In the first part of this article, we explored organisations that made data-driven decisions that catapulted them to the top: Tesco and the Clubcard; Apple and the iPod; Oakland Raiders baseball team; and Uber. If you haven’t read the first partyet, we’d recommend you do before proceeding.

In this section we’ll bring the focus right down to your business and explore five reasons why you should collect and interpret data to make better decisions. In the next chapter, we will look at how to do this with marketing data using Google Analytics but the learning will apply to any web analytics software.

Why should you use data?

I have outlined five reasons for using data to power your decisions.

Data is the truth

Raw data doesn’t lie but gives you it straight. If you’re tracking your digital assets correctly, it’s impossible to manipulate data to tell you what you want to hear. It may tell you that you’ve only had 10 people visit your website since the start of the week and that they all left within 3 seconds of landing. Or that 100% of your visitors in the past month are returning users and therefore your site is attracting nobody new. This information is golden. It tells you what your business is, not what you want it to be.

It is only when one interprets raw data that subjectivity joins the party. Interpretation is what Benjamin Disraeli meant when he said that there are “lies, damned lies, and statistics”. Taking data and selecting which bits glow and which bits to gloss over is when problems occur.

Remember that data is pure and interpretation can be sugarcoated. You need to put systems in place to track data so you can see exactly what is happening.

Data improves things

Because data gives you the truth, it can establish a baseline from which to measure improvement. It is only by quantifying something that you can objectively track the incremental impact of decisions.

An example of data and its ability to improve are fitness trackers like Fitbit and Jawbone. By setting baseline times for jogs in the park or steps per minute on the commute to work, one can measure improvements in fitness over time.

Just as fitness trackers measure your heartbeat, capturing your business’s data takes the pulse and enables you to track the impact of actions. Remember that it’s what gets measured, that gets improved.

Data predicts the future

As data gives you the objective view, it can be used to predict the future. Not everything is linear so you can’t say for sure that something will happen tomorrow based on what happened today. However data gives you trends and patterns that means you can look ahead through extrapolation.

If your analytics data is telling you that mobile traffic to your site is growing month on month, you can predict that it is likely to continue to grow and you should therefore invest in responsive design. Or if your data is telling you that customers that buy a set of products typically “stick” for three years, you can calculate lifetime value to inform when and how much you should pay to retain them.

Data can be your teleport as long as you remember that it can only give you an idea not a real view of the future.

Data breeds innovation

Democratising data across an organisation is also great for generating new ideas. If everybody has access to data, it empowers owners and employees to view the business objectively and to come up with better ways of doing things.

Data that show trends can offer inspiration for new products and processes. Surveymonkey, the online survey specialists, released the results of their work with Virgin America. Customer feedback data highlighted that more small business travellers were using the airline and that more could be done to accommodate their particular needs. This led to changes across the whole operation, including the digital and physical experience of flying for the entrepreneurial traveller.

Making data available across an organisation will inspire new products and processes and promote a culture of innovation.

Data is your competitive advantage

Lastly, the data you get from your business, like marketing analytics or CRM information is unique to your business. Your competitors can’t view your visitor stats,  nor your customer purchasing patterns. It belongs to you and is only accessible by you.

If you use it correctly, you can make it a considerable competitive advantage as you will understand your customers and your market better. You can use it to extrapolate the future, inspire new ideas, monitor improvements, based not on gut (which is also important!) but on what’s actually happening.

How to collect and interpret data?

Now that we’ve covered the why, we’re ready to uncover the how. In the next part of this article, we will explore Google Analytics and run through several tips on how to interpret online behavioural data for better decision making. However all the best practices can be applied to any analytics tool.

This is an extract from my forthcoming book How Google Products Work. You can be one of 500 people to get it free in eBook form by registering interest HERE.