How to get actionable insights from your business data

Does it ever feel like the world’s best-performing companies know something you don’t? These companies never seem to lack direction, stay competitive, or know how to keep the customer satisfied. For many of them, the evidence is in their data. These companies don’t depend on gut instinct; instead, they rely on the strategic insights their data shows them.

As Carsten Bange, founder and CEO of the Business Application Research Center (BARC), explains, following the data takes away the need for intuition and replaces it with fact. “Creating a data-driven culture is about replacing gut feelings with decisions based on data-derived facts, be they simple key figures like revenue or profit, results from advanced analytics models, or even qualitative data.”

If you need some convincing, let’s take a look at some of the research. A study from McKinsey shows that organizations who use data to shape their strategies are:

• 19 times more likely to see profitable results.
• 23 times more likely to acquire new customers.
• 6 times as likely to retain their customers.

For today’s businesses, access to data isn’t a problem. The biggest challenge is making sense of it.

How to turn data into action

Although there are many benefits when using analytics to define and create a business strategy, many business owners are struggling to make the most of their information data.

As a recent study of more than 1,000 executives by Deloitte found, 62% rely on traditional tools such as spreadsheets, rather than delving deeper into their data and using advanced tools to grow their business. Businesses that are ahead of the curve are using data insights to inform their strategy and stay ahead of the competition.

One company that uses data to decide its direction is ShopRunner. In an interview with McKinsey, ShopRunner’s CEO Sam Yagan explained how data drives everything, from the recruiting process to staffing reviews, for their membership-based shipping program. Yagan also used the same method at OkCupid to match singles with compatible partners.

So, how do you follow the lead of some of the world’s most successful companies and use the data you’ve got to create actionable insights? You can start by taking the following steps:

1. Create actionable goals. This might be measuring staff productivity or perhaps you want to find out how much invoicing is costing your company. Once you have a clear idea of your business goals, you can create your business strategy around them.
2. Increase data transparency. Give your employees access to the data they need to make better decisions.
3. Use tools to measure data. Use a user-friendly reporting tool that makes it easy to present information, make decisions, and act on data.
4. Analyzing your data and measuring results. Review your data to see which elements of your business are working and which aren’t. Keep measuring results and review them to inform your decisions moving forward.
5. Use your data to make decisions. In the same way you use online reviews to inform your purchases, your company can inform its business decisions with internal data.

Now you have a clearer idea of how to use data in your business, which key performance indicators (KPIs) should you be looking at?

KPIs worth tracking

The most important KPIs will be different for each business, so we’ve put together some of the most essential you can consider for your company.

• Cost of invoicing, billing, and collections. This metric measures the cost you pay to collect revenue on goods or services.
• Project profitability. Compare the hours spent on a project with the revenue it generated.
• Custom acquisition costs. Calculates the cost of acquiring a customer.
• Contribution margin. Also known as the dollar contribution per unit. This KPI tells you how many funds you have available to cover essential fixed costs.
• Utilization rate. This is the number of hours spent completing billable work, you’ll see it expressed as a percentage. It measures employee productivity and allows you to optimize staffing decisions.

Getting started with Smart Reporting

Smart Reporting is easy to use and intuitive and you can get started with it in just a few steps. These include:

Defining your objectives (quantifiable business goals): Begin by setting out your business objectives. For instance, do you want to attract more customers? Or improve the customer experience? Maximize your marketing campaigns?

Update your data: By updating or importing your data in Smart Reporting, you can keep track of your financial, non-financial and budget data for your chosen company.

Selecting KPIs: With Smart Reporting, you can choose from more than 50 financial KPIs. You can also measure non-financial KPIs.

Key Features of Smart Reporting

Smart Reporting has multiple features that help guide your decisions, give you a clearer picture of your performance, and transform your data into actionable insights. Smart Reporting:

• Keeps staff up to date on the key metrics your company is tracking.
• Provides a range of analytic tools to measure profitability and cash flow, while customized financial KPIs and statements give you control and flexibility.
• Lets you set goals and identify strategies to achieve them. There is also the option to analyze progress and adjust your goals when you need to.
• Transforms your data into actionable insights, which you can use to grow your business and guide your decisions.
• Creates engaging, shareable reports with just a few clicks. The reports are clear to understand and provide actionable insights.
• Allows you to select an unlimited amount of KPIs, but there are limits on how many active KPIs you can have.

Making smarter decisions with data

Today’s innovative companies are creating growth strategies based on their data. Research shows companies that use this approach are more likely to see profitable results, acquire new customers, and keep their existing ones.

Empower your business to do the same with QuickBooks Online Advanced.