Guide to Becoming a Data-Driven Merchant

Mastering data as a merchant

Leveraging significant data used to be expensive for smaller organizations. Many SMBs couldn’t afford essential tasks, such as buying and maintaining computer hardware and software or hiring and retaining talent for data-related activities.

Cloud software has changed this scenario. It not only removes upfront barriers but also allows SMBs to benefit from embedded learning. Leading SMB cloud software handles the heavy lifting in data collection, aggregation, and governance, ensuring results come from a single reliable source. Top solution providers offer templated and flexible reporting and forecasting, reducing or eliminating the need for specialized data and analytics professionals.

To thrive with data, cultivating a mindset informed by data is crucial. In this guide, we’ve gathered research from organizations investing millions to figure out why companies succeed or fail based on their use of data. We’ve simplified it so businesses of any size can use it to establish robust, data-informed foundations.

Now, how do you combine data-driven outcomes with human intuition? And how do you incorporate data-informed decision-making into your company without feeling overwhelmed by the sheer volume of information? Let’s explore these questions together.

What does it mean to be data-informed?

Being data-informed sees data as a crucial part of decision-making, but not its sole component. Instead of relying solely on data for the entire decision-making process, data-informed strategies consider other vital elements, such as customer experience, overall analysis, brand consistency, and past experiences.

Collecting data from various sources and analyzing it is valuable to identify patterns and correlations between different variables. However, it’s essential to understand that correlation doesn’t always mean causation; even the best technology requires human interpretation.

Preparing for success

Becoming a data-informed merchant is a significant undertaking, but the transition doesn’t have to be overwhelming. While considering the purchase of Cloud software for managing your organization’s data, providing templated reporting and forecasting, and more, it’s crucial to focus on the data itself.

Luckily, there are already clear strategies available to make the process toward your new mindset and operational structure as efficient and straightforward as possible.

Let’s simplify the 5 essential factors in any data project: strategy, people, process, data, and technology—with strategy as the initial step.

Strategy

The success of any data project relies on having a strong strategy. Without a clear strategy, the actions you take and the data you collect will lack direction and won’t yield meaningful results. Make sure your strategy includes a well-defined goal, a solid business case, a leader supporting the initiative within the leadership team, advocates, and stakeholders to support the change.

People

Ultimately, the shift to a data-informed way of working won’t succeed unless it aligns with your company culture. Bring together individuals with technical, communication, and business skills to implement and support the integration of data-informed practices across teams.

Process

Set up effective processes for using the data you collect. According to Forbes, “It’s crucial to build processes and teams that can aggregate relevant data, make it readily available to all stakeholders, and empower your team to draw conclusions about that data that lead to productive and fruitful decisions.” It’s essential to create systems that go beyond merely collecting data; it must be turned into insights for successful action.

Data

Evaluate the data your company collects with a critical eye. This involves considering the data’s relevance, and its source, ensuring compliance with regulations, and establishing ethical boundaries when gathering information.

Technology

Before embracing a data-informed approach, it’s crucial to ask: What technological requirements does this change entail? Do we have individuals with the necessary skills for this task? Will additional training be required? Does it involve internal IT development, a third-party application, or outsourcing?

By following these steps, you’ll enhance your skills as a merchant, adept at transforming data into valuable insights and actionable improvements. As a data-informed company, you’ll unlock additional revenue opportunities, optimize operations for higher margins, reduce risks, and foster increased collaboration across departments.

A deeper dive into strategy

Before embarking on any organizational initiative, it’s essential to understand its underlying purpose. Are you aiming to identify a new product category, refine your marketing strategy, or gauge pricing sensitivity? Whether optimizing shipping costs for increased margins or pursuing other objectives, starting with the ‘why’ is crucial.

Develop measurable outcomes for your vision using a project roadmap. Ensure they are practical and achievable; in some cases, embracing numerous small projects proves more beneficial in building competencies than waiting for one ‘perfect’ project, leading to stagnation. Smaller projects foster growth and cultivate an experimental mindset, both vital for success when implementing a new data-informed operating model.

Embracing an experimental mindset
An experimental mindset in business welcomes change, encourages flexibility, and embraces growth. It involves being open to testing, re-testing, and finding value in both failure and success.

Maintaining an experimental mindset is crucial when dealing with data, particularly in data-informed decisions where human interpretation plays a role. According to a Harvard Business Review report, “Big data requires ‘little experiments.'” It’s important to note that correlation doesn’t always imply causation, and any observed relationships between datasets should undergo rigorous testing for validity.

As highlighted in a McKinsey report, aggregating all your data without a filter may lead to misinterpretation and the loss of key information. Therefore, the real impact of data interpretation lies in taking the results a step further and thoroughly vetting them for accuracy.

Culture matters most

The success of any new initiative in an organization relies on its people. For data-informed initiatives to thrive, a supportive culture and effective management practices must be established beforehand. As highlighted in a Harvard Business Review paper, the adoption of change projects starts at the top, with leaders demonstrating confidence in the system. Encouraging a data-informed mindset involves setting best practices for approaching data and promoting information sharing and quality assurance among teams.

An EY study on senior leaders’ data habits found that over 50% expressed concerns about poor data quality. Effective data management is crucial for project success and is best achieved when everyone prioritizes data integrity, making it a part of the organizational culture. When everyone is aligned toward a common goal, forming and maintaining processes and habits becomes more straightforward.

The principles for being data-informed: educate, engage, enable, repeat.

The four principles of data-informed decision-making form the foundation of your cultural framework. They include:

1. Adopting an analytical approach
2. Fostering an experimental mindset and a commitment to continuous learning
3. Encouraging collaboration; and
4. Making decisions based on data, supported by evidence.

Building a culture of change and effective management isn’t a one-time effort. Continuously enhance your team’s skills through different methods and initiatives. When hiring, look for individuals who can quickly adapt and contribute to success. A McKinsey report suggests that you might already have people in your company with an experimental and data-informed mindset. Conduct an audit to identify existing skills and potential areas for improvement.

Building processes

Now, let’s revisit the process. Processes in your company are crucial as they support the strategy, establish habits, and enable you to assess how decisions are made. While it may not be the core of your change project like strategy and culture, it serves as the driving force that keeps things in motion.

On a personal level, the process mirrors our thinking, reactions, problem-solving approaches, and more. An experimental, data-informed process involves these steps for any task:

1. Plan: Recognize the issue, explore advantages, and create a hypothesis.
2. Collect and organize data.
3. Explore and visualize data to identify causes, not just correlations.
4. Confirm or disprove the hypothesis.
5. Draw conclusions.
6. Repeat.

In this approach, your organization should be ready to question or adjust any existing processes. Even technological methods can be harmful if you dismiss better alternatives in favor of familiar options. Avoid getting stuck in ‘legacy thinking.’ An Inc. article noted that many organizations struggle with outdated systems, hesitating or resisting the move toward potentially superior solutions.

This doesn’t mean that change projects should occur without careful consideration—quite the opposite! Data-informed mindsets and processes promote evidence-based, calculated risk. This way, a willingness to take risks supports experimental mindsets by using data to gain insights into your business operations before taking action to enhance them.

Ensuring data quality

Having shared, high-quality data is crucial for the success of any data-informed initiative. According to an EY report, although “81% of organizations believe data should be at the heart of every business decision,” most still use isolated systems and overlook signals for change.

Breaking down silos is essential for obtaining a comprehensive view. Acting on incomplete or faulty data will inevitably lead to equally poor results. To enhance shared data, address a lack of collaboration within your organization. Promoting cross-team projects and multidisciplinary thinking can lead to more targeted business outcomes and improved customer experiences.

Making data accessible to all

While your organization may have experts proficient in data analysis, it’s crucial to cultivate a certain level of data literacy across all roles.

In an article by InfoWorld, they highlighted that the most successful data-informed companies are those recognizing when data should be widely accessible throughout the organization. Therefore, every person who can use data to make better decisions must have access to the data they need when they need it. This embodies the peak of a data-informed strategy: providing quality data, peer-reviewed and accessible to everyone, empowers decision-makers and their teams to achieve quality results.

Essential tools and technologies

Choose technology partners for your organization based on their ability to simplify and improve your data collection, access, and evaluation process. According to McKinsey, a successful data strategy relies on deploying the right technology architecture and capabilities. It’s crucial to find technology that aligns with your current goals and can scale to meet future objectives.

With the advent of affordable cloud technology, barriers to adopting smart technology are lower than ever. Unlike on-premise installations that demand substantial infrastructure and maintenance, many cloud technologies can be managed by smaller businesses and even individual teams. Harvard Business Review emphasizes the importance of leveraging technology with a robust back-end and user-friendly interface.

Additionally, top cloud systems for small to medium-sized businesses often offer pre-packaged reports derived from data across thousands of customers. This allows companies, even those lacking extensive internal resources or a dedicated data analyst, to access information in a tested, vetted, and approved format.

One reliable data source

Ensure everyone in your organization has access to the same reliable data to avoid duplication and errors. A Cloud system provides a single set of continuously updated records, reducing IT needs and ensuring you have the latest software version.

Automating processes is the key to streamlining operations. Using technology such as Qoblex helps you automate routine tasks in your team’s daily activities to eliminate errors, reduce repetition, and remove the need for manual data aggregation and preparation.

Achieving results with data-informed decisions

Merchants in various industries are embracing digital transformation to become data-informed organizations. Thanks to the cloud, the hurdles to becoming a data-informed merchant are now lower, and shared knowledge is more accessible than ever. During the process of digitally transforming your business, you can find answers to numerous questions. If you’re just starting this journey, we suggest beginning with the following:

• Start by understanding why you’re considering a data-informed initiative. What are your goals for this change?

• Create measurable KPIs (Key Performance Indicators) linked to business outcomes.

• Ensure you and your team are well-prepared for success.

• Look into technology partners that can automate repetitive data tasks, reducing manual errors and ensuring a single reliable data source.

• Choose a technology provider with industry expertise, and consider those offering relevant pre-packaged reporting.

• Keep asking why to stay focused on your goals.

To succeed, start by defining a clear and measurable strategy—this is crucial for any project. Educate your team and foster a culture that supports this new strategy. Implement processes that encourage questions, diverse perspectives, and anticipating challenges. Establish best practices to make quality data accessible to everyone involved. Explore your technology options, choosing those that enhance efficiency and effectiveness.

Whether you’re a big organization or a small to medium-sized business, making decisions based on data can drive results, benefiting your business and, in the end, your financial performance.

About Qoblex

Since 2016, Qoblex has been the trusted online platform for small and medium-sized enterprises (SMEs), offering tailored solutions to simplify the operational challenges of growing businesses. Specifically designed for B2B wholesalers, distributors, and eCommerce ventures, our software empowers users to streamline operations from production to fulfillment, allowing them to concentrate on business growth. Qoblex efficiently manages inventory and order data across multiple sales channels including Shopify and WooCommerce, integrates with popular accounting systems such as Xero and QuickBooks, warehouses, and fulfillment systems, and boasts a robust B2B eCommerce platform. With a diverse global team, Qoblex serves a customer base in over 40 countries, making it a reliable partner for businesses worldwide.