Would You Let a Blind Person?Drive?

Relying on Feelings and Hunches is Not a Proper Way to Do?Business

How would you feel if you sat in a taxi (or Uber, if you don’t know what a taxi is anymore) and realized the driver is blind, or driving blindfolded?

What about working in a business where the leaders ignore or misinterpret the data?

Many companies are doing just that. They are navigating their operations based on gut feelings and intuition, rejecting the invaluable resource of data.

The risks of blind decision-making

Tracking data is not a simple task, and it sometimes takes a special person or an entire team to define what data to track, how to do it and to analyze the tracked results.

But making decisions based on gut feelings is even harder. Especially when making crucial decisions.

Which way to go? Is my preference also the preference of my customers? Will our idea work in the real world? Do people even have the problems we are trying to solve?

Decisions made without the support of data can lead to unpredictable results, leading to time and money losses, or even?failure.

I have seen it on several occasions.

• one person “had a feeling” some feature would be really “nice to have”
• we spent weeks or months planning and developing it
• we launched the feature
• “nobody” ever used it.

The same situation happened in different companies, with different solutions. But the reason for it was always the lack of data.

Measuring and analyzing the data has never been a priority in these companies.

Some companies never recover from ignoring the data.

Let’s take Blackberry Limited for example.

Blackberry was a developer of de-facto “business phones”. Any serious business owner, CEO, or manager had a Blackberry phone.

And then Apple released their first iPhone.

Blackberry, being the “leader” in their space, ignored the signals that users wanted more flexible systems. They assumed the customers they have, will remain with them, no matter what. They assumed that the “business” segment was theirs.

Eventually, they stopped producing their own hardware. The company still exists, but the latest available financial data shows they are down -97% in sales from their best years.

The vital role of data in?business

Understanding customers

Understanding your customers is crucial for any business. If you know exactly

• who they are,
• where they are from,
• what they do,
• what challenges they are facing
• and how they use your products,?…

You have a higher chance of optimizing the solution specifically for them, making it easier to sell.

Without this data, you are guessing what your customers need and want. In the worst case, you are guessing who your customers are.

Optimizing marketing

In marketing, data is everything.

It helps measure your return on investment, analyze customer acquisition costs, and analyze marketing spend. Without this data, businesses are spending blindly and may not get any results, except for results from pure luck.

Relying on luck is not a good business strategy.

Data in pricing strategies

Setting the right price for your solutions is difficult.

With data, you can see which price points are better accepted, and how the competition is doing.

With data, you can react to market changes. Without it, you may be losing potential customers.

These are just some of the most obvious fields where having the data can tell you a whole different story than guessing.

Businesses usually focus on Sales KPIs (key performance index), but they rarely or never implement KPIs related to users trips:

• how the users are using their solution?
• are there any issues?
• do users know how to use the solution to the fullest extent?

Some other potential data that should be tracked in any business?are:

• Support handling (the number and severity of issues per week/month, identification of common issues)

This could help you implement automated solutions, or optimize the flows to eliminate the issues.

The number of issue alone don’t tell the whole picture, it makes sense to count them by severity and urgency.

• Customer satisfaction (occasional surveys, new feature introductions)

Asking your customers what they want/need or what they miss in your solution is the easiest and cheapest way to get insights on what you need to improve.

This is the direct feedback of your solution.

Customer acquisition cost is always higher than customer retention cost.

• Employee satisfaction (don’t assume, ask if your employees are well, if the workload is too big, if they have enough support)

Employee turnover is another problem many ignore.

Each new employee needs to go through an onboarding process, where the efficiency is reduced for the new employee and the mentors who are responsible for successful onboarding.

In the software development process, if you add a new junior developer, it usually takes at least 3–6 months for the new developer to be able to work “alone”. For these 6 months, this is an asset that is highly overpaid for the amount of work he does.

Employee acquisition costs are similar to customer acquisition costs. There are much higher costs to get new employees than to keep the old ones.

• Workplace efficiency (are the offices too big for the number of people working there, how much time is spent on “water cooler discussions”, is the “open office” floor plan efficient for the type of work your business does?)

Workplace efficiency assumptions are another overlooked problem.

Some leaders assume that people are the most productive when they are together in an office. They assume the open floor plans are the best, but in some cases working in a crowded place where everyone is shouting, has the opposite effect.

They assume that people in the office for 8 hours are productive for 8 hours… Wrong. The average person is productive for around 3 hours per day, regardless of the number of hours spent in the office.

Office distractions. This is a theme that would deserve a separate article.

Ignoring data about workplace efficiency is a huge cause of lost opportunities.

Financial health through?data

Tracking income and expenses is the backbone of financial stability.

Only tracking revenue tells nothing about how well your business is doing. You might be making hundreds of thousands per month, but still losing money.

It’s impossible to budget effectively or identify cost-saving opportunities without data.

Data helps businesses create accurate financial forecasts. Predicting revenue and expenses is nearly impossible without the help of data.

And why is it important?

Predictions and estimations are meant to be wrong, and inaccurate. But they still help us navigate.

If a company forecasts a 100% increase in sales in the next period, it should employ more sales and/or support people to be able to handle it.

If the business develops products, it should be ready to increase production as soon as possible.

Ignoring these signals again means lost opportunities.

The risks of ignoring?data

• Competitive disadvantage

Businesses that ignore data are risking falling behind the competition. Those who can react to current market changes are often the winners. Even smaller companies can outperform big and rigid businesses if they carefully collect data and react to it.

• Wasted resources

Losing resources, especially time and money because of missing data, is the most common risk.

Spending money on marketing strategies that don’t bring in customers, or investing in products that don’t sell.

Conclusion

A data-driven approach is not a luxury, it’s a necessity for any serious business. At least those who are serious about not losing money, time and other resources.

Measuring “everything” should be a priority, not a “nice-to-have” feature.

The first step in implementing a data-driven approach is defining what to measure. You need to identify the crucial elements for each metric. Then you need to select where and when you want to measure and set the measurements up.

You wouldn’t let a blind person drive, so why would you rely on assumptions?