5 Ways Incorrect Data Points Effects Business Performance
The chosen data points used to assess the performance of your business have a bigger impact than you may realise — from your sales numbers to your social media following. If they are not selected and reviewed in the context of wider strategic goals. You could inform your decisions with data that could limit the chances of achieving your goals.
There are an ever growing number of data points that can be used to assess business performance. Each new technological innovation or policy improvement creates its own set of data points. GDPR introduced compulsory cookie consent. Initially it was just a thing that was added to websites, not many businesses paid much attention to. Until the impact of cookies not being accepted had a knock on impact on other data points. Now businesses track cookie consent opted-in rates, and conduct copy A/B tests in an attempt to increase the opt-in percentage. And improve the validity of their other data points.
Although it can, at times, feel as if opening the data can of worms a bad idea. It is important. As data is the real unsung hero of our business health, and incorrect data points effect business performance. The truth is your business has relied on data since you created it. You likely used data to assess who your target audience is, used it to quantify how likely the solution you provide will be perceived as valuable. And if you were using incorrect data points to make this assessment you likely wouldn’t have started your business.
The main role of data is to help inform the decisions you need to make, as you may already know. But what data you focus on plays an essential role in many other aspects of your business performance. Poorly selected and monitored data points or KPIs can lead to a lot of not-so-great side effects and impact your overall business health.
Here are five ways incorrect data points effects business performance:
1. Improper Outlook
The saying goes, “bad data in, bad data out”. And when “bad” data overtakes the “good” data, the performance outlook for your business will be skewed. Ultimately “bad” data is subjective. In terms of business performance any data point that is more vanity oriented, i.e. likes and shares, could fall within the category of “bad” data. As vanity metrics are harder to objectively replicate the successful result over and over again.
It’s too often the case that the pursuit of vanity metrics makes other things in business go awry. By limiting your business decisions to these data points, the outlook of the overall performance is also limited. Which can lead to serious problems down the line, including burnout from chasing the virality of social media, confusing your brand positioning, reduction in return on investment and more.
2. Weakened System
Another key job of your data is to maintain the integrity of the system that drives your strategy. Your strategy will detail the actions and support needed to bring your vision to life. So when your data is off kilter, the systems put in place to support the strategic outcome will struggle.
Incorrect data points will make it harder to see the truth in the business performance. Making it harder to take responsibility for the actions which caused it. Increasing the likelihood of feeling bogged down with lots of “busy work” trying to figure out what can be done to “move the needle”. And less time doing the things that will move said needle.
3. Poor Morale
A big part of goal setting is tracking your progress. Your data helps to track your progress towards your goals. It will be what keeps you motivated to continue through the challenging times and see things through to the finish.
Data that is in good shape, means you’re able to correctly monitor your process and make adjustments to maintain optimal performance. As a result, you feel encouraged, confident, in control and optimistic, and you are more likely to worry less about how close or far you are from the end result
When your data is out of whack, you have very little clarity on whether you are moving closer to or further away from your goal. You’ll also have a much harder time putting your decisions in the context of your long terms goals. Increasing levels of indecision and procrastination. Leaving you more vulnerable to lack of motivation, frustration, self-doubt and constantly worried about not achieving the goal you set yourself.
4. Increased Fire Fighting
Incorrect data points effect business performance in more areas than the one you’re specifically working on. And a bad decision in one area could be the catalyst to a flurry of unintended consequences.
The data points you choose to monitor your business performance by will affect your choices. If your selected data points are at odds with one another, or with your desired outcome. It’ll feel like you’re constantly fighting small fires. Due to actions in one area having a near instant negative impact on another area of business. Taking you a few steps backwards, rather than forwards.
5. An Unhealthy Heart
The heart of any business is its people and its values. In order to keep it healthy, you need to feed it data that it can use. So it can continue to fuel the system that keeps your business running and upholds the values and purpose of the business.
Using incorrect data points to fuel your business, increases the likelihood of decisions being made that make community around your business – employees and customers – unhappy. Maintaining a good relationship with your community is vital for your business. For your community to choose to continue you on your business journey. They need to trust in what your business believes and values. This trust is formed through their interactions with your business.
If decisions are informed with data that is contrary to those beliefs. It’ll be harder to build a trusting relationship with your community. And overtime your community will weaken, which could result in the untimely end of your business.
Monitoring the correct data points is vital to accessing the health of your business. Business health checks are important as they can tell you whether you’re at risk of running into problems that will diminish your ability to achieve your overall goals.
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