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Did you know that data-driven organizations are 23-times more likely to acquire customers and 6-times more likely to retain customers? They’re also 19-times more likely to be profitable. Those statistics come from McKinsey Global Institute and they illustrate just how important data is to business success.
Today, information is power, and when a company has access to the right data, it can use that data to drive business growth and success rather than simply using data to report and reflect on the company’s performance.
That’s why data is transformative, and that’s why it’s the holy grail of business today.
According to Gartner, “data and analytics will drive modern business operations” in the future. Assuming Gartner is correct, companies that have already started their own data-driven transformations are poised for long-term success, while the rest will be left behind. The data proves it. NewVantage Partners’ 2020 Big Data and AI Executive Survey found that 70.3% of companies that invest in big data and artificial intelligence are realizing measurable results from those investments.
Becoming a data-driven company doesn’t happen overnight. It’s a process. Here are seven key considerations your company should understand to begin its own data-driven transformation:
Based on the results of the NewVantage Partners 2020 executive survey, only 26.8% of companies have data-driven cultures, which represents a significant opportunity to fill the gap.
The first step to harnessing the power of data is recognizing that your company needs to invest money in order to build data as a strategic asset. Furthermore, data strategy should be owned by the company’s leadership and spread to all employees through a data-driven company culture.
Once all employees buy into the culture of making decisions based on data, you’re on the road to a successful data-driven transformation. However, you’ll need to invest in technology, talent, training, and possibly external data sources to do it.
Anyone can say their company prioritizes data, and many executives believe they’re companies are data-driven. However, the reality is quite different.
Looking at the Dell Data Maturity Model (DDMM), there are four stages that a company goes through when it comes to developing, implementing, and committing to a data strategy:
Each stage of the DDMM has a specific goal. To move from data aware to data proficient, companies must develop standardized reporting, and to move from data proficient to data savvy, they must track key performance indicators (KPIs) using a business intelligence platform. To move from data savvy to data driven, companies need to be able to make decisions related to critical initiatives using data. Finally, the goal at the data driven stage is to add scale and reduce costs.
According to a study by Forrester Research, companies only analyze 12% of the data they have, which means 88% of data is wasted. In other words, most businesses have a long way to go to become data driven, which means developing and committing to a data strategy is essential.
Bottom-line, you’re not data-driven if you’re only analyzing 12% of your data.
Where will your employees get the data they need to make business decisions, identify opportunities, and be proactive rather than reactive? First, determine how you want to use data (i.e., your goals) and what type of data you need to reach your objectives.
Some data can be collected internally, so be prepared to invest the money and time to develop the architecture required to collect and store that data. In addition, some data might have to come from external sources. Again, commit to investing the money necessary to get the information you need to be successful.
When it comes to consumer data, you should be collecting it from all possible sources. This includes first party, second party, and third party data. First party data is data that your business collects directly from your customers through your own channels. All of your customer-related systems should be set up to make it easy for your employees to collect, access, and use first party data.
Second party data is acquired from a trusted partner that you have a relationship with (or pay). The data is reliable because it’s collected as first party data – it’s just collected by a trusted partner rather than by you. Third party data is compiled by data aggregators. If you use third party data, you must be very selective about the sources you get the data from to ensure it has been collected in legal ways and is accurate. Your business systems should be set up to seamlessly import second and third party data, so your employees can use it effectively.
How will you take the data that you’ve gathered or have access to through an external source and turn it into actionable insights that can guide decision-making and help your business reach its strategic objectives? Do you have the talent on staff to analyze and use your data? Do you need to hire or outsource specific job functions in order to allow your data to drive the best results?
A critical part of using data effectively to guide business decisions is to analyze it and find opportunities (or threats) from it, so you can exploit those opportunities (or mitigate the threats) to improve sales, operations, and value for the organization. Therefore, you need to be sure you have the necessary resources to effectively use your data.
Data is powerful, but if only one or two people or departments in your company have access to it, then its potential is limited. For data to be transformative to a business, it must be accessible across the organization for daily decision-making.
Data can aid and streamline processes for the marketing, finance, sales, customer service, legal, operations, and other teams across the organization. When decisions are made based on data, they’re typically better and lead to greater success. Therefore, to the extent possible, make sure the decision-makers have access to the right data to make the best decisions.
Data accuracy is always important, but as more people in your company begin to rely on data to make decisions, the risk of loss from decisions made with bad data grows exponentially. With that in mind, it’s essential that processes and policies are put in place to ensure everyone is using accurate data. For example, a data accuracy policy should require vetting of external data sources to confirm only reliable data providers are used.
When your employees use data on a daily basis, it’s critical that your company has data privacy policies and related procedures in place to keep data secure and compliant with relevant privacy laws like the California Consumer Protection Act (CCPA). This includes both internal and external data to prevent illegal data-sharing and other data-related practices that could be illegal or unethical.
The way data is collected and used will continue to evolve in the future, so your business needs to be prepared to pivot as rules, methods, and technology change. Agile systems and agile marketing will be critical in the coming years.
For example, privacy rules that affect consumers and marketers are already changing. In the past year, Apple changed the privacy rules for its users, and Google changed its privacy rules soon after. These won’t be the only changes for Apple and Google, nor will Apple and Google be the only companies to modify their privacy procedures and rules in the future.
Evolving privacy rules are also coming from regulators, and businesses must be prepared to change as those rules require. For example, as of December 1, 2021, dispensaries in Illinois are required to protect medical marijuana patient data with the same standards that businesses and healthcare providers must protect patient information in the medical industry under the federal Health Insurance Portability and Accountability Act (HIPAA). There are already rumblings that other states may release similar patient privacy rules.
As with most things related to the cannabis industry, the one thing we can count on in the future is change, and that includes changes in privacy laws and procedures. Your business must be ready, willing, and able to pivot.
Data is transforming the cannabis industry. Whether you operate a cannabis business or an ancillary business, you need to prioritize data in order for your company to gain and keep a competitive advantage that translates into long-term growth.
According to the results of the NewVantage Partners 2020 executive survey, only 45.1% of companies are competing on data and analytics, and only half of firms are managing data as a business asset. That means there is a significant opportunity for businesses to prioritize data and gain a measurable competitive advantage.
Start your company’s data-drive transformation now by integrating data into your company’s DNA, developing a data strategy, identifying your data sources, making your data accessible to the employees who need it, using it effectively and legally, ensuring it’s accurate, and staying agile.
Originally published 2/28/19. Updated 6/10/22.