Post on 26-Aug-2014
description
FRAMED DATAThe Road to Becoming a Data Driven Company
How Do I Create a Data Driven Company?
A lot of companies these days like to say that they are a data driven or
metrics driven company.
But what does that even mean? Are they really data
driven?
“Data driven” can cover a huge range of goals and abilities.
So then, what makes a company data driven?
First step:
Define your company’s Key Performance Metrics (KPM)
These are the hard, quantitative numbers that are attached to your business goals
For example, an e-commerce site might measure revenue per day
While an online social gaming company might prefer to measure daily active users or monthly active users
Figure out what makes your company tick and what drives its success.
After defining your quantitative goals, you can align your entire
company’s culture and team around it.
A lot of companies will hire data scientists, data analysts, and product
managers without necessarily figuring out the metrics that define your
business’ success.
Second step:
Data Warehousing (storing your data)
Data Warehousing is taking all of your production data (from web pages,
queries, user behavior, demographics, etc.) and storing them into one
centralized source of truth.
Data Warehousing is taking all of your production data (from web pages,
queries, user behavior, demographics, etc.) and storing them into one
centralized source of truth.
The schema (organization) of your data warehouse will be centered around your KPMs. i.e. If you’re tracking daily active users, it might make sense to have a
user login table.
(Yes it sounds a bit like database 101, but you’d be surprised to see how many companies skip that step)
Third step:
Now we can get into Analytics and Business Intelligence
Now that you have a data warehouse, you or your analysts can use the information to determine answers to key questions.
How many users logged on in the last 7 days?
How many people logged on from Idaho on Tuesday night?
How many women above 40 bought a virtual good from our online game?
The next goal is to extract numbers and generate hypotheses, reports, and dashboards to figure out where we want to go next.
We did it!!
Many companies can stop here and pretty much be a reasonably
data driven company.
However, in the last couple of years we’ve rediscovered machine learning and have made it part of our everyday arsenal.
Fourth step:
Data Science
Roughly, data science means taking features and variables from the
hypotheses we defined earlier in analytics and BI, and using these to craft machine
learning models to either explain our past or predict the future.
Machine learning models inform product decisions,
strategic decisions, and form the basis for a curiosity based company that is now on the
offensive.How can we use our data to monetize the company further?
How can we use our data as a key asset?
How can we use our data to figure out what our users are doing?
(BTW, Framed Data provides painless data science services that any company can use to increase their user retention. Give our free trial a shot
and click the logo below!)
USER-FACING EXAMPLE #1: amazon.com
Can you spot the machine learning here?
Can you spot the machine learning here?
At the bottom is a section labeled“Customers Who Bought This Item Also Bought”
At the bottom is a section labeled“Customers Who Bought This Item Also Bought”
Given what I’ve bought in the past, they use machine learning to try to predict what I might be interested in buying in the future.
At the bottom is a section labeled“Customers Who Bought This Item Also Bought”
The main KPM they are trying to optimize for is revenue.
USER-FACING EXAMPLE #2: LinkedIn
Can you spot the machine learning here?
Actually there are 2, but we’ll cover this one first.
This is a 300x300 box that tries to predict people I might know.
LinkedIn is optimizing for added connections and friends, getting their users further linked in.
The articles in the news feed are also based on my interests and previous clicks.
The goal here is to optimize for engagement.
But how do I determine the best KPMs for my business?
Picture the business funnel for an e-commerce website.
At the top you have all the people visiting your site.
SITE VISIT
Out of those users, some may look at an item.
SITE VISITITEM VIEW
Then out of those, a few might add the item to a shopping cart.
SITE VISITITEM VIEWSHOPPING CART
Finally, you have people checking out, which translates to revenue.
SITE VISITITEM VIEWSHOPPING CARTREVENUE
In each stage of the funnel, you have people leaving. This is the attrition rate of the funnel step.
SITE VISITITEM VIEWSHOPPING CARTREVENUE
Each stage is a potential Key Performance Metric.
SITE VISITITEM VIEWSHOPPING CARTREVENUE
Given your business, whether it’s online or brick and mortar, there are various steps that a user may take ultimately generate revenue.
It’s up to you to figure out what drives your business.