Once we have a good KPI dashboard, we first needed to collect and structure our data in a certain way. From this same dataset we can get a lot of knowledge about customers. We can get to know then so well, that we can start predicting how they will probably behave.
A powerful way to use data to support your business strategy is to try and predict certain things. You could for example use basket analysis to determine which items a lot of customers often buy together. Once you have a good insight in this information you can identify customers with some of these items in their basket and recommend some of the missing ones at checkout, assuming they also might be interested in these items. This would be a way to generate more income from data: we sell more items than before because we get relevant items in front of our customers.
You can also your data to get more insights in you customers by performing a customer segmentation exercise. You could use data mining to identify the parameters that are most relevant to put your customers into different similar groups or segments. Then you can use these parameters to set up more efficient marketing campaigns with fine-grained targeting. More insights in your target audience means you can reach them with less budget for payed advertisement. This would be a way to have less costs using data: you need to spend less money on marketing to reach your target audience.
Using the right KPI's gives you peace of mind. Peace of mind that you can trust your data to take the right decision. That you can use your data to (re)calibrate your gut feeling. Pay attention that your business strategy is leading in defining these KPI's and not the other way around: this would be searching where the light is, or measuring what is easy to measure without really thinking it through. Be aware that - like in quantum mechanics - the fact that you're measure something, changes the thing you measure. Usually there are unforeseen effects of measuring one thing or the other in ways you don't expect.
Make sure that the way you visualize KPI's and trends is in line with the way the human mind processes visual information. In other words apply best practices where these Gestallt-principles of perception are incorporated.
Let's go a bit deeper in the peace of mind aspect. If you don't have trustworthy financial and operational reporting yet, this is probably the first thing you want to start implementing for three reasons: peace of mind that you can trust your data to take decisions as mentioned here above. A second reason is to have a rich dataset of a good quality to base your more advanced analytics exercises on. The third reason might be not on your radar yet, but imagine putting up your organization for sale. During due diligence the acquirer will try to get a feeling of how your business is actually doing, and how it will do in the near future. When you don't have reliable data with the right KPI's about your business, this might prove to be a painful exercise.
