What is a Data Strategy and do We Need One?

A data strategy doesn’t have to be complex. What’s required depends on the size and type of organisation. The prerequisite to devising a strategy is simply the ambition and the will to be more data-driven. The strategy itself is simply a plan for how you will manage, use and leverage your data to support the organisation's objectives.

Do you need a Data Strategy?

As always, it depends… A simpler question is, do you have a business strategy? If your organisation has a ‘north star’ and a simple performance indicator (KPI) that it seeks to achieve, then the simple answer is, how does data support that? 

Whether you’re trying to sell more bricks, or trying to feed more hungry people, the starting point is data to help you do more of that. Data should be part of that strategy. Obviously, even these examples are more complex: if you’re a brick manufacturer, you probably want to sell the bricks that have the highest margin; if you’re trying to feed hungry people, you’d probably rather live in a world where there weren’t hungry people, so ideally you’d want fewer hungry people to feed…

How much time and money you invest in codifying and executing a data strategy really comes down to the value it generates. How much effort will it take to gather, store and analyse the data, and what actions will you be able to take.

If you run a business maintaining people’s gardens, and you have 15 customers, there are likely to be a small number of key metrics: your costs (equipment; fuel etc); your time (how long it takes); your income (how much you charge). Deducting your costs from your income and dividing it by the number of hours you’ve worked will tell you how much you’re making per hour (before tax!). If this figure is too low, you then have to decide if you’re spending too much, or charging too little. (a side note: in any situation, you should always look beyond ‘the numbers’. This paragraph is not meant to make light of a physically taxing job that requires dealing with potentially awkward customers!). Realistically, as long as you’re recording enough data to make sure that firstly, you’re making a reasonable living for your labours, and also keeping the tax people happy, it doesn’t require a complex data strategy.

What if we scale up this example: you run a lawn care business that operates as a franchised network. You need to keep expanding your customer base, keep the current customers on the programme, and ideally sell them more services. You also need to monitor the performance of the franchisees. You also want the franchisees to understand their own performance. Beyond the basics (income, costs, time etc), you will also need to market to new customers and engage with existing customers. You will want to understand what works and what doesn’t: what is the most cost-effective way to gain new customers? Where and who are your best markets? Or, you might keep it really simple: tell your franchisees to knock on as many doors as possible and hope for the best…!

Then there’s the eternal question… does size matter? Yes and no. If we look at the UK market, there are over 4 million businesses, but 74% are single-person entities. Companies with up to nine employees make up over 95% of the total. But, are there cases where even a one-person enterprise will need to be data-aware? In past decades, it was less likely, but a great example is the social media influencer who relies on views, likes and subscribers. However, as social media platforms also have a vested interest in these metrics, the influencer themself doesn’t really need to do any data gathering and analysis as such, as the platforms not only present the data to them, they also tell them how they can improve the metrics. That said, we can’t overlook scale-ups in this field who create influencer networks or employ teams of people to maximise the market. Effective use of data is their modus operandi.

UK Business Segments by Total Number, Employment and Turnover. Small (0-49 staff) make up 99% of businesses, employing 48% of the working population and produce 34% of all business turnover

All businesses should look for opportunities to gather data to support their goals, but the crucial calculation is one that applies to everything we do: how much effort/money will be expended and what are the potential benefits. For a company with a decent number of transactional customers, gaining consent to add them to your email marketing list makes sense, but analysing how a mailing list of fifty customers interacts with your emails, beyond whether or not they are interacting, might not. Sending a simple survey to the same fifty customers though, could give you valuable insights into what they want.

Further posts will look at a simple example of a (made up!) business, how they might think about gathering and analysing data, and easy ways to survey customers. The consideration of whether an explicit data strategy is required for an organisation will also lead us to larger organisations, where a data strategy is essential, and the considerations for that strategy. At the far end of the scale are the tech giants who have made data their core business- most will be familiar with the adage ‘if the product’s free, you’re the product’. Our data has been commoditised, and we will take a closer look at that ecosystem. We will also look at the elements of a data strategy.