Due to the rapid digital transformation across all industries, an exploding quantity of data is available to businesses today.
The last couple of years has seen businesses invest in technologies and resources for making data and analytics software an integral part of their operations.
Today, it’s safe to say that data and analytics have gone from being a siloed function to becoming an integral part of digital transformation.
But the key to remaining competitive in a fast-moving marketplace requires more than just embracing data. It requires businesses to develop a thorough data-driven culture that focuses on optimizing business outcomes and performance through metrics across all functions – marketing, sales, support, retention, you name it.
So how do you establish a data-driven culture in times when most shy away from number crunching?
What is a data-driven culture?
A data-driven culture is about making decisions based on numbers and insights generated using data. It’s about leaving behind the traditional decision-making approach based on assumptions and gut feelings and encouraging data usage across every department’s day-to-day activities and tasks.
For instance, insights can be gained from data to pinpoint leaks in the customer funnel, requiring actions across marketing, sales, and support teams to prevent them.
But at the same time, a data-driven culture also means instilling trust and commitment among all the members of an organization to collaborate fluidly on shared metrics by enabling access to data at their fingertips.
Why is a data-driven culture important?
Relying on gut feelings and assumptions has always been an unsustainable strategy. Becoming a data-driven organization not only empowers teams to use insights for improving decision-making but also makes processes more efficient and effective.
It’s about making sure you double down on your core competencies and avoid mistakes that could derail your digital transformation and business growth. Now there are many advantages associated with a data-driven culture, but here we’ll look into some of the important ones.
Supports progress tracking and transparency
When you’re competing in a fast-moving market, you’re moving multiple pieces of your operations in tandem. But the trick to succeeding here is to ensure you’re making progress on all fronts by keeping them aligned.
A data-driven culture helps move away from using data for mere report generation weekly or monthly. It instead is focused on developing a transparent report functionality to provide a holistic view of all functions.
Improves coordination and consistency
A 360-view of all functions and their progress further enables automation for mundane tasks and coordinated efforts across marketing, sales, support, and other functions. This improves how a product, service, or process is delivered to the end consumer.
Increases productivity and improves team effectiveness
With better progress tracking and coordination, a data-driven culture helps define the constants and the dynamic elements across all functions. This allows departments to define their work scope clearly, align their day-to-day tasks, prioritize activities based on what data indicate their attention is required, and deliver on time, boosting productivity on all fronts.
Improves workforce engagement
Most organizations see their workforce drop off mid-operation due to a lack of employee engagement or interest. But both reasons are driven by the lack of definition of what they’re supposed to achieve and how they can move towards it. A data-driven culture helps tackle both.
Saves costs and drives higher revenue
With better coordination, progress transparency, and better business decision-making, a data-driven culture promptly helps organizations identify loopholes and opportunities in their growth strategy. This helps save costs by avoiding activities and tasks with a higher chance of failure, doubling down only on those that add value to the end goal.
How to create and adopt a data-driven culture
Data alone does not make an impact on the growth of an organization. To really start seeing a positive impact, one needs to go beyond the numbers and learn how to put data to work. Here’s what encompasses adopting a data-driven culture at an organization:
1. Clearly define your goals
Before you even begin looking at your data, you need to define what you’re trying to achieve from it. Defining what goals you want to achieve in a data-driven culture is the first step of adopting it.
For example, your goal could be to improve customer engagement and reduce churn. In this case, you need to look at data that shows how a typical customer engages with your business at different stages of the sales cycle. You also need to look into metrics such as the engagement rate on your campaigns and the response time you can deliver on support requests.
2. Identify your performance parameters
Technology gives us access to unlimited data. But that doesn’t mean every metric available to you should impact how you gauge performance or success across a business function or campaign.
Once you have your goals clearly defined, identify the key metrics representing your progress towards them.
For example, you want to reduce your customer churn rate. In this case, looking at your customer engagement rate at the time of sign-up or subscription is a good metric instead of looking at the number of repeat visitors on your website.
Similarly, if you want to improve the customer experience, you need to look at the number of support queries. But, at the same time, you also need to look into how many of those queries were resolved and your turnaround time. Another key metric here can be your NPS score.
3. Commit to gathering changes that are needed
When you adopt a data-driven culture, your workforce, starting from key stakeholders to the newest member in the team, will require making some changes and adjustments to existing processes.
You need to clearly communicate your purpose of using data, goals, and performance metrics across all departments. The idea is to get them on board with using data as the core driver of all decisions and make them commit to it.
4. Include all stakeholders in goal-setting
Companies with a strong data-driven culture have the top managers and stakeholders involved in the process early on. Apply the concept of leading through an example here and be the first to start using data for making business decisions.
Let’s continue with the example of boosting customer engagement and retention here. Suppose the Head of Customer Experience or Chief Marketing Officer starts a meeting by explaining the importance of customer retention backed by data on the revenue generated from repeat customers. In that case, everyone in the meeting will be tuned in to what they have to say and engaged in the action plan.
5. Narrate your data
Another thing to keep in mind when developing a data-driven culture is to make it look easy to apply. Simply presenting your team with numbers across different functions and processes may overwhelm your workforce. Number crunching is not everyone’s forte!
Narrating your data in an easily comprehensible manner is essential.
- Identify your storyline: What are you trying to explain, what are your goals, your outliers, what comparisons can you make, and what correlations support your goals?
- Be aware of your audience: Who is your audience, is the story relevant to them, how does it add value, and have they heard your story before?
- Build your narrative: What do you want your audience to know, what do you want them to do, and how can you use data to make your point?
- Leverage visuals: What data can you present with the help of visuals, such as graphs, infographics, and so on?
6. Leverage automation to save time
Gathering data for different departments, sifting through the metrics to find those that add value to you, and then collating numbers to create a report. Think about the last time you skipped looking at Google Analytics because you had to look into too much data to make sense of what matters to your goals.
This is where automation comes in.
With the help of the right automation software, you can automate data collection as well as report generation on a daily, weekly, monthly, or yearly basis. This way, each team gets access to timely reports to track their progress and create a plan of action tailored to their performance.
7. Enable data accessibility
If you want everyone to embrace data and use the insights to make decisions, you need to make data easily accessible.
Most organizations give restricted access to data, which loosely translates to only managers getting the complete picture. To promote a data-driven culture, there needs to be a defined level of transparency on data, making it accessible to everyone to plan their day-to-day tasks.
Examples of a data-driven culture
Different organizations across the globe make use of data in different ways. Some examples of a data-driven culture to achieve different goals include.
1. Google: Using analytics to create a better workplace
Your workforce is the lifeblood of the organization. When work has become distributed and teams have gone remote, it’s important to keep up with employees and understand how they’re moving from day to day.
Google is the perfect example of an organization using data and analytics to understand its workforce better. It uses team reviews, performance reports, and employee surveys to get insights into what may be blocking the productivity of their employees, what can help them do a better job, and what can keep their morale up.
One such use case that stands out is how Google used people analytics to enhance employee welfare. They used employee insights to back their decision of extending the maternity leave, cutting their new mother attrition rates in half.
2. DBS Bank: Using data to serve customers better
Another good example of the benefits of a data-driven culture is DBS Bank.
To survive in a competitive fintech market, the bank embraced artificial intelligence (AI) and data analytics. They use the technology and the insights to provide customers with hyper-personalized recommendations to make better financial decisions. This, in turn, is helping the bank serve their customers better and improves customer loyalty.
As a part of embracing a data-driven culture, the bank has also invested heavily into training its employees in big data and data analytics.
3. Netflix: Using data to develop new products and services
Market trends and preferences change often. Even industry leaders are not immune to these changes and see a fluctuating response to their new launches.
But Netflix has cracked the code. They use data and analytics with the help of social listening to understand user preferences. This has helped them launch blockbuster hit series in different genres and introduce new languages and formats in the last couple of years, improving their user engagement and retention.
4. Epigamia: Using data to boost customer loyalty
As a fast-moving consumer goods (FMCG) brand, Epigamia needs to continually remain in the eyes of its target segment to beat the competition. This includes their customers, each of whom has their preferences and tastes.
Epigamia actively uses data and analytics to segment their customer base, understand their evolving needs and preferences, monitor product performance as well as campaign results, and use the insights to personalize their omnichannel marketing campaigns.
This has helped them tackle the challenges of dropping email open rates, increasing them by 20%, and getting consumers to make repeat purchases!
5. CASHe: Using data to personalize consumer journeys at scale
CASHe, a credit-enabled financial technology platform that offers consumer lending products, is another example of a well-implemented data-driven culture. The business understands the importance of hyper-personalization in their products and services, using data to pave the way for the strategies being used across the buyer journey – from discovery to conversion.
Using data and analytics, CASHe has been able to strategize event-based campaigns that are personalized on a lead-to-lead basis to nudge consumers at the right time with the right message.
The ability to personalize at scale and offer a seamless credit experience to salaried millennials has led to increased borrower engagement and retention initiatives. It has also positively impacted CASHe’s conversions of potential leads into prospective borrowers.
But that’s not all.
From Coca-Cola, which uses data and analytics to refine their target audience, to Uber, which uses insights to improve their service efficiency, there are many other examples from market leaders who embrace a truly data-driven culture.
Benefits of a data-driven culture
There are many advantages of a data-driven culture. But when you look at it from a business outcome standpoint, you’ll still see many benefits associated with the effort.
1. Increases confident decision-making across all levels and departments
A business runs on decisions being made every day – no matter how big or small. Every little task you add to your daily sprint impacts the overall goal you’re trying to achieve.
With a data-driven culture, you don’t have to second-guess or be skeptical about your plan of action. You will have concrete data to look into when deciding what needs to be done or what needs to be prioritized in a department.
Your decision-making automatically becomes more confident and less prone to errors.
2. Boosts customer success and longevity
Data helps describe a customer’s behavior and understand their habits, preferences, and how they interact with your business at different stages in the lifecycle. This helps guide the actions of your marketing, sales, support, and success teams, helping them create hyper-personalized strategies.
Considering how 71% of consumers today are frustrated with impersonal experiences, putting more effort into your buyer’s journey is a sign. The more personalized your strategies are, the more loyalty a consumer feels towards your business.
As Len Covello for Forbes puts it, “Personalization is the Holy Grail of loyalty and customer longevity”. Covello also stated a study that proves how an increase in loyalty by 7% can boost lifetime profits per customer by as much as 85%.
3. Improves customer acquisition and engagement
With the improved longevity of customers, you get a chance to understand them better as they progress in their journey with your business.
This gives you insights that you may not have discovered during the initial market research or competitor analysis. It’s like directly getting insights from those you’re offering your products and services to!
The insights gathered by different departments will help you understand your target market better, identify their challenges and goals on a deeper level, and refine your ideal customer persona.
More details on your ideal buyer enable you to create strategies tailored to their journeys, leading to lower acquisition costs and better engagement rates across the customer’s journey.
But implementing a data-driven culture comes with its own set of challenges.
Data-driven culture challenges
While the challenges of leveraging data and analytics may vary from department to department, and even across organizations, there are some we might all face:
1. Rightfully using the available data
Organizations will need to be more transparent with their workforce, giving higher accessibility of data on all levels. This puts the organizations at the risk of data security and critical information.
Organizations need to develop policies and compliances to ensure the appropriate use of the available data.
2. Data overload
Embracing data means taking insights and numbers into account for every decision made in the organization. This can result in data overload for some departments and roles, leading to a drop in efficiency at work.
To counter this, it will become important for organizations to train their employees to pay attention to data that matters. This is where goal setting and identifying key performance metrics come into play.
3. Data accessibility and autonomy
Providing access to data on all fronts to enable autonomy is a challenge in itself. Considering distributed work environments, organizations will need to invest in technology that helps offer transparency of data in all departments with defined control on how it’s accessed.
4. Trust in data
The increasing number of digital platforms and their engagement signify the growing amount of data available to businesses today. But like we always say: not all data makes sense.
While automation will help organizations gather data from multiple channels, they might still face a challenge sifting through it – remember quality > quantity.
5. Daily interactions
Not everyone is a pro at analytics, so it’ll become a challenge for organizations to bring data into their daily interactions.
This becomes crucial for organizations to focus on the quality of interactions between stakeholders/decision-makers and individuals with an analytical skillset. This may include training employees in different departments, using common terminologies, and setting up standardized methods to collect and communicate data.
Driving growth through retention with a data-driven culture
Market surveys report how businesses need to focus on retention to grow sustainably. This holds for both inward growth as well as customer-facing growth.
A data-driven culture enables organizations to reduce turnover and boost employee retention by understanding their needs better. This helps boost employee morale, engagement, and productivity levels, driving them positively towards achieving organizational goals.
When teams across different departments are more aligned and driven by data, they will understand the audience they’re addressing in a better way. This will also have a positive impact on customer retention.
And customer retention, in turn, will enable organizations to double their profits and revenue through an established community of buyers, helping them grow more sustainably.
Establishing a data-driven culture is your hack to growing sustainably (or even faster) in high-competition markets and driving customer acquisition.