In Uber's lofty San Francisco headquarters, a growing team of data scientists leads experiments that propel Uber's exponential growth. In 2014, their head of data Kevin Novak claimed that based on high-level analytics, Uber makes simple changes with incredible impact. They recommended the ideal locations for drivers to "hang out, facilitating a 5% increase in output. With a valuation approaching $50 billion, Uber is one of the most visible startups using data to disrupt an industry.
Data science is all the rage in 2015, and for good reason: A strong data-driven team can create more impactful products, better marketing campaigns, and yield a productive and profitable company. Uber's not the only one following this approach: 73 percent of startups have increased their data-collection efforts in recent years, harnessing intelligence to drive growth.
Here are four key steps to using data to fuel growth at your startup this month and beyond:
Step 1: Test Your Products
Despite early confidence in a product, founders rarely know whether their idea will hit the mark.
Instead of hedging your bets (and funding) on a big product release, get your initial idea out to the public as quickly as possible. For startups, a lean approach can make a huge impact on product development, determining viability of an idea before requiring additional time and money.
Chris Heivly suggests that you "Gather copious amounts of relevant data from your perfect, targeted customer segment and they will, without much work, provide you insights that steer your product roadmap." Make sure to place your emphasis on creating a minimum viable product, or the version of your idea that allows your company to collect as much information as you can about your target group and their purchasing power.
Step 2: Market Smart, Not Hard
Data in its purest form should facilitate real-time feedback from audiences, enabling a company to create an appealing brand. Analytics are an essential aspect of any formidable marketing effort--they allow your company to reach an ideal audience, personalize content, and boost social sharing. Digital marketers agree, having named big data their third-highest priority this year.
In order to avoid getting lost in big numbers, tie any extensive data mining exercises to your business goals, pinpointing relevant statistics that speak to your KPIs (key performance indicators.) If you're data-shy, start the process by implementing easy-to-use tools like DataHero, MixPanel, Google Experiments and Google Analytics, all of which can serve to demystify the data management process for small startups.
Step 3: Yield Productivity and Higher Profit Margins
Not only does data empower you to create the most relevant products and the strongest campaigns, it directly correlates with strong numbers. Experian Data Quality and Dynamic Markets Limited found that 58% of data management professionals believed holding onto high-quality data about their customers helped them to make more informed decisions and increased their work efficiency.
And in 2012, a team of researchers cited in Harvard Business Review found that data-driven companies on average experienced 5% higher rates of productivity and 6% more profit than their competitors. For companies trying to gain a strong advantage, data science is a powerful way to make inroads with consumers and drive revenue.
Utilizing data enables teams to act as independent units, accurately assessing and tackling individual business issues. Armed with the right metrics and a supportive data-driven culture, groups can make decisions backed by real numbers. When evaluating statistics, implement industry-specific analytical models and always recognize the limitations of the field--clean data can enable faster and smarter decisions, but it should compliment rather than negate common sense.
Step 4: Make a Holistic Impact
Even if your startup doesn't live within the tech space or the digital sphere, it would still benefit from the precision of data science. Research suggests that sharing data encourages managers to invest their time into competitive thinking, mobilizing different actors to support your company's growth. The consulting group McKinsey & Company recommends fostering a data-forward company with " a multifaceted approach that includes training, role modeling by leaders, and incentives and metrics to reinforce behavior." Just as with any component of a company's culture, data-driven tendencies need to be nurtured, even within the most technically savvy startup.
The extra effort to evangelize data analysis is well worth the time. Nearly half of executives whose companies made data widely available to employees found that collaboration across otherwise separate teams increased. Data management can also serve to streamline processes outside of your revenue stream.
Buzzfeed, for example, not only uses data to discover the most relevant content and optimize sharing but to conduct analysis in different aspects of their company. Ky Harlin, then Director of Data at Buzzfeed shared that, "On the HR side, we've done analysis of how we've been hiring in the past, and we've come up with ways to measure the productivity of certain editors and certain teams in editorial groups." Educating your entire team about the role of data also leaves analysts to conduct deeper work on company-wide challenges that drive revenue and growth.
How are you using and benefitting from data at your startup? Let me know in the comments below.