Data: Your SME Superpower (If You Can Access It)
Introduction
Data delivers valuable insights into business performance, illuminating areas that are working well and those that need attention. But merely having the data is not enough—you need to capture it and show it in ways that people understand.
Making decisions without data is like going into a fight with one hand tied behind your back. You might be able to win, but it's going to be a lot harder than it needs to be and there'll be bruises along the way.
The same is true for businesses. If you're not using data to inform your decisions, you're at a disadvantage.
For SMEs, becoming a data-driven company can often feel like a Herculean task. Collecting the data is easy enough. Data flows through your business like a lazy river. But capturing the data, converting it into a business context, and turning it into action items for your business? This is the true meaning of 'datafication,' and mastering it feels like it's making life harder, not easier.
In this article, we're looking at how data can be an SME's most valuable asset—if you can manage it from retrieval to consumption and utilisation at many points along the way.
Performance improves when you measure what matters
Key Performance Indicators are the lifeblood of every small- and medium-sized business. They allow you to see how you're doing, assess areas that need improvement, and make decisions about where to allocate resources. In other words, they're essential for understanding the health of your business and your progress towards strategic goals.
We're not going to dive too deeply into KPls as they're not the primary focus of this article. But it is important to know that every business has a set of tactical numbers that will give decision makers the pulse on how the business is doing. Generally, you should be selecting the KPls that are relevant to your industry, growth stage and revenue model. As the saying goes, don't just measure; measure what matters!
Before we go any further, here are the four biggest reasons why your business needs KPls. We've also provided examples of the type of KPls you could be tracking.
Four reasons why your SME needs KPIs
#1. Give your finances a health check
KPls give you a realistic look at the financial health of your business. They can help you reduce expenses, cut waste, make the most of resources, improve profitability, reduce financial risk and optimise trade terms to speed up revenue receipts.
Example KPls: Revenue, expenses, profit, profit margin, solvency, cash flow, DSO.
#2. Make timely course corrections
KPls give you a clear line of sight into business performance. They can help you spot successes, failures, opportunities, and bottlenecks so you can do more of what's working, less of what's not, and make timely adjustments before the problem gets entrenched. Based on these insights, you can set targets for the business and staff that will deliver your strategic goals.
Example KPls: Performance against SLAs, quality of product, customer support resolution time, waiting time for customer orders.
#3. Generate new business
Having a 360-degree view into the customer journey is the first step towards developing the pricing model, marketing strategy and selling techniques that will land you the most business. KPls help you recognise gaps in any of these processes, so every lead becomes a realistic opportunity.
Example KPls: Number of new customers, customer acquisition cost, sales pipeline value, lead conversion rates, customer satisfaction metrics, churn rates.
#4. Empower employees to take action
No matter what you are measuring, KPls keep your teams aligned and moving in the same direction towards your most important goals. They can also help you get a better return on the investment you spend on hiring and training. Instead of measuring output by irrelevant benchmarks such as the number of hours worked or emails sent, teams know exactly what they need to accomplish and where to focus their energy.
Example KPls: Average time to complete a task, customer response time, completion of personal development goals, plus employee-centric KPls like employee satisfaction index, employee retention rate and absenteeism.
In an ideal world, your business will measure a combination of lagging and leading key performance indicators. A lagging indicator is backward-looking and will tell you what results have happened—your profit number is a lagging indicator. A leading indicator is forward-looking and can influence future results. For example, customer loyalty metrics like the Net Promoter Score are leading indicators. The more delighted customers are with your product or service, the more likely they are to return.
Now you know the pros of KPls, let's look at the cons. And in our view, there is only one—KPls are meaningless without quality data.
Data is the key to unlocking the full potential of KPIs
Without data, KPls are little more than guesses or best estimates. With data, they become powerful tools for driving growth and profitability.
The problem is that most SMEs don't have easy access to the data they need to unlock the full potential of their KPls. This is often because their data is coming from many different places—spreadsheets, ERPs, CRMs, flat files, databases, APIs, Google Analytics, Mailchimp, Salesforce, Sage, Facebook, knowledge in the manager's head that she has forgotten to share with the team...the list goes on and on!
It's fragmented, often inaccessible and always difficult to analyse. And that means you cannot trust any insights you get from it.
The five signs of a data-quality problem
If you want your KPls to work for you, you need a sharp focus on the quality of your data. If your data is inaccurate, irrelevant or out of date, your KPls will give you a false picture of how your business is performing. This can lead to bad decision-making that can cost your business time and money.
Here are five red flags that your data might not be as trustworthy as you need it to be.
#1: Your information is held in different places across the business.
The number one reason your KPls might be misleading is because your data is siloed in different applications, and you are not getting the full picture. If you are one of the many businesses that stores customer data across various spreadsheets, CRMs, customer data platforms, mail server tools or on-site at different locations, then your reports will include shards of information instead of being glued together as a whole.
#2: You are spending endless hours manually compiling information for reports.
In today's digital age, there's no excuse for creating the same reports manually month after month after month). Neither should you be relying on your IT team to build custom reports for you. That's because writing reports by hand takes time. By the time the information hits a decision-maker's desk, it may no longer be useful. What if you get a big order cancelled just minutes after the monthly sales report is written? Would you still take the same action?
#3: You have multiple versions of spreadsheets.
Spreadsheets are a highly manual reporting tool and prone to human error. That's especially true if you have different people editing the spreadsheet at different times, leading to version-control issues and the possibility of multiple versions of the truth—a recipe for disaster!
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#4: You are relying on static reports.
By definition, a static report provides you with the numbers around a key event or metric at a specific point in time. This is useful if you need to take a quick look at what happened or you want to compare historical data, for example, by comparing sales figures for this quarter with the same period last year. However, static reports do not allow you to analyse or dynamically manipulate the data. You can't perform forecasts, what-if scenario planning or any other types of trend analysis, which means your KPls will only ever be lagging, not leading.
#5: The data does not track your KPls.
On the subject of KPls, we know that data and KPls are inextricably linked—and the relationship is circular, not linear. What do we mean by that? Well, just as you need quality data to inform your KPI strategy, you also need the right KPI strategy so you know what you need your data to measure.
The fact is, you are swimming in data. Your business is generating huge volumes of data every day, and this exponential increase means that you have more options for measuring performance than ever before. The challenge is narrowing down the seemingly unlimited options and focusing on the data that benefits the business. Do you feel overwhelmed by data? Does your data support your strategy or sink it?
At this point, you may be thinking yes, my business has a data problem. Where do we go from here? Luckily, there's a simple answer to that question—business intelligence tools.
What is business intelligence?
Business intelligence (Bl) is the process of turning data into insights. It's a verb, not a noun. Bl is all about understanding your data and using it to make better decisions.
Business intelligence tools are a type of application software designed to capture, analyse, transform and report data for business intelligence. There are hundreds of BI tools on the market, some more feature-rich than others. For SMEs, the popular tools include Microsoft's Power Bl and Bl tools from Tableau, Zoho, YellowFin, SAP and Oracle.
Whichever software you choose, it will be doing lots of things under the hood to optimise data performance. These include:
Five benefits of business intelligence for SMEs
If you feel that your data is working against you, not for you, then Bl can definitely help. Business intelligence tools can improve many different areas?within an SME. Here we'll focus on the most valuable benefits.
#1. Provides fast answers to questions
In the business world, time is money. That's why having the ability to make decisions quickly and efficiently is such a valuable asset. Bl software empowers you to access data from all parts of the organisation quickly and easily, in a format that's much easier to understand than text files and spreadsheets. This allows businesses to make fast, informed decisions and quickly react to changes in contracts, inventory, staffing, customer trends, the market and so much more. In today's fast-paced business world, that's a winning formula.
#2: Empowers employees
According to research by Accenture, 74% of employees feel overwhelmed or unhappy when working with data, and more than a third would rather avoid using data to complete a task. Bl software eliminates the endless amounts of rows and spreadsheet columns and thus removes a lot of the overwhelm—making data analysis accessible to all your employees. This benefit is especially important for SMEs that work with minimum human resources. Users don't need IT skills or a degree in statistics to use this self-service tool.
#3: Makes your business more profitable
From sales pipeline planning to real-time process monitoring, Bl tools enable faster planning, analysis and business reporting. According to the Business Application Research Centre, more than 50 percent of users say that these are the most valuable benefits that helped them increase revenues and reduce costs.
Simply: Bl tools enable you to spot inefficiencies, identify cost-cutting areas and uncover opportunities that you couldn't see before. Small businesses may not have a lot of extra cash on hand, so they have to tightly manage and control their budgets. Bl software helps you plan your costs and be mindful of your spending, improving your profitability.
#4. Fuels strategic decision-making
When you know what's happening and why it happened in real-time, you can take exactly the right action. This is where Bl software really shines— turning raw and impenetrable data into visuals and actionable insights so you can make sense of it all.
Need a report? The software performs this task automatically and updates itself in real time so you always get the up-to-date view. Need to track progress against a KPI? Decision makers can quickly access all the relevant data (not just part of it) and use it for answering critical business questions. In short, Bl software provides SMEs with the power to make the best decisions—and do so based on facts and data, rather than guessing or relying on gut instinct.
#5: Finds hidden opportunities
While no-one can know exactly what will happen in one, three or five years' time, Bl users are in a better position than most to predict what will happen in the future. For example, you can project your current sales performance into future timelines and run scenarios about what might happen if you lost a star salesperson or a key customer. You can track patterns in customer behaviour that can offer you the insight into the type of products, offers and messaging you need to keep them happy.
All of this leads in one direction: a 360-degree view of customers, markets and operations, leading to higher levels of productivity and, consequently, increased profits.
Putting it together
Your business data is your SME superpower—by maximising the value of your data you will very quickly be able to make better-informed decisions, improve business processes, increase efficiency and productivity, anticipate customer needs, provide intelligent services and products, and achieve your desired business outcomes.
These benefits only happen when you unlock your data's value. To do this, you need to:
Implementing any new kind of software can be a minefield, but it doesn't have to be. Less is more when starting out.
Here are some buying tips to help you get started: