Actionable Insights - How to Gather and Transform Business Data
Introduction to Actionable Insights
Collecting data from inventory, sales, and customer management systems, although essential, is not enough to make impactful innovations for business expansion. Management must be able to digest and create a plan of action from this information, or else the impact of vital metrics can be overlooked.
Actionable insights ensure that companies can develop a strategy to improve various business operations and functions from gathered data. In fact, a study conducted by Forrester found that insight-driven companies grow up to 8 times faster than the global gross domestic product (GDP).
Therefore, collecting data and generating effective actionable insights not only supports process optimization but business growth as well.
What are Actionable Insights?
Actionable insights are sets of big data from which management can develop effective data-driven actions. These insights can be drawn from raw data, typically software, such as customer, sales, and inventory management systems, to generate comprehensive reports and analyses. From these reports, businesses can determine what operations need further improvement.
For example, customer surveys provide insight into where consumers buy their items, their satisfactory levels, and the overall performance of the item. With this information, management can innovate products, marketing strategies, and services to improve customer satisfaction and experience.
Actionable insights allow management to view their business performance from different perspectives to make informed decisions on enhancing their operations and customer service. In fact, a Lumao's State of CX report shows that over 38% of organization leaders use actionable insights from feedback to improve and personalize customer experience (CX). Insights can lead to impactful actions that promote average sales, operational efficiency, and customer satisfaction.
Additionally, Forrester's case study shows that while 74% of organizations have the need for insight, only 29% are successfully collecting and acting on their analytics. Therefore, companies that seek to make data-driven decisions have a competitive edge when using actionable insights to progress their business.
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6 Key Characteristics of Actionable Insights
Businesses that struggle to convert their collected data into actionable information should acknowledge that not all data is actionable insight material. In fact, when using a pyramid model, actionable insights only make up the tip of the pyramid, followed by general information and data.
Raw data is plentiful and is converted into information such as graphs and reports, but only a small amount of this information is actionable. Management can determine what sets of data are considered actionable insights by identifying six key characteristics.
Information that is directly linked with a business's needs and goals is likely to contain actionable insights. For example, if a company is looking to improve customer experience, feedback with reviews and suggestions from buyers would align with their goals and provide actionable insight. However, if a particular reported metric or qualitative information fluctuates or does not affect the focal company goals, the data may be unnecessary.
On the other hand, insights based on key performance indicators (KPIs), such as net sales, revenue, and profit margins, provide crucial metrics that can be acted on immediately. Therefore, KPIs and metrics that align with company goals can be interpreted and easily converted into actionable insights.
Generally, data that lacks background and context is considered to be unhelpful. Oftentimes, a reference, benchmark, or previous report is needed for comparison.
For example, if a weekly report shows a retail store sold 400 units, the owner may be initially pleased. However, if previous reports show the average weekly sales are 600 units, this would indicate a 33% drop in sales.
With this data, management can also collaborate information from demand trends to determine why sales have declined, whether it was due to a slow season or ineffective marketing tactic. From these detailed actionable insights, plans can be developed to promote sales and revenue.
Therefore, providing ample background and details to support data ensures that management can understand the full picture regarding operational performance.
Although this is a critical characteristic, relevance is subjective as insight can hold value but not necessarily contribute to a business's goals. Therefore, in order for data to have relevance, it must be delivered to the appropriate project manager at the right time. Otherwise, the information may be discarded.
Insights can also lose relevance if they remain within analytics tools without being accessed for extended time periods. Therefore, data should be analyzed and passed on to project managers promptly.
Broad information can help businesses gain holistic perspectives but is not necessarily useful when handling actionable insights. Specific and detail-oriented insights provide enough information for management to act on immediately.
For example, a report that shows revenue has increased by 25% may seem promising but may be the result of an external factor rather than an intentional promotion. Therefore, insights should be supported by an explanation that defines precisely how an event occurred.
5. Unique Perspectives
With the plethora of incoming data, unique insights can sometimes prove to be more helpful than routine checkups and provide unorthodox ways to improve operations. While scheduled reports and analyses should remain, finding new ways to innovate functions may be worth the extra effort. When trends and patterns emerge, such as demand and sales, companies tend to monitor the information over time.
However, there may be indirect causes of these trends that go unnoticed. Therefore, running unique analytics to monitor functions from new perspectives and identify unusual data can allow managers to approach projects in an innovative way.
Valuable insight that is muddled with excess information can lose its clarity, resulting in stakeholders not understanding its significance. Therefore, effectively portraying actionable insights is essential for managers to be able to acknowledge and work with data. Aids such as graphs, images, and reports can adequately visualize the impact of the data insight.
How to Turn Data Analysis into Actionable Analytics
Once businesses narrow down what information can be used to create a plan of action, they must understand how to do so. Some best practices for forming data into actionable insights include-
- Measure the Appropriate Functions
- Ask Stakeholders Questions
- Utilize Segmentation to Drive Action
- Understand the Data Context
- Create an Optimization Plan
Define the issue, stakeholders, and scope of analysis.
Measure any relevant data and generate reports to find unusual trends.
Analyze patterns, statistics, and cross-examine metrics.
Improve operations based on actionable insights.
Control the implementation by monitoring respective KPIs.
- Develop a Hypothesis
If (an event) occurs, then (the plan of action).
For example, if sales increases due to the newest promotion, then the company will invest more in marketing schemes to maintain heightened revenue.
- Integrate Data From Other Systems
- Dissect Organizational Silos
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Gathering Customer Data Sets
A Harvard Business case study revealed that the fastest-growing businesses implement data gathering to discover how their technology affects CX. This feedback allows companies to make quick changes to improve customer service and satisfaction.
There are several options for collecting customer reviews and feedback, such as-
Other Sources of Actionable Data Sets
Customer reviews and feedback are great sources of actionable insight. However, for businesses that take advantage of several management solutions and system integrators, there are many other sources to extract data from.
With a POS system, management can extract quantitative data on inventory turnover rates, average sales, employee performance, and customer purchase history. This information can be easily converted into statistics and actionable insights to show how demand and sales fluctuate throughout the year. Departments, such as marketing and human resources, can then discuss ways to enhance item performance, sales, and revenue using this information.
When integrating POS services with inventory control and demand forecasting software, it is easier to see how external factors, such as weather and events, affect consumer demand and turnover rates. For example, retailers may experience spikes in demand for raincoats due to people attending outdoor events on a rainy day. Without this context, management would not be able to prepare sufficient stock to meet the surge in traffic.
Analysts can observe these types of insights to determine sales trends and implement procedures to optimize inventory levels. By increasing or lowering stock held in the warehouse based on forecasted demand, companies can save on handling costs, promote sales, and increase profit margins.
Actionable insights are vital for transforming lagging operations that are preventing business expansion and profitability. By investing in advanced analyses and reporting, organizations can efficiently monitor their performance and continuously develop innovative solutions.
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- Actionable Insights - How to Gather and Transform Business Data
- Actionable Insights- How to Gather and Transform Business Data