As an analyst myself, it’s easy to jump straight into to how we get data and turn it into insights. After all, that’s what I do pretty much all day every day and it’s great. What I often forget, though, is a lot of people aren’t quite there yet and for good reason. In a meeting earlier this morning, after a whirlwind demo of the different things we can do with data, attribution modeling, market analysis, geo-targeting, etc., the business owner we were speaking with uttered an all too common sentiment- “Man, this is really interesting” she said, “but I just can’t do anything with it right now”. While the value of solid analytics is taken at face value by many, a lot of business owners have been burned by false promises, particularly small business owners. Working with data requires a lot of knowledge, patience, and time, often requiring specialized (and expensive) personnel or contractors. For a small business, even one freelancer can be a big investment at times, for a dubious return. I am a firm believer in the value that strong analytics can have for businesses (potentially a little biased), but I know not everyone is. So before I continue into the wonderful world of numbers, let’s take a step back and set the right expectations. What can all of this actually do for you, why hasn’t it worked before, and at the end of the day, is it worth the investment of time and money?
What can all of this actually do for me?
It can be easy to dismiss the value of analytics as something that really only applies to massive corporations, or to e-commerce business, or to B2C business, etc. After all, a small B2B company really doesn’t have all that much information floating around, does it? Well, honestly it does. It’s a matter of how you look at the world around you. Everything can be categorized as data – just not everything should. As a business leader, your primary function is to set the business strategy. To me, strategy is really all about how you allocate your resources. How do you choose where to spend your time and money for the greatest effect? Those are the business decisions that can make or break a startup or any other business for that matter. Where you spend your time and your money today will have a great effect on how your business is performing 1, 6, or 24 months from now. Are you investing enough in growth? Are you spending too much time on small things that aren’t allowing you to get the big things done? Do you need to hire another staff member now or can you wait a month or two? Those are business decisions that I would bet almost every business leader can relate to. The entire focus of analytics should be allowing you to make better business decisions. That’s what this can do for you. Now whether or not it can is dependent on a couple of other things.
The Most Common Failures of Analytics in Business
You aren’t asking the right questions
Scenario – you have to decide whether to spend your advertising budget in area A vs. area B. You ask how each area is performing in sales currently. Area A is doing 30% better than Area B, so you invest in Area B to get it up to par. A couple of months later, Area A is still going strong, and sales in Area B have actually decreased. Making decisions based on current performance alone is one of the worst ways to set up a decision-making process. In almost any scenario, there are a huge number of factors that play into performance now, and performance in the future. If you ask an analyst to tell you how things are doing, they will most likely dutifully present a spreadsheet and maybe a couple graphs on how things are going. That’s not actually going to help very much. What you need to know in order to make a good business decision is WHY is one performing better than the other, and how can THAT be addressed in the other area to match performance, if it can. Getting to understand the factors that play into performance and how they can be adjusted is one of the key components of any analyst’s job description, either contractor or employee. Ask them that, and you will receive a much more nuanced answer that will allow you to make a better decision. You’ll make them think harder, and they may whine a bit because they actually have to use their brains, but if you have a good analyst they’ll thank you for it. If they can’t handle those sorts of questions, they aren’t enabling you to make better business decisions, and they need to go.
- You aren’t collecting the right information
One of my pet peeves as a marketing analyst is reports that will spit out numbers on everything under the sun but are missing the information that I actually need to understand an issue. A lot of platforms out there are guilty of information overload. Now don’t get me wrong, I love data and lots of it, but few things are more frustrating than getting everything but what you need. A big case-in-point is lead information that doesn’t include the critical “How did you hear about us” field. This basic question is often the first step to understanding what parts of your marketing machine are working and what aren’t, but is often overlooked. The conclusions that can be drawn from information are only as good as the data that informs the analysis in the first place. This falls mostly on the analyst – if you start asking the tough questions and they say they can’t answer those because they don’t have the right information and can’t get it, you’re working with the wrong people.
- The right stuff is known but isn’t communicated.
This happens all the time. Now this isn’t solely on the business leaders – if the information isn’t presented in a way that makes sense to the decision maker, the information is useless, correct and insightful or not. If the information is too late and the decision has already been made, it’s worthless again. Working out the specifics of what information you want to be presented, when you want it presented, and how you want it presented is key to having a successful analytics process that delivers meaningful value to you as a business owner. This can lead to great amounts of frustration on both ends, and a loss of trust between the decision maker and the analyst, which devours the value of the insight provided.
- The expectations are set wrong
This is the last big failing I will go over, but one of the most important. If someone misrepresents the information that they can provide you, the trust evaporates and the value of that relationship plummets. Many times, when a business owner loses faith in the reports, they stop reading them all together, and thus the value of the analyst is nullified. On the flip side, if the business owner doesn’t understand the full capabilities of the analyst, they won’t see the value in the first place, and the relationship never gets off the ground. Setting the right expectations and defining what represents valuable insight to business decision makers is the foundation of making any investment in analytics worth it.
SO is it worth it?
At the end of the day, all of this boils down to a simple question for a business owner looking to make a choice. What I’ve tried to illustrate above is what analytics can do for a business if done properly, and what typically holds it back. Most critically, however, is the point that the function of analytics is to drive better business decisions, and so your need for analytics is largely a function of the questions that you need answers to. Are they difficult, are there a lot, and do you need good information fast? Then an analyst is a solid business investment. To “zoom out” a bit, the need for a good analyst can be summarized with one simple question – how committed are you to driving change and growth in your organizations? If you are looking to preserve the status quo, you don’t need a good analyst. Your need to answer business questions is not that great. If you are committed to growing your organization (which yes, means change), then knowing how to allocate your resources is huge. You will have more business questions with a larger effect, and thus a greater demand for what analysts provide – meaningful business insight. Find an analyst, and find a good one, and they can be your greatest strength in growing your organization.