Right now, there’s an awful lot of data going around. A lot of it bleak and depressing. Whether it’s calculating the R-rate or forecasting the rise in Covid-19 cases, data scientists are being put to the test and providing vital insights.
There’s also lots of data being used in other less gloomy circumstances. If you watched this weekend’s Premier League, you’ll have seen data for XG, pass completion rates and aerial duels. You can get lost in it and many do.
In the world of business, data is a useful counterpoint to instinct and word on the street. There’s the financial data that informs us how well the business is doing. There’s the customer data that helps to hone our product and service offering. There’s the marketing data that guides our sales and promotional activity.
As an entrepreneur or business owner, having a knack for data can help you go a long way. Let’s look at a few key areas:
Identifying market opportunities
Every business wants to unearth a lucrative gap in the market. That perfect meeting point between supply and demand. On the other hand, the last thing you want is to waste a load of time and money solving a problem that doesn’t exist.
Data can help to unearth these gaps and provide the clues as to whether you’re on to a winner.
Take this example. How do most people find information these days? They’ll search on Google. Every search is recorded by Google meaning there’s an unbelievable wealth of data for you to examine. Here’s two free tools that will help you do that:
- Google Keyword Planner
- Google Trends
Both of these tools can help you look at search trends over time, keyword volumes, competition, and then drill your results down by location. You could use that data to identify products/services that are in demand in your area where the competition is low. Winner!
(Looks like outdoor heating could be a winner this winter.)
It’s also an ever-evolving situation. “Keeping on top of how potential customers search is vital,” says Adam Adlkish of Fibre Marketing. “Keyword trends change all the time, this has never been more true than in 2020. Coronavirus led to massive search changes, with keyword volumes changing dramatically and new search terms being used each day. ‘
Creating customer profiles
Steve Jobs once said businesses need to figure out what customers are going to want before they do. Whilst Apple get it wrong a fair bit (what happened to my USB port and headphone jack?) – there’s no doubt their customer-centric and forward-thinking product design is a big part of what makes Apple a global leader in innovation.
But what does this have to do with data? Well, there’s masses of data out there on both your target customers and your current ones. The best companies are using that data to refine their products and finely craft their sales messaging. For example, you can use your CRM software to create different customer segments e.g. ‘loyal customers’ or ‘one-off customers’. Depending on the data you have, you can build customer profiles based on their common characteristics. You can also look at the products they’re buying and use this to inform future developments – a bit like Apple.
You may unearth a few surprises. It could be you discover your top customers aren’t who you think they are. If you’ve been marketing your business to mid-20s hipsters when in fact your customer base is 40+ homeowners, well, that’s going to prompt a fundamental shift in your business planning.
“I make a habit of collecting my target market’s problems and then working out ways to solve them or help them with them,” says marketing strategist Sophie Cross of Thoughtfully. “When you know the key characteristics of your typical customer you can show up where they do and see what they’re talking about. You can see who they follow and what they’re really interested in. You’ve got to make your business all about them. Give them what they really want, not what you want to give them.”
Optimising marketing performance
The word ‘optimisation’ is a favourite of data people. It refers to the process of fine-tuning performance to deliver incremental improvements. If you can tweak something here and get an extra 2%, a 0.6% improvement in another place, plus 1.7% over there – it all adds up. This doesn’t have to involve wholesale changes, just smart tactical adjustments in a variety of places. A good analogy can be made with the Team GB cycling team who applied the ‘marginal gains’ philosophy to great success at 2012 and 2016 Olympics.
The most obvious place where optimisation can prize great results is on your business website. Conversion rate optimisation looks at how you can get more users to complete an action – for example, making a purchase or requesting a callback. If you have a high traffic page on your website and you can boost the conversion rate by a small percent, that could be massive. Similarly, if you have product with a great profit margin – it makes sense that you want to boost the conversion rate there.
There are a whole host of things you can do to optimise conversion rates:
- Adding video to your website
- Ensuring every page has a Call To Action (CTA)
- Changing the positioning of buttons
- Enhancing the copy
- Tweaking the design layout
A good idea is to carry out A/B testing to understand what impact the changes are having on your website. That way, you’ll have real data to back up your decision before you roll it out further.
Interrogating financial statements
Your financial data trumps everything. It’s how you know whether your business is heading in the right direction. If you’re not properly clued up on financial terminology and how to interrogate the data on your reports, you can quickly miss important details and fall behind where you need to be.
There are a whole host of financial reports that you’ll need to review and interrogate. Check out our useful guides on the following:
Being data-savvy and pro-active is going to make a massive difference, as well as plugging into expertise and accounting software solutions. “Waiting for your Year-End accounts is usually too late to do anything,” says Tamsyn Jefferson-Harvey of Seed Accounting Solutions. “We advocate staying on top of your finances throughout the year, and either looking at, and understanding the reports yourselves, or asking a professional to prepare and deliver the necessary services. We would usually recommend a trifecta of management accounts, forecast and business plan. This enables you to look at your business performance on a more regular basis, identify seasonal changes, detect warning signals that need to be prepared for, set annual goals and monitor your KPIs (which we also recommend setting each year in a one-page business plan).”
Data doesn’t tell the whole picture. To go back to our football analysis, if you only looked at the stats you can come away with a different impression to what you’re seeing and feeling. A team could have had 10 shots on target… but actually all of those shots were from 20 yards out and didn’t trouble the keeper. This is especially true in business right now. We need to have some understanding of what’s happening on the ground to make sense of the numbers. If you can strike a balance, though, you’re on to a winner.