What Do Data-Driven Decisions Look Like Within B2B Companies?By Zachary Yuzdepski
Data-driven decision (DDD) making is a buzz phrase that is constantly tossed around in today’s business world, and raises many questions for people who are unfamiliar with the jargon. What is it? How does it affect B2B companies? How do we use data at our business? Well, let’s start with defining the phrase, and hopefully answer a few of your questions.
“Data-directed (or driven) decision making refers to using valid information to inform executive decisions. Data-directed decision making attempts to reduce ‘gut feel’ decisions by presenting valid data that can support optimal outcomes.” (Investopedia)
If you already understand what data-driven decision making is, you may be wondering what young business school students can tell you that you don’t already know. This post is designed to give you an in-depth look at how business-to-business (B2B) companies are using data. As part of our research in writing this piece, we travelled halfway across the globe to Germany with the Edwards School of Business. As young researchers, we had the opportunity to meet with notable businesses in Stuttgart, one of Germany’s major economic hubs. We sat down with recognizable companies such as BOSCH and Kärcher as well as B2B manufacturers whose business branches worldwide. Here’s what we found:
Using Data for SEO Strategy
One similarity that most companies have is that each company knows their prospective buyers. Why is this important? Search engine optimization (SEO) strategy for B2B firms should target prospective customers, and look to generate more qualified leads to the business. Every business is unique from the next; some have comprehensive SEO tactics, and others have no SEO strategy at all. No matter the SEO strategy, a business who confidently understands their buyers can generate more traffic to their business online by ranking for relevant keywords.
One thing we noticed was that smaller B2B companies may not have the marketing resources or assistance from SEO specialists. This means employees that are relatively unfamiliar with search engine optimization are driving the strategy. Ranking at the top of Google’s search rankings can be incredibly hard for any business, no matter how familiar the business is with SEO. It’s frustrating, time consuming and can be daunting for businesses with no direction.
For a company to be noticed on Google and start generating qualified leads to their business, the most important data is data about customers.
Some companies develop detailed buyer personas, other companies simply understand their buyers. The main concern is that B2B firms understand who they are selling to well enough that they are able to rank on keywords that interest their customers.
Three Steps to SEO Success:
1. Determine your prospective customers
This is the step that every B2B business we visited did well—they all understood who was buying their products and services. The more information that a business has about their client, the more specific they can be when tailoring content with desirable keywords.
2. Determine keywords that will target these prospective clients
For any keyword that has a high volume of traffic, there will obviously be a greater difficulty in ranking near the top for these keywords. Look to be specific in your keyword selection! For example, a B2B company selling software shouldn’t necessarily look to rank on the keyword “software.” Instead, they should be identifying who their software helps and targeting their keywords to these markets. Try these helpful keyword tools!
Take a look at the businesses in the top three search positions for any keyword. They’ve likely published a content rich web page about a certain keyword, or consistently post to a blog on their website. The trick to ranking on any keyword is posting new blog articles or web content consistently with related keywords and synonyms, then creating internal links between them to support each other and make these posts more helpful. This way, Google’s search algorithm starts to identify your business as a go-to source for information on a particular niche.
Check out our easy-to-follow SEO checklist!
Using Data for Research and Development
It’s no secret that companies are starting to invest in R&D now more than ever, but just how much? We noticed that several of the businesses we visited had a substantial investment in R&D. In Germany especially, there is a mind-boggling amount of time and money invested in research and development for businesses in various industries. The growth of a business, in some cases, relies on an organization’s ability to use data.
With access to technology and innovations in data analysis, data is more accessible than ever. Not only is data incredibly easy to get, but it is getting easier to use and understand with online tools. Free tools are everywhere, and with innovative technologies such as Google Analytics or Google Data Studio, this data is becoming more comprehensible to the average users.
Data plays a huge part in decisions and growth of major companies across the world. When asked about using data in her day-to-day decision-making, Vendasta VP of Growth Jacqueline Cook asks:
“Is there any other way?” (Jacqueline Cook, VP of Growth - Vendasta)
There really is no other way. Data and analytics provide decision makers with a valid foundation for their thinking, and make it easier for them to influence others. Data allows businesses to forecast their ability to supply and their ability to meet the demand of the industry. Consistent data analysis allows companies to find flaws in their procedures and discover areas of the business that bring the most success. Without data, a business would not be able to manage costs and drive revenue. So, when companies are faced with decisions surrounding the strategic growth and direction of their company, it is certain they’ll have the data to support their next move.
There is proof that shows data is influencing decision makers’ thought processes. Data-driven decision making is on the rise, in fact the use of data-driven decisions (DDD) in U.S. manufacturing nearly tripled between 2005 and 2010, from 11% to 30% of plants (Harvard Business Review).
To the businesses that don’t engage in data-driven decision making processes, you’re falling behind your competition. Research from MIT’s Sloan School of Business indicates that companies that engage in data-driven decision making enjoy a 5 to 6% increase in output and productivity over firms that do not (The Economist). The impact of data on research and development is real, and is only going to become more influential as technology advances.
Impact on Cost
Something that keeps smaller companies from using big data in their decision making process is the cost. It can be expensive to invest in big data, as simple databases/software are not always able to handle such large datasets. Therefore substantial investment in IT infrastructure must take place before a company looks into using big data. Like any investment that a company spends a lot of money on, when companies invest in big data collection, they expect big returns. Big data is used to improve the bottom line, and to make necessary adjustments to a company's current way of doing things in order to grow revenue.
A major risk for companies investing in big data is wasting money when unprepared for large data or getting lost in navigating large datasets. The companies that succeed in understanding big data usually have people within the firm familiar with data analysis, sometimes called data scientists. While you don’t have to be a scientist in order to work with big data, it is probably helpful to have someone familiar with big data and large datasets to deal with analysis. The best way for a company to be sure they are making good use of big data is to have people, infrastructure and time dedicated to understanding these large datasets.
Big data is not for every B2B company, however. In fact, many of the companies we spoke with mentioned that big data is not a focus for their business. Why? Because many B2B companies know their customers intimately through relationships and interactions, and don’t feel the need to collect and mine data about them. Investing in big data simply may not offer a reasonable ROI, depending on a company’s unique circumstances.
The Importance of Qualitative Data
Of course, how could we be talking about data without addressing the age old debate:
“What should I be using for my decision making—qualitative or quantitative data?”
We had time to sit down with some folks at the DHBW Stuttgart, a university in Stuttgart that has expertise in data collection and empirical research. When asked about qualitative research or quantitative research, their answer was really no surprise: it depends on the problem.
Qualitative research involves gathering stories, experiences, ideas, and opinions directly from people, and may be through interviews or focus groups that aim to gather written or verbal descriptions and feedback. Quantitative research, in contrast, involves cold hard data in numeric forms and may be gathered from internal data such as sales growth, or from customer surveys. Amongst the companies we visited, we were surprised by how much qualitative data heavily influences the way businesses make decisions.
So why does qualitative research matter so much to B2B companies? B2B businesses rely on relationships with their customers/partners/clients, so a lot of the information gathered about a customer is not quantifiable. B2B companies spend time gathering feedback from sales personnel about their clients. A great B2B company puts their clients first, adapts their business decisions to their clients’ needs, and works towards building a long-term business partnership with their customers. In order to understand the customer there must be constant communication, and therefore a lot of the data B2B companies possess is simply an understanding of their customers. This qualitative data can be as simple as direct conversation between sales staff and the client, addressing the client's direct needs.
Even the most successful companies that we visited find success in simple qualitative data. So if you’re a B2B company and your company relies heavily on qualitative data to drive your decision-making processes, your company is not alone.
The Future Influence of Data on B2B Companies
Every B2B company uses data, no matter the size or industry. Data can be defined differently by each unique business, but there is always some form of data being used. In the B2B world, a lot of data goes to waste with mismanagement and misunderstanding, but this is definitely changing as technology alters the way businesses use/store data. Innovations in CRM software have changed how businesses manage their relationship with their customers. Innovations in inventory tracking have changed the way businesses address complications with supply and demand. Innovations in open-sourced software have created new, inexpensive ways for businesses to interpret datasets.
No matter the innovation, data analysis is becoming easier for businesses as a result of continuous technological development. In the past, many business people associated data-driven decision making with the companies that could afford to analyze data. In 2017, data-driven decision making is a part of most businesses in some form, large or small, whether the business knows it or not.
It is impossible to make a decision today without supporting it with data, and as data tools grow more accessible look to see every business investing in data analysis to enhance their decision making processes.