Capture Data And Turn It Into Information
By Jim Deyo
How much would "perfect" information be worth to you? How much would you pay for it? If I could tell you with certainty where the economy, or the stock market, or interest rates would be over the next 2 to 3 years, wouldn't that be worth a lot to you? Of course, there is no such thing as perfect information -we live in a world of uncertainty. But, real information does have value and you should be willing to pay something for it. Getting actionable information is an investment. It takes time, money, and discipline to collect information but it can pay a huge dividend.
There's a difference between data and information. Data is factual items collected over time. It's raw material for good information. To be valuable, data must be organized in a meaningful way and then analyzed. Information is knowledge and understanding that helps you make decisions with more certainty. Good information is actionable - you can do something with it, or because you have it.
· Data is sales by customer; Information is seeing what factors make 80% of your sales come from 20% of those customers.
· Data is knowing how many hits your web site has every month; Information is knowing the sales conversion rate of those hits and even better information is knowing why people buy.
· Data is knowing who your competitors are and what their sales are; Information is knowing why your potential customers are buying from them, instead of from you.
Having and being able to use actionable information is an incremental process; you have to capture the data and then you have to turn it into information. Most businesses are guilty of saying, "we'd really like to know that (about our market, our customers, our employees), but the information isn't readily available and we don’t have the time to go get it.” Correction - they don't make the time. Getting good at collecting information only comes when you make a commitment to it – when you first tell yourself and then imprint on everyone you work with that "this company" puts a premium on finding and using the information that is going to tell us what we need to know. We are willing to be disciplined and we are willing to pay for it.
Focus on your customers for a moment. There is no reason to treat customers all the same. They have different needs and objectives and don't all want to be treated the same and, even if they did, they’re not all equally profitable. You should know why different segments of customers buy from you and how loyal they are. You should also know how much every customer is worth to you, how much it costs to get new ones, and how much it costs to keep the ones you already have. If it's not practical to do it for every individual customer, do it for groups of customers. If you don't have a system that lets you collect this kind of information, at least take an educated guess. That’s what having an information mentality is about - the analyzing, not the guessing part.
Let's not make this a bigger deal than it needs to be. Making decisions with the benefit of real information is critical and you can spend a lot of time and money building sophisticated processes for collecting and processing data and turning it into information. You can also use a little imagination and do a few simple things that will get you a lot closer to where you need to be than where you are now.
For example, any retailer should at least collect and know a customer's address, zip code (to identify them), their e-mail address (to contact them), and why they are buying / who they are buying for (to market to them). You can get that information during the sale process. If it's in your store, ask them and record it. Or, design a simple form for the customer to complete while you process their order. You can get that information through your web site. The internet may never work well for advertising, but it's already good for processing orders and it’s great for collecting information. You can get that information by using surveys. Not the long ones, where someone has to fill out a lengthy form, or be on the phone for 20 minutes; I mean 5 question surveys that take less than 60 seconds to complete, or, better yet, single question "surveys" that your employees take for you when they interact with your customers.
Instruct your sales people that "today’s question" is not, "would you like fries with that?" It is, "Can I get your e-mail address, so we can send you a coupon for your next purchase." If you already have the e-mail address, the question could be, "Would you be willing to go to our web site and fill out a 5 question survey that will take less than 60 seconds of your time, to receive a free gift with your next purchase?"
Again, it's about the thought process you build into your business. Anywhere there are single pieces of information - from customer interactions, to birth announcements, to people moving, to things people want, or do - you build a strategic advantage for your business when you collect and use them. It's a game of inches; you collect the data one piece at a time, add it together and think about it, and turn it into actionable information. But, it's you - the owner of your business - that has to first create the mentality and then the simple "systems" that will make it happen. It's you who has to commit your business to do something that you know your competitors don't do very well, if at all.
Jim Deyo is the President of Business Advisor Online, an internet based service that provides small businesses with the ideas they need to grow and the resources they require to make the right decisions. As a former Sr. Vice President with a major banking institution, Jim worked extensively with small and medium sized companies and has over 30 years experience in commercial and consumer lending, accounting, finance, marketing, and strategic planning. Visit the website at http://www.businessadvisoronline.com and sign up for a six week free trial of the service, or e-mail Jim at firstname.lastname@example.org.
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