#Using Metrics to Make Decisions
“Looking in the rear view mirror, managing by the numbers should have been one of the key things we should have done when launching the service, to knowing what our customers are doing.”
-Samuel Njuguna
Running almost any kind of a business today means collecting data. That could be data on website usage, customer acquisition costs, or just about anything else that can be quantified. The big difference comes in what you do with that data.
Both Samuel Njuguna and Samuel Njogu, the co-founders of the mobile transfer service Chura, and Teddy Ruge, founder of Raintree Farms, Co-founder of Remit.ug and Hive Colab, learned the hard way that running your business based on data means running your business successfully.
##Pre-Data Decision Making
Early on in the company’s history, Chura relied on a decision making strategy common to startups in the early days: voting. As you can imagine, there were intense discussions over what to do on any given issue. The problem was, these decisions were largely taken based on team members’ feelings on a subject. Often, a more persuasive member convinced the rest to go along with their idea.
That might sound fine, but over time it became increasingly obvious that the team was missing things. Trends, opportunities, all kinds of things which would have been obvious in a data-based approach were overlooked by the team.
Worst of all, making decisions was time consuming and could lead to personal conflicts within the team.
Teddy Ruge experienced difficulties from a lack of data early on in his Raintree Farms startup. While focusing on running the company in the way he had initially imagined, he found the model wasn’t working. It took data to make him realize that he had to pivot and adjust his business model.
##Using Data the Smart Way
The pivot Ruge had to make was to introduce more structure, to have each farmer plant an equal acreage to crops and then pay them a monthly salary. This may not have been Ruge’s initial vision for the company, but it allowed it to not be as vulnerable to crop prices, control the entire value chain, and ultimately become profitable.
“If you’re making data based decisions, it saves you a lot of time and money. If you don’t have such a model, you have to make it based purely on other people’s opinions.”
-Samuel Njogu
The co-founders of Chura were amazed at how focusing on data changed the way they ran their business. Now, instead of wasting time discussing which of 4 images was best for a Facebook marketing campaign, they simply tested each photo to see which performed better. They did the same thing with each aspect of their marketing and website to find small improvements wherever they could.
The result was greater efficiency in decision making and a series of small improvements throughout their business. They learned that 8% greater efficiency here or 5% there really added up to big improvements.
"The difference between then and now is that we know small differences matter. If your marketing improves by a bit and then what you do on the site improves by a bit, in the long run you get the sum of the different parts. Small changes, in the long run, become big.
-Samuel Njogu
##How to be More Data Oriented
Chura and Raintree Farms both showed that, but having good data recorded from day 1 gives you even better perspective on your business. This mindset extended to decision making within the business. Every time they avoided a long drawn out argument by simply following the data, theirs businesses won.
All of this applies particularly well for building websites and doing online marketing. In both cases, it pays to get good software that allows you to track data so you can test to see which design works best. In the end, it all comes down to gathering good quality data and listening to what it has to tell you.
Can you relate to the stories we told here? How is your experience different? We’d love to hear from you. Your questions and comments are what will help us make better lessons in the future.