5 Questions that will help you to make sure you run a data driven operation
AAA Today, it is a known fact that everyone needs to be data driven, regardless to your role or to your official position.
How can you know if your organization is data driven enough?
A lot of companies are integrated to 5-20 analytical systems ,collect thousands of daily events , develop lots of dashboards and reports and have a professional data-science team.
Is this enough ?
For me, being data driven means to be revenue oriented. All the efforts around data are meaningful only if they help to drive revenue or lead to a noticeable optimization that will improve user’s engagement and as a result will increase the revenue over time.
Here are few questions that will help you to determine whether your data efforts are aligned with your business goals :
What is today’s top priority task? Can you estimate what is its contribution to the company’s revenue?
Look at your schedule today. What is the task that takes most of your team’s time.
Whether it is a business task or a technical one, answering a customer , developing a feature or upgrading a system , you should be able to determine its business value and quantify it into revenue.
Do you know to measure what is the exact contribution of your next product version to the revenue ( or usage )?
When you upgrade a product version. How do you measure the new feature’s effect. A lot of companies just release the upgrade to all users (sometimes using gradual release methodologies) , and look at the overall performance (revenue and/or usage) .But how can we know what is the contribution of the specific product or technological features that were added? how can we make sure that the user likes the new initiatives , use it and that it contributes to the total revenue as expected ?
What was yesterday’s revenue? How often do you check your product/feature revenue and performance? Do you know what is the weekly / monthly revenue trend and what caused it?
Sometimes we are so busy with our day to day tasks and we don’t have time to review and analyze the day to day performance. But while we are working , there are customers out there that are actually using our product everyday. Their usage can be impacted from a change that we’ve made, a change that someone else in the company made( IT guys updated the website servers for example) , it can be affected by a competitor that made a good campaign or from a local holiday . It is important to spend time on understanding what is going on out there , even when we are very busy with executing our tasks. I know that some business managers leave that task to the business analysts , but in order to have a deep understanding of your product and audience, you must feel the data everyday by yourself , at least on some level.
How much is a new customer worth for you ( in other words ,do you know your LTV ) ? Do you know how much it cost you to acquire a new user ( user acquisition cost ) ?
These are essential questions that stand at the base of your business model. It is not always so easy to calculate it , but whether you have a small business or a big one , It is important to quantify your user behaviour, conversion ratio and revenue retention. You must know these metrics across all your marketing channels and segments in order to ensure the ability to scale your business with marketing.
How many people in your team use data on a daily basis ? Are they managers only?
Obviously, not every developer needs to work closely with a revenue dashboard ,but it is highly recommended that every function in the organization ( at least managers ), will get their day to day decisions based on data.For example ,which bug has a higher priority – bug in support page for iphone 8 or a ux change in the onboarding page in LG6 ? Basically,the product manager should prioritise these bugs, based on data – taking under consideration – 1.how many customers have each one of these device 2.how many people actually doing an action and experience this bug, and 3.what is the effect of this bad experience on engagement and revenue. But , in a data driven organization , also developers have access to that data , so they can consistently evaluate and quantify the effect of their development without waiting for the product manager’s feedback.
As much as you have certain answers here , your day to day decisions are being driven by data.
If you don’t have clear answers to all these 5 questions ,this is the time to start thinking about what are the main KPIs that drive your business forward , how can you monitor and track them , and then – how can you significantly impact them.