Laci is a Global Senior HR Analyst at XpertHR, a division of LexisNexis.
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The push for incorporating data and analytics into business is widespread, and empirical evidence confirms it's not just hype. Data-driven companies are 23 times more likely to top their competitors in customer acquisition, about 19 times more likely to stay profitable and nearly seven times more likely to retain customers.
The advantages of being data-driven are internal as well. Leaders can make informed decisions while having the flexibility and responsiveness to course-correct quickly. Data-led companies are more innovative, create new offerings and find ways to optimize processes to improve efficiency and reduce costs. They can also improve the overall employee experience, leading to higher acquisition and retention rates.
With this level of measurable impact, it's no surprise that more than 90% of companies say they're prioritizing data initiatives in 2023.
How Major Brands Are Using Data
There are several well-known global companies that continuously earn immeasurable value from data.
• Coca-Cola applies data analytics to its customer experience. Data informs the company's marketing campaigns, content creation, product development and sales strategies. This strategy can be key for gaining (and keeping) customer loyalty.
• Google uses data to drive internal performance by identifying the behaviors that shape the most effective, satisfied managers. This has allowed the company’s senior team to help managers become more engaged, perform better and stay at Google longer. This has reduced its overall talent acquisition costs.
• Starbucks analyzes reward program data to inform customer usage and preferences. These insights inform decisions as to what products to offer and how to customize them to best meet existing and new customer needs.
As these exemplary organizations show, a relentless drive to employ data creates a competitive advantage and a resilient ROI.
3 Steps To Build A Data-Driven Strategy
Achieving a data-driven status remains aspirational for a vast majority of companies that aren't sure how to move forward. Moving organizational culture from gut feel, opinion-based decisions to evidence-based actionable insights is transformational. Leadership can jumpstart their efforts by adopting at least three key habits.
1. Define and execute a strategy.
A data and analytics framework outlines how an organization expects to use data to guide all decisions and actions about people, process, technology and how work gets done. Effectively determining your data strategy and its implementation should be oriented around five principles.
• Define the questions to be answered. Think about what you're hoping data can help you understand about your business needs. For example, if you operate globally, perhaps you want to determine how many new engineers you'll need over the next five years to successfully manage all your locations. Maybe you're experiencing a lowered turnover rate but aren't sure why. With data, you can find the answers.
• Collect the supporting data. What kind of data will help you address the questions you determined in the previous step? Do you need historical, trend or benchmark data? Then, how do you plan on collecting it? Depending on what your goals are, you might gather customer feedback, employee input or analytics from social media engagement.
• Identify the required resources to analyze the data. There are a number of things you can use to help parse the data once it's collected. First, there's personnel to consider. Do you have in-house expertise available, or will you need external advisors? Then, there's technology. You'll need to find tools that will best collect and visualize the data. Finally, what's feasible for sharing insights with stakeholders? Will standard reporting suffice, or would they prefer a self-service dashboard or portal so they can see the data that most impacts them?
• Analyze the data. Now, observe and internalize what the data is showing you. Does it indicate historic, cyclical trends or provide enough evidence to diagnose a problem? If you've collected and analyzed the data properly, you'll be able to answer questions about talent needs, performance targets or "What if" forecasting opportunities.
• Communicate the results. Finally, share out the results. You can tailor them by stakeholder group, then share how you plan to act on the insights. For example, you can share what performance metrics you'll begin tracking and how, or what you envision as a process for improvement.
2. Lean on leaders and hold them accountable.
Data can set the foundation for establishing evidence-based decision-making in your company. But the driving force will be your leaders. As good data stewards, they'll identify business and talent opportunities, encourage data curiosity and experimentation and expand data literacy among their teams for even greater utilization. They can also use data to steer teams (and the business overall) through uncertain times or necessary change, anticipate needs and minimize risks.
Other ways that leaders can contribute to a data-driven culture include:
• Engage in data governance to ensure data utilization and strategy execution.
• Share data among stakeholders to make aligned and collaborative decisions.
• Partner with HR to execute on data-driven talent processes within the businesses.
• Use tools and technology to enable data availability and visualization.
When the C-suite and your board of directors hold leaders accountable for modeling these data-led behaviors, and reward them for doing so, the use of data becomes habitual and shapes a data-led cultural landscape.
3. Continuously monitor and evaluate performance.
A data-led organization is committed to continuous improvement, using data to monitor and evaluate performance. Data analytics tools and technology can identify areas for improvement, track progress against goals and measure the impact of decisions. This will require setting clear business goals, then closely tracking and analyzing the performance of key metrics. This habit ensures your organization is constantly learning and adapting to changing market conditions, new work needs and expanding workforce expectations.
Data is quite possibly an organization’s greatest asset, and a data-led culture can have exponential business impact. Adopting a methodical, habit-forming approach can ensure the creation and sustainment of this culture. As with any transformation, getting started can be difficult. But with early support from the top down, the evolution will take place, and you'll be measurably better for it.
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