Having access to relevant and accurate actionable insights is becoming increasingly important for companies of all sizes. Detailed market intelligence and customer data are becoming more accessible and affordable every year, so more businesses are deciding to invest in these areas.
This means data will become crucial for anyone trying to stay competitive. But it’s not just about collecting and storing raw data. You must handle billions of disparate data points that are useless if they’re not properly processed and interpreted. In fact, this amount of data can easily misdirect or confuse you, preventing you from making informed business decisions.
First, you’ll need to establish the context for the data and understand the key connections between data points. Only then will you have a chance to gain insights that can actually be acted upon—hence the name actionable insights.
What are actionable insights?
First, it’s important to distinguish between three distinct concepts: data, information, and insight.
Data is raw and unprocessed. Data points represent particular, measurable facts without necessarily assuming any connections between them.
Information contains a bit more. It’s data that’s processed and organised and provides an understanding of basic connections and trends. These data are systematized and arranged practically and straightforwardly, offering a great starting point for deeper analysis.
Insights occur when thorough, comprehensive knowledge of the context is applied. They result from detailed analysis of information and lead to useful conclusions. As we mentioned, if there’s a way to act upon these insights, we call them actionable.
An actionable insight example
We’ll try to clarify these differences further by using an example. Let’s say you own a company, and you calculate your revenue at the end of every month. The fact that your company earned 50K on a certain month is what we denote as data.
Now, if you take your monthly revenues over the last five years and arrange this data chronologically to recognize trends and tendencies, you will end up with information. Noticing a steep drop in revenue in the last 18 months would be an example.
But the key step is yet to come. Once you start identifying the reasons for the trends you’ve noticed, using your knowledge of the context, you’ll get insights. Discovering that the fall in revenue correlates with the pandemic breakout, supply chain issues, or innovative breakthroughs by your competition—all these are insights. An insight is actionable if it suggests what the company should do to improve its position given the circumstances.
In short, there’s a whole spectrum here, with raw data at one end of it and insights at the other. The key question that arises is how to turn data into actionable insights and use them to your advantage
Collecting the right data
Choose the relevant data sets
The amount of data you could collect to improve your business is virtually limitless, so sifting through is crucial. Most estimates claim that we produce more than 2.5 quintillion bytes of data every day. Companies use data analysis software of all kinds not just to collect immense volumes of data but also to choose data sets relevant to their business needs.
Of course, the processing power of this software is becoming increasingly powerful, as is the amount of available data. Suppose you don’t discriminate and delve into analysing every piece of data you can lay your hands on. In that case, this will demand a lot of processing power, and, more importantly, it will probably leave you confused and unable to make any sense of it.
Set some ground rules
So, before data starts pouring in, you need to set some constraints. In this sense, data analysis is a somewhat predictive activity. You must assume which factors and parameters will lead you to worthy conclusions. Even sketching particular outcomes beforehand is welcome. You should choose which data to collect based on your expectations and ultimate goals and then see if the data proves you right or wrong.
There’s no recipe for success here, but a typical rule of thumb is whether collecting certain data will add value to your operation. It’s key to create proper filters that will let you focus on what’s essential.
Use the right tools
The other key is technology. There’s a vast number of data sources you can use, so make sure you get hold of accurate and relevant ones.
Probably the most useful ones are those that analyze your particular audience and customers, such as social media analytics or CRM software that keeps track of your website activity. Integrating all these different sources into a solid, unified body of data is also critical to moving forward to the next steps.
Turning data into insights
Connecting the dots
Once you have that sorted out, it’s time to put all these disparate bits of data into context and draw conclusions. Remember, an insight is a piece of information that’s complex and structured yet clear and specific. It needs to be relevant and bring you closer to actually understanding the issue you’re dealing with.
Firstly, data needs to be transformed into information. This is done by prioritizing, sorting, segmenting, and grouping huge numbers of data points.
Most of this work is automated and based on the initial rules and criteria you set. When you’re setting these rules, remember that balance is critical. If you’re being too general, your findings may turn out to be empty and superficial, yet if you’re being too specific, this can confuse you, overwhelm you, or make you lose sight of the bigger picture.
Assemble a versatile team
Keep in mind that this initial algorithm may need to be modified if circumstances change radically. In times of turmoil and dramatic market fluctuations like the one we live in, some info may cease to be relevant, while others might gain importance.
That’s why having a wide range of professionals to help you interpret the results is very valuable. It’s not just about data scientists but also marketers, financial experts, salespeople, customer service reps, market specialists, and basically anyone who can chip in with their two cents and their knowledge about a certain sphere of your business or market.
If you assemble a competent team, it will be easier to distinguish between causation and mere accidental correlations. There are many moving parts; to avoid misinterpretations, you need people who understand how specific parts move and what causes them to change.
Use visualisation
Finally, the way you present the obtained information is crucial. Well-designed, user-friendly visualizations are much easier to read and understand than endless monotonous spreadsheets.
This part of the work can also be automated, and a quality reporting tool can do wonders for you here. It can extract raw data from your data sources and organize it to create easy-to-understand charts and graphs based on the presets you’ve prepared.
Enabling actionable insights
Connecting insights and actions
So you got your data, software, and a capable team to make sense of it, and you managed to gain valuable, actionable insights about what’s good and bad for your business. The process is still far from over, though.
Sometimes, acting upon the gathered intelligence may be the trickiest. Research by Forrester shows that 74% of firms want to be data-driven, but only as little as 29% think they are good at connecting analytics to action.
Human role in decision-making
Note that the development of new technologies can only partially fix this problem, as humans must still make at least some of the decision-making process. Admittedly, the software is improving at predicting future trends and making particular decisions.
On the other hand, big decisions about the overall business strategy, brand management, or a PR crisis either involve too many variables or aren’t quantifiable.
For instance, you can measure how much money your company will lose due to certain decisions during a PR crisis, but you can’t strictly measure “how much reputation” it will lose. And even if you could, deciding “how much” of the reputation a company is ready to lose is based on typically human goals and aspirations and not exclusively driven by financial logic.
Is it even worth it?
Hence, in order to properly act on insights, you need everything: reliable data, experts who can analyze it, software that can generate solid predictions, and human decision-makers who determine future actions while keeping the bigger picture in mind.
It’s a very complex process, and you’ll have to get everything right to grow your business truly. And it’s worth it. That’s why as many as 77% of companies in the US and 69% in the UK are data-driven, while insights-driven businesses grow more than 30% annually. Properly turning raw, unstructured data into actionable insights is the key once you decide to take this road.
Final thoughts
Getting your business to become data-driven can be a frightening experience. It’s a huge shift, especially for old-school owners and executives. It’s also risky and complicated, and the whole thing may seem too obscure and confusing. So, it’s unsurprising that executives get nervous when implementing changes that will make their companies more data-driven.
Collecting tons of disparate data and deriving actionable insights from it may seem like a lot of work, but it’s the only way. You will make some mistakes along the way and have to update algorithms, tinker with pre-set criteria, and constantly adapt to new circumstances.
But with the right approach and a capable team, you’ll be making fewer and fewer mistakes, you’ll gain confidence and experience, and in the long run, you’ll be able to use data to create a competitive advantage and help your business grow.
