If you begin with bad data, you won’t make the best decision.
Opinions expressed by Entrepreneur contributors are their own.
Over the years, I have become a “data hound” looking for every morsel of wisdom I can ge to help me make smarter decisions. The good news here: accurate data is king. You can’t effectively manage your business without accurate data. Getting it is not always easy but without it you risk making the wrong business decisions — hurting your business when you thought you were helping it. Allow me to explain.
Managing a sales pipeline.
In B2B businesses with long sales cycle the only way to assess the effectiveness of your sales team and predict future revenue is based on data your sales team enters into your CRM. Watch if a salesperson’s number of accounts is growing, how those leads are working their way through the sales funnel and total dollar value of the pipeline being managed.
But, think about what I just said: you are evaluating the success of your sales team based on the data they are entering (or not entering) in the CRM system. That creates multiple problems. I have seen situations where salespeople enter false information to look more successful to save their jobs. More generally, there is plenty of room for error any time you rely on humans for data.
For example, did the salesperson remember to enter a new lead into the CRM? Did they remember to update the status of a lead (e.g., from active to dead)? Did they update the dollar value of that lead from $20,000 to $10,000 after they learned the client didn’t need as many products as they first thought? Did they update the expected close date from April to June, after they learned the project has been delayed?
You get the point. Most businesses are making mission critical decisions based on future expected revenues from this data. More often than not, the data is not very accurate, updated or reliable.
If your CRM suggests you are working with more than $1,000,000 of potential leads, and your normal conversion rate is 20 percent, you would think there is a reasonable chance to close $200,000 in sales. That’s money you count on to run the business, pay your bills and meet payroll. Bad data could put you in an illiquid position, unless you have a cash reserve cover the $200,000 that didn’t…