Data-Driven Decision Making for Efficiency and Profitability
What is data-driven decision making and more importantly, how can it help service contractors like you save time and protect margins?
Data allows you to dig deeper into the inner workings of your security or cleaning business. But, just having access to the data doesn’t do much until you interpret what it actually means. Once you do that, you can put that insight into action to implement data-driven decision-making across your organization.
Benefits of data-driven decision making
Leveraging data allows you to make decisions with the best available information. And, when you can base your decision on repeatable and well-structured data, it allows you to be confident in your actions. It also helps you make better decisions and allows you to connect the dots to see patterns forming across your organization.
Know what you’re looking for
Data-driven decision-making can’t happen if you have no idea what questions you’re trying to answer. One thing’s for sure though — many of your questions probably revolve around financial data includes day-to-day questions like:
- What things do we need to focus on to improve?
- In which business segments should we continue working?
- What’s making us money vs. what’s not?
Your first step should be to determine what key questions you want to answer. For cleaning contractors, you want clarification on your budget variances. For security contractors, you want to know how you can identify your unbilled overtime. From there, you can look at the data to see what answers you can find.
Structure your data
Knowing how you want to view your data is the second step. For some businesses, pre-built reports get you the information you need in the least amount of time. For others who need custom reports, using a customizable business intelligence (BI) tool can give you powerful analytics right at your fingertips.
Every company is going to have a slightly different way they want to see their own data. That’s why every data owner needs to have an idea of the answer they’re looking for and the level at which they want to find the answers. With a BI tool, you can structure the data the way you want to see it, saving you a significant amount of time.
For example, think about a simple financial statement. An effective overview for you might be a fiscal year’s worth of companywide data. Yet, if you could easily slice that large collection of data down to the job or region level, you could uncover issues you might not otherwise have seen from a broader view. Also, consider changing the time period you’re viewing to look for trends. Try year-to-date, year over year or even just quarterly data to see what’s there.
The objective is to find a way for your data to guide you in managing your business more efficiently. For busy cleaning and security contractors, the process of compiling pertinent data needs to be repeatable, sustainable, and most importantly, easy. Automate your chosen information into one report that’s sent to you periodically.
Have clear metrics
Once you’ve put your data structure in place, you can determine your desired goals and important metrics. This helps you understand whether your answers gleaned from the data meet specific expectations you’ve set. For cleaning and security contractors, that might revolve around a goal to maintain a certain percentage of profit margin by job. By looking at the job-level profitability data, you might discover you have a couple of jobs falling below the threshold. By drilling down further into your data, you can uncover why you aren’t hitting those numbers. Do you have unnecessary overtime? Did you bid it correctly in the first place? Having metrics in place for every question you ask makes it easier to find areas for improvement or prove success.
Validate your results
Now that you know what data you’re looking for and you have your metrics in place, you should ensure your findings are correct. Data by itself is not the truth. You must ask how the data got there and then validate it. One way to do this is to start with a small subset of your data and do the math ahead of time, outside of your reporting. That gives you a glimpse of what the data should look like on a larger scale and allow you to manually check it against the reporting. This validation can give you peace of mind before you crunch all your numbers.
Understand the whole story
Another way to validate your data is to understand the complete story. Look at how data paints a picture of your entire business. You have to understand what’s happening in your business to understand what’s happening in your data. When you look at the numbers, you also have to recognize what’s driving the output. Factors like the economy, the environment, trends in the industry, legislation and employee issues impact your data and help you validate it. So, it’s important to take the pulse of what’s going on inside your business as well as of outside factors.
In short, you have to view your data from different angles in order to achieve true data-driven decision-making. Go a step further to understand the full story of your data and don’t necessarily take it at face value. Instead, take a multi-directional approach, considering even things the data doesn’t show. For example, you have customer survey results that show a 95% customer satisfaction rate. The data proves you’re doing well, right? Maybe not. How many customers filled out the survey? Who didn’t? It could be that upset or disengaged customers didn’t fill out the survey, and you’re only hearing from a small subset of customers that are happy with your service.
Want to read more about how the right tools can lead you towards true data-driven decision-making? Download our case study to learn how one security company saved $250,000 in less than 24 hours using BI software.