not leveraging it. One of the worse things that can happen to a business is not being able to turn data to money – this is happening in a lot of African businesses. From telecoms companies to financial institutions, ecommerce and retail among others most business are guilty of this – they capture data but do nothing with it a la Nokia, which had a huge research and development department. Arguably, if they had analyzed their data properly they could have been better prepared by anticipating new trends and behavior of customers on mobile.

The truth is, for businesses to thrive in a digital world, investment must be made not only to capture data, but to analyze and secure actionable insights. This can be as simple as looking through past purchase records to understand the behavior of customers, changes that have occurred, and how their expectations have become either simpler or more complex. Also, setting up focus group activities and studying how customers use your product – what features make them frown, smile, makes them confused (this is particularly useful for businesses whose products are in pilot stage), etc. could go a long way to revealing crucial insights on customer behavior.

One of the worse things that can happen to a business is not being able to turn data to money – this is happening in a lot of African businesses.

Data is Useful for Every Part of Business

Data makes a company tick. While a company’s products team need data to improve on the current product and services, its sales team thrive on data for go-to-market strategies and expansion. Marketing also need data to measure the performance of current marketing mix and optimize it across all marketing vehicles and other touch points. For human resource managers, they need to know which passive candidate will be a good fit for an organization and which employee is likely to make a move in the next 3-6 months. Data helps with that.

Data helps a business stay ready, anticipate and get ahead of competition.

For businesses considering data-driven growth strategies, a good place to start is answering the ‘WHY’ question: why are we capturing data? What problem are we trying to solve with data? What would do we use it for? Do we want to efficiently predict and effectively meet and surpass customer expectation? Are we trying to efficiently predict and effectively meet and surpass customer expectation? Do we want to identify other business opportunities and improve our business model?

Having a good idea of the ‘WHY’ helps in answering the ‘HOW’. What data points do we need to capture? How do we capture and analyze the data? What tools should we use for analysis? However, there must be a clear objective for data gathering, otherwise the wealth of insights data analysis could bring would be just a dream.

Finally, to paraphrase Michael Lewis in his book Moneyball: The Art of Winning an Unfair Game, people operate with beliefs and biases; to the extent you can eliminate both, and replace them with data, you gain clear advantage. In context, decision makers, sometimes, tend to use insights from already analyzed data to “confirm” assumptions. They panel-beat and twist insights to favour their beliefs. Such practices are wrong. Decision makers must not allow prejudices and biases interfere with the data-driven decision making process.

morofolu This is a guest post from Eniola Moronfolu, a digital transformation professional and Mara Mentor, who helps businesses make effective and efficient use of digital tools and technology to understand, respond to and exceed customer expectation, shares insights on how and why companies need to invest more in data capturing and analysis, and how acting on data insights drives growth