Train Your Business To Be Data-Driven
An Eighteen Month Program Sized For Most Business Budgets
Investment
It doesn’t take as much of an investment as you might expect to change the culture of a company. While global conglomerates and myriads of branch locations could escalate the investment, a moderately sized company with a central location can accomplish meaningful data-driven transformation for as little as $30–35K per month.
Return
That works out to about $400K per year, which is much less than some would have you believe but no easy burden on the P&L either. This sort of investment needs to drive a sizable return. There are several ways to estimate the likely impact of a data-driven culture, processes, and decisions but lets sum it up this way.
If your business generates $10M per year in profit, this $400K investment can and should increase profit by $2M. That is a 4x ROI and a 20% increase in your bottom line… not bad. The return should come from a mix of cost saves and revenue enhancements. They may also take a little time to materialize, but you should start seeing results within 90 days.
For those in more revenue-centric models, the ROI calculation is a bit trickier. Typically, the target is a 10% increase in revenue and requires a starting level of $75-125M in annual sales to make this a great investment. Note — an ROI target of 4x means that even partial success was a strong investment. You could cut this in half, if you are willing to risk a break-even result. For many the peace of mind makes that a solid investment decision.
The Process
As I have noted before, data-driven transformations are predicated on access. But they also require a bit of aART.
a)udit — this gets the little ‘a’ because no one likes it. It is not sexy. It is not fun. And as a result, few have the care or expertise to do it right. Here right equals reliability and speed. Great data auditors are a rare breed, sadly. If an analytics provider tries to skip this step, get out now!
A)rchitect— this is the first step in creating access. Your data systems hopefully represent your products and platforms, but do they reflect your business? If either your sales guy and office manager are incapable of coherently describing your data, probably not. This is the level of transparency need. Everyone should understand your data.
R)eport — Everyone does not need to touch the data, fewer still to change it. Solid reporting is key to building the access and feedback needed to inspire change. This includes KPI design, an understanding of Leading Indicators, strong visualization, benchmarking, and so much more.
T)each — The final step is education, training, instruction, and communication. Don’t hire someone to create data-driven tools and processes unless they are capable of teaching and inspiring your team to use them. This is true access, not just capable but empowered.
The Provider
It is quite simple, on paper. The reality is that this sort of program requires discipline, experience, and a respect for the aART. You need to hire a team. Is there a grand-practitioner who can do this alone? Sure, I rank myself high among them, but you don’t want to pay my hourly! My $30K starting estimate should get you a team of five analysts, with a cross-section of experience. This allows the right work to get to the right pay grade and delivers the best cost.
Can you source this internally? Sure, but where is the career path? And what kind of talent shows up for 18 months of work, that includes audit, and the reward for a job well done is early termination? You may be able to convert one or two team members into future analytic staff. There is a maintenance tail on this as well, but by-in-large when the project ends — so will the team. You could likely arrange to hire the top prospect from the analytic provider you hire to do this for you. Be sure that is in the contract up-front.
The Transformation
Transforming your company into a data-driven operation is more cost effective and straight-forward than you might think. The returns shouldn’t be difficult, but demand that an ROI analysis be part of the initial audit. If I don’t think my clients will see the returns, once I’ve seen the audited data, I let them know. In fact, I always restate the objective after the i’s & j’s are dotted. It is just good faith and good practice.
But what will that transformation look like?
Simple & Easy. Simple reporting. Simple answers. Simple understanding. Easy ways to measure your work. Easy ways to find the answers you need.
It will take you higher. Higher growth, higher profit, higher employee retention, and higher employee efficiency.
It is well worth the effort, if you know how to invest in it. I hope this article brought you closer to that knowledge. If you are looking for such a transformation, we are happy to help:
