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Corporate professionals, business owners and B2B solopreneur consultants know that information is nearly as valued to us as our skill set. Good information leads us to make smart decisions about all aspects of business: what services to offer, identifying target client groups, designing a profitable business model, understanding how to market our services, gaining a competitive edge. That good information is integral to all that we do come as no surprise, but until now there was no scientific evidence to support that belief.
Research conducted in 2010 by Erik Brynjolfsson, economist at the Massachusetts Institute of Technology Sloan School of Business; Heekyung Kim, graduate student in economics at MIT Sloan School; And Lorin Hitt, economist at the University of Pennsylvania Wharton School of Business, proves that good information really does put money in your pocket.
The three studied 179 large businesses and found that when decisions were validated were based on reliable data, companies achieved a 5% higher productivity level than businesses that relied more on "experience and intuition" for decision-making. The higher productivity could not be attributed to other factors, such as the use of more sophisticated technology.
In the study, data-driven decision-making was not primarily based on merely collecting data, but was closely linked to how the data was utilized. In the April 24, 2011 New York Times, Mr. Brynolfsson stated that business decisions based on data and analysis "have huge implications for competitiveness and growth".
Thomas Davenport, professor of information technology and management at Babson College near Boston, MA, supported the conclusions reached regarding data-driven business decisions in a book written with Jeanne Harris and Robert Morison, Analytics at Work: Smarter Results (2010) , concluding that Companies that readily heavy on data analysis are likely to outperform those that do not.
The big question is, which data do we choose to collect and analyze and how do we best apply it? Curating data is big business. "The biggest change facing corporations is the explosion of data," said David Grossman, technology analyst at Stifel Nicolaus in the April 24, 2011 New York Times. "The best business is in helping customers analyze and manage all That data ".
So how might a solopreneur or small business owner decide which data threads to follow? Start by reading your P & L statements. Examine gross revenue and fixed and variable expenses to calculate how much it costs to generate sales and ponder which expenses might be trimmed to make the bottom line better.
Speaking of gross revenue, what are the wholesale costs of the goods your company sells? Should you find alternative providers, or renegotiate terms? If you offer B2B services, take a look at the processes you follow to generate your intangible. Are there operational efficiencies that can reduce the time you spend on administrative work?
Finally, pay attention to the products and services that customers have been buying, or not buying, over the last four quarters. Should you make any adjustments to what is offered or how it is bundled and priced? Or should you ask customers why they no longer feel the need for certain items or services?
Purveyors of B2B services are advised to examine client retention and new client acquisition. How does your current active client roster compare to the previous year's? Do you need to tweak your business model to maintain your competitive edge, or might it be wise to develop a referral arrangement or identify a potential strategic partner?
Online analytics services can for a modest price track visits to your website and report which pages receive the most attention. You can correlate that data to the number of follow-up requests you receive and the conversion of that follow-up to new business.
Make further use of that data to evaluate the overall efficiency of your website and learn how you might enhance this important marketing tool. Will adding multimedia to your website be useful or will adding pages to give more information do the trick? Or maybe you should just simplify the website text and clarify your message? Listen to the data and find your answers.
Thanks for reading,
Kim
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