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We surveyed 500 of the UK’s companies that were actively online and promoting their products. We asked about the collection, analysis and use of online customer data in their decision-making, and the impact this has on their bottom line. Our research suggests that a startlingly high number of businesses in the UK’s Internet Economy would benefit from reading Michael Loban‘s post on data resolutions for 2013. Here, we revisit some of his insights backed up by our data to illustrate how big the online data gap is for many UK companies, and what they must do to bridge it.
Insight 1: ‘Address your data phobia’.
We identified a cohort of companies in our sample with apparently no fear of data. We call them ‘datavores’. When making decisions about how to grow their sales, they rely on data and analysis over experience and intuition. They collect data comprehensively, analyze it thoroughly and use it to make decisions. But they are in the minority: only 18% of the companies we surveyed compared with 43% who make decisions on the basis of experience and intuition. These ‘gut-driven’ companies would stand to reap significant commercial benefits from their online data if they could get over their data phobia. We find that datavores are four times more likely to report substantial benefits from their online customer data.
Insight 2: Get on with social network marketing.
Only 40% of businesses in our sample report that online data is important for designing and evaluating their social media strategy. Lacking the right data to make decisions, perhaps we shouldn’t therefore be surprised to learn that more than half of the businesses we surveyed were hesitant to dip their toes in social network marketing, despite the fact that nearly 1/2 of the UK population* uses social media actively. (* cited from UK Office for Communications)
Insight 3: Tools are great, but great analysts are awesome.
Our survey suggests that fully harnessing the potential of online data requires up-skilling the workforce. Over three-quarters of businesses who have trained their staff to improve their data capabilities in the past two years report significant benefits from online data (compared with only 20% of those who haven’t provided training). Another of our findings leads us to add a coda to Michael’s resolution, however – while it is true that great analysts are awesome, it appears that great analysts who are empowered to act on the basis of their insights are even better. Datavores are much more likely to delegate decision-making than other firms. The implication is that making most of your data is not always painless. It may require re-organizing the business, changing its culture and rethinking the role of managers. ‘No pain, no gain’, as they say about most New Year’s Resolutions.
Insight 4: ACTION!
This brings us neatly to perhaps our most important finding: in order to benefit from online data UK businesses need to put their data to work. They need to use it to improve their website to be sure, but they also need to feed it into decision-making process in other parts of their business – such as in product development and business strategy. In fact, the ‘use of data to make decisions’ turns out to be the main factor discriminating between the datavores and the other companies we surveyed. And that, controlling for other relevant business characteristics, ‘using data’ is what really makes a difference on the impact of data on performance. To put it in stark terms, if you don’t use your data, you may as well not have collected and analyzed it.
We present the findings above (and many more) in greater detail in our Rise of the Datavores report. This is the first milestone in our program of research and action looking at the potential of online data for innovation and growth.
In the coming months, we will be matching our survey responses to financial data to measure in quantitative terms the connection between data-driven decision-making and sales growth, profitability and productivity. To get a really robust handle on the direction of causality in this relationship we are looking to run a controlled experiment to measure the impact of an Online Analytics intervention on a randomly selected group of UK businesses. In related research we plan to quantify the extent of business demand for data-savvy talent and assess the adequacy of the UK’s education system in supplying it.
Last, but not least, we will be looking through practical work to identify datavores in the public and third sectors, and work to encourage the transfer of good data practices across different parts of the UK’s economy and society.
In all these areas we will be looking for data experts to work with, to probe whether we are asking the right questions, to refine and help implement our research plans. Drop us a line if you want to hear more!
Posted by Hasan Bakhshi and Juan Mateos-Garcia at Nesta
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