Its no secret that the key to acquiring new customers and retaining your most profitable customers takes more than intuition and gut decisions these days. It takes strategic action based on data, the right data. In a down economy, using data to make better business decisions is more important than ever. But having a lot data is not enough. Having collected the RIGHT data is truly the key.
The instinctive approach to using analytics to make business decisions may be to simply start capturing new data, and lots of it. Many companies have deployed world class CRM and ERP systems to collect volumes of data, spending years collecting lots of data and then begin to explore what types of questions they can ask of the data. That’s backwards from a logical perspective. And this can be a costly error. To be in the drivers seat of analytic decisions, you need to start from the business perspective and make sure that you are collecting the right data to answer your critical business decisions.
Starting by articulating your business goals and directing your data collection strategy around those goals will save you a lot of time, money and aggravation. Many businesses spend inordinate amounts of money acquiring data only to find out that when they try to solve their real business challenges with that data, their data is incomplete or inaccurate. Wasted time collecting the wrong data = wasted money.
Ask yourself: “To answer this business question, what data would I need to support the answer”. For example, if you are most interested in learning how to retain your most profitable customers, you will want to collect as much data about customers activities, their profitability, the length of time they are customers, why they leave and why they stay”. Sure, the list could get much longer, and should. But the point is, collect as much data as you can to answer the questions.
You should revisit your data collection / business goal alignment every quarter (at a minimum) to ensure that you are keeping pace in your data collection strategy. It is all too easy to lose sight that data collection is not a static exercise, but needs to be as fluid as your dynamic business decisions. When you want to make data informed decisions, you want to be sure that the data is already there ready to be work for you.
Tags: advanced analytics, business analytics, CRM, customer aquisition, data collection, data mining, data modeling, data strategy