Are you curious to know if your company can become data-driven?
Being data-driven means using data to make better business decisions.
Unfortunately, many companies believe that being data-driven simply means collecting a lot of data… and they don’t have a very clear understanding of what to do with that data.
The truth is that collecting data is an important part of the process, but it’s not the whole story.
This is one of the reasons why most companies attempting to become data-driven have a hard time reaching the success they’re looking for.
On top of that, there are three key aspects that determine whether a company is ready to become data-driven, and I’ll be addressing each of them in this article (and in the video below).
Measure vs Monitor
Before delving into the three aspects, one thing must be clear: data-driven does NOT simply mean collecting a lot of data.
Companies often have a large amount of data to gather, but it’s not just about the data itself. It’s about what you do with these metrics.
They say “You improve what you measure” …but actually, that’s not true.
Instead, you improve what you monitor.
The difference between measuring and monitoring lies in what you do with the data.
When you measure, you gather a significant amount of data. However, if you never look at that data, nothing meaningful happens.
That’s the problem.
To make use of the data, you need to monitor it.
This involves organizing the collected numbers, creating reports, and defining Key Performance Indicators (KPIs).
You should review these reports regularly, like on a weekly basis.
This is how you effectively utilize data, a process known as monitoring.
Without such a process in place, data alone is pointless and can’t lead to data-driven decision-making.
The three key aspects of a data-driven company
There are three important factors you need to focus on in order to be data-driven. The first one is resources, which means having the necessary tools and materials.
The second factor is the data itself, collecting the information you need.
And finally, the third factor is know-how, which refers to having the knowledge and skills to make sense of the data.
Now, let’s go into detail about each of these factors…
When you analyze and interpret the data you collected, you’ll notice things and gain insights.
Often, you’ll realize that what you expected to happen on your site is different from what’s actually happening.
This leads you to form hypotheses and then validate them.
It’s important to understand that being data-driven is a process, not a one-time event.
You need to repeat this process regularly and, to do this effectively, you need to have all the resources necessary.
The willingness to change
But before using the resources, you should answer a question: are you open to making changes?
When you discover that things are not happening as you expected, you need to develop hypotheses and test their validity.
To do this, you need to make changes in the system.
Are you ready to do that?
In my experience, some companies put a lot of effort to collect and understand data, but then they are not willing to make the necessary changes.
These companies cannot be data-driven.
Before embarking on the data-driven path, ask yourself if you’re willing to make the necessary changes.
If not, it might be best to continue as you are and be content.
Do you have the right resources?
Having the will to change things is not enough.
Making changes based on data analysis typically involves tweaking your website, product, or offers.
It requires effort and work.
You can’t simply expect that analyzing data and gaining insights will automatically transform your business.
You need to put in the work to make those changes and allow your business to operate differently.
It’s one thing to be willing, but another thing altogether to have the time, money, or people required for the task.
If you’re the one making all the work, ask yourself if you have the time to invest.
If the work is done by your team, you should evaluate whether you can afford to allocate the man-hours necessary to run the CRO program & the split testing.
If you need external help, consider if you have the financial means to hire experts or dedicate resources.
Ultimately, it often boils down to having enough money to buy the time for the necessary actions.
So, ask yourself: do you have the time, people, or financial resources to allocate?
If you don’t, attempting to be data-driven would be futile.
Be willing to learn from failure
Another important aspect to consider during your decision-making process is whether you’re open to learning from failure.
While not directly tied to resources, it plays a significant role in determining your willingness to take certain actions.
Through conducting experiments, we learn new information, which allows us to form different hypotheses.
This process involves multiple iterations until we stumble upon the hypothesis that proves to be true and brings positive results for our business.
Usually, out of 10 experiments, around 3 may yield the desired improvements while the other 7 may result in failure.
If failure greatly upsets you, it’s unlikely that your conversion rate optimization program will be successful.
In data-driven programs like these, the focus is on discovery and learning.
While financial success is important to all of us, the joy comes from the learning process itself.
Remember, it’s an ongoing process with continuous data and room for improvement.
As someone leading a data-driven company, your responsibility is to make the system work better.
Failure is a natural part of this process and should be embraced rather than shamed.
In order to be a data-driven company you have to, of course, have the right kind and quantity of data to analyze.
That is why it’s fundamental to have enough conversions and enough visitors.
You need enough conversions
Before starting the process of becoming a data-driven company, it’s crucial to consider if you have enough conversions.
When we talk about conversion we mostly refer to leads and sales.
When we run a split test, we want to have at least 100 conversions per variant.
If we run a test with 2 variants (the control + one variation) we want to have at least 200 conversions in total.
Anything less than that would not be enough to be taken as significant (and honestly, even 100 conversions per variation is a small number… with my clients, I strive to put at least 300-500 conversions in each variant).
This said you understand how the volume of data plays a role in whether your company can or cannot be data-driven.
If your company has just 50 sales per month, you better focus on:
- increasing traffic;
- improve your sales process;
- improve your offer and product;
- possibly increase the number of leads you get.
If you get 30 leads per day, you total about 900 leads per month.
That is enough to split test a different lead generation form or funnel.
If your company does not get more than 200-300 leads per month, it’s not big enough to embrace a data-driven culture. You have to focus on growing the traffic to your pages.
You need enough visitors
Data is generated by the activity of visitors on your website.
If you don’t have enough visitors, there won’t be enough activity and data to work with.
Also, having more visitors translates to more leads, which can lead to more sales.
Driving more traffic to your website (through campaigns and content creation) should always be one of the top priorities of your Marketing team, through campaigns and content creation.
The amount of visitors you need depends on your conversion rates.
As long as you’re getting hundreds of leads and sales per month, you’re in a good position to utilize your data and embrace data-driven decision-making.
Websites convert visitors into leads very effectively.
For some websites, even 10,000 visitors per month are enough to initiate a conversion rate optimization program… because the conversion rate is very high.
Other sites have lower conversion rates and may require over 100,000 visitors per month to engage in similar data-driven efforts.
The exact amount of traffic you need can vary depending on your specific conversion rate.
From a practical point of view, remember that you can start to split test when you have at least 200 conversions (leads or sales) per month.
The last key aspect of a data-driven company is know-how.
Do you know how to be data-driven?
If you don’t have the knowledge yourself, it’s okay.
You can hire people who do.
It’s beneficial to have a basic understanding of what you want to achieve, but you can rely on experts to guide you or your team through the process.
This is exactly what I do with my clients.
You can hire professionals like me or find someone who can help you.
However, it’s crucial to have a clear understanding of the process. Otherwise, there may be a misalignment between your goals and the actions the people you hire take.
If you or your team need help to bridge the know-how gap, click the button below and book a free 30-minute call with me.
On the call, you can pick my brain and I’ll help you pinpoint the areas where you may need help!
Click on the button to book a FREE call to discuss your business with me and get actionable insights you can apply to your business today.