Over the last two decades, data has not only become more abundant but crucial to the survival of virtually every type of business. Although placing a direct value on business generated information is tough. Business analysts agree that greater access to higher quality data will increase a company’s worth. Evidence of this was published in 2018 by venture capital firm Mercury Fund. Analysing SaaS start-up valuations based on market data, Mercury Fund’s report found that the variable separating companies was data.
As per the report, the value of start-ups analysed was between 5X and 11X revenue. However, the metric that determined a company’s ranking within the spectrum was its annual recurring revenue (ARR) growth rate. In other words, performance was linked to how well companies understand their customers. Understanding consumers without data is virtually impossible, which is why access to accurate and high-quality information is crucial for modern businesses.
If we accept that data in any form is vital to the long-term performance of a business, the question becomes: how do you ensure the data you have is accurate?
Think outside the box
Taking data from a variety of sources should be a standard move for any business. However, most companies tend to tap the same reserves. By looking at wells of data outside of the norm, you can often gain new insights and, in turn, validate the information you already have. For example, the forex market can be a great indicator of spending habits. As you can see from the image below, 71% of Austrian consumers buy products online from home and abroad. In contrast, Japanese e-commerce is dominated by domestic shoppers. These insights are useful for retailers in terms of predicting which international customers they’re likely to attract.
However, you can also look at currency trends. Analysing trading data from the IG Academy app, business owners can not only learn the nuances of forex but see how the markets are moving. When a country’s population is buying more products from another, the value of the associated currencies can shift. By cross-referencing this with consumer spending habits, you can start to see which international markets are worth targeting.
Not all data is created equal
Another important point to consider is that not all data is homogenous. Many novice data analysts assume that one set of data can be applied to all situations. This simply isn’t true. The quality of data you have can vary from source to source. In other words, depending on how the data set was collected, cleaned and processed, the accuracy can vary. However, many people fail to understand this.
Instead of treating each data source as its own entity, business owners lump them together and treat everything as if it was one large collection of infallible information. The reality is that all sources need to be assessed individually and then taken as a whole. As we highlighted in the first point, you need to cross-reference findings from varying sources, extrapolate ideas and then come to a logical conclusion. Only by doing this can you ensure your insights are accurate.
Integrate your data
Although it’s important to treat data sources individually, it’s also important to have a single collection platform. Data silos that pull information from different departments can confuse the issue. To put it another way, storing data from different departments on different platforms can lead to inaccuracies. Yes, each source has its own value. However, you also need a way to connect it in order to create a complete picture. The only way to do this effectively is to use a central platform. By integrating data and eliminating silos, it’s much easier to connect the dots and achieve more precise results.
Know what you want
In many ways, this should be the starting point for companies looking to make the best use of big data. Without having a clear idea of the information, you want and what you want to get from it, all of this information can be a curse. According to the latest statistics, more than 2.5 quintillion bytes of data are created each day on the internet.
Breaking down the figures, Domo’s Data Never Sleeps infographic (image above) tells us that Netflix users stream 69,444 hours of video every minute of the day. Beyond that, Spotify adds 13 new songs per minute, while Google conducts 3,607,080 searches in the same timeframe. Put simply, there is more data out there than you can handle. Because of this, it’s important to target the right sources. Without a clear plan, you run the risk of being overwhelmed and producing inaccurate insights.
Clean your data
The final way to ensure your data is accurate is to cleanse it regularly. As we’ve said, new data is being produced every second, which means stored data can become outdated fairly quickly. Indeed, if we go back to our retail example, the number of internet users in Austria is higher now than it was in 2000. According to Internet Live Stats, just 33.7% of the population used the internet at the turn of the millennium compared to 81.1% in 2016. Lower internet penetration will naturally correlate with fewer online purchases. So, while today’s data supports Austria being a strong market to target for online retailers, that wasn’t always the case.
This example shows how data can change over time. Without cleansing outdated information, results can be skewed in the wrong direction. Indeed, if analysts looked at old internet penetration rates for Austria, they might assume that the current stats regarding e-commerce were wrong. However, as we can see, more people are now active online, which suggests more people are shopping online. Only by cleansing data and learning to manage it in the ways we’ve suggested can you start to make these connections and, in turn, use it to improve your business.