Why Every Business Needs a Data Strategy

What is the key to creating a competitive advantage for today’s businesses? It’s the ability to leverage data to make informed decisions. How well a company handles data is central to any organization’s ability to compete. And organizations that fail to implement new technologies and apply analytics will fail. 

Every Business Requires Data

In the past; businesses could survive, and even thrive, based strictly on an owner’s understanding of the company’s products or services and its audience. Today, that is not enough. 

With more and more companies vying for a piece of the same pie and customer expectations shifting dramatically toward personalization and customization, businesses need data to make decisions, surface insights, deliver products or services, and grow.

Simply put, without access to data, businesses are flying blind. Because every business requires data to succeed, every business needs a data strategy.

What Is a Data Strategy?

“Data strategy” refers to how a business gathers, stores, analyzes, and uses information. This goes beyond creating a data-driven marketing plan or using in-house data to improve customer service. It affects every process at every level within the organization.

Of course, businesses encounter pain points as they move toward a more data-centric position. Some of the most common questions decision-makers must answer include the following:

• How do we make decisions at speed with data we may not trust?

• How do we ensure that data is as accurate as possible so that we can trust it?

• How do we improve access to data across the organization, particularly for those who must use it to make critical decisions at various levels in the company?

• How can we improve transparency and privacy regarding data gathering, storage, and use?

• How do we ensure that our data strategy supports our business strategy and that we can move at a competitive pace?

• How do we limit legacy processes and technologies while still maintaining access to the data contained within legacy systems?

A robust data strategy answers these questions while providing a framework for future growth and accelerated but accurate decision-making.

A Dynamic Data Strategy Delivers Critical Benefits

Developing and implementing a data strategy provides businesses with a wide range of mission-critical advantages and benefits.

Decision-Making

Perhaps the most crucial benefit is the ability to make accurate, informed decisions faster. It’s impossible to make decisions that grow a business without access to data, regardless of the industry in question. From grocery stores to e-commerce shops, decision-makers must have accurate information about many factors, including:

• Customer demographics
• Customer preferences 
• Competitor actions and decisions
• Changes to industry rules
• Changes to government regulations

A robust data strategy ensures this data is available, accurate, and up to date. The result is an ability to make decisions at the speed of modern business.

Innovation

Without innovating, organizations can only do what they’ve always done. Unfortunately, that leads to stagnation and trailing behind the competition. It usually also results in decreased customer satisfaction, declining market share, and reduced brand recognition.

Developing a data strategy provides the foundation necessary to innovate based on accurate information about competitors, customers, technology, and other factors, including the following:

• Customer Pain Points – It’s crucial for businesses to develop products and services that address the underlying problems customers face rather than simply addressing the symptoms of those problems. Accurate data helps companies to drill down to determine the underlying cause and then fosters the development of innovative solutions.

• Customer Expectations – What do your customers expect from your business? What do they expect from using your products or services? Innovation allows you to meet or even exceed those expectations to improve customer satisfaction and drive customer retention and evangelism.

• Competitor Advantages – Every business has competition, regardless of industry or niche. Paying attention to what those competitors do is critical. That applies to product or service development, delivery, and other efforts and initiatives. What technologies are they investing in? How are they positioning themselves in the market? How are they advertising themselves and building brand recognition? Most importantly, how are customers and potential customers reacting, and how does all this inform your own efforts?

• Technological Developments – Technology continues to evolve. New solutions to challenges hit the market every day. Are you using the right technologies? This goes beyond product or service development and touches on every aspect of business operations, from customer service to marketing and advertising.

A robust data strategy touches on all these areas, helping business owners and decision-makers glean important insights and move forward confidently.

Profitability

A data strategy improves profitability for organizations in many ways, including the following:

• Cost-Savings – Reduced costs transform into profits. A data strategy helps organizations cut costs by optimizing their use of data and analytics, reallocating resources, improving process efficiency, and more.

• Improved Competitive Advantage – A data strategy helps businesses develop better products and services. That drives their competitive advantage, boosting profitability and brand recognition. 

• Data Monetization – Your business’s data is valuable to other organizations. With a data strategy, you can monetize appropriate assets and sell information to third parties while ensuring compliance with information privacy and security rules, regulations, and laws. This creates additional income streams that boost profitability.

Internal Operations

Internal operations can suffer from inefficiency, lack of data-driven direction, and other problems. A data strategy helps optimize internal operations and improve processes like customer service. Accurate data enables process improvement and optimization based on accurate, real-world information, such as customer sentiment and satisfaction levels, employee performance, the number of calls/touchpoints required to solve a customer’s problems, and more. 

Of course, it’s not just about customer service. This touches on processes including back-office operation, inventory management, determining product popularity, sourcing products or supplies, and managing in-house activity. This applies to businesses of all types and sizes, from traditional office environments within Fortune 500 companies to retail stores and everything in between.

Agility

Today’s businesses must be more agile than ever before. This applies to the framework used for data collection, storage, processing, and use, as much as anything else. An agile approach to data strategy creation can help organizations accurately forecast industry changes and shift customer demands while taking advantage of new opportunities. 

A robust data strategy helps create the scalability necessary to effortlessly adapt to changes on the fly effortlessly. That reduces churn, internal stressors, and costs. 

The Challenge Presented by Business Goals

Too often, organizations implement a data strategy only to find that it does not align with their business goals. This does not have to be the case; decision-makers can avoid it by taking specific steps.

First, creating a data strategy that is neither too narrowly focused nor too broad to implement is essential. The middle ground ensures a process that delivers the utmost value and utility. 

Second, decision-makers should ensure their data strategy supports or improves the right areas within the organization. The four most common are data operations, decision-making, risk management, and business strategy development and implementation.

Finally, it’s crucial to understand your business goals and how data supports achieving them. This will inform many things, including the type of data you collect, store, and analyze. Failure to understand business objectives or to align your data strategy with your business goals can result in collecting the wrong data entirely or being unable to analyze it. 

Communicate with stakeholders across the organization to determine their needs and goals and where they might overlap. You’ll need to break those goals down into KPIs, milestones, and quantifiable measures to identify the most relevant and important data. 

Some of the questions you’ll need to answer include defining the company’s long-term goals, the information necessary to achieve those goals, and then what data is required to move forward. This will form the foundation of your data strategy.

In Conclusion

Ultimately, every business is a data business, regardless of industry or size. Without access to accurate, up-to-date information, making informed decisions and building a thriving business is impossible. A data strategy ensures that you can collect, analyze, and use data to inform decision-making and improve profitability within your organization. Creating and implementing a data strategy is no simple task and requires a deep understanding of business goals, competitors, customers, and your industry as a whole.