In the past, we’ve written about why the way you store your data matters. But if you’re new to thinking about data as a precious resource, you may have been asking yourself why data is so important to start with.
Of course, there’s the obvious. As a property manager, you have an ethical—and likely legal—obligation to keep your clients’ data safe from misuse, theft, disclosure, unauthorised access, and more. And, without data, there’d be no way for you to accurately manage and record all of your contacts, properties, and financials. But in the age of what’s known as “big data”, data has also become a key driver of decision making, innovation, success, and growth.
So if you’re not thinking about your property management agency through the lens of data analysis, it’s time to get on board.
What is data-driven decision making?
While many of us have spent our entire lives being told to trust our gut, data-driven decision making asks us to do the exact opposite. But not without good reason.
Economics Nobel laureate Daniel Kahneman proposed that humans use two different thought systems when it comes to making decisions: one which is fast and based on intuition, and a second, which is slower and relies on reasoned thinking. He argued that while the faster system may have once increased our chances of survival by allowing us to act quickly on opportunities and avoid threats, it can also push us towards bad decisions by ignoring critical analysis.
Essentially, data-driven decision means ignoring our instincts, instead relying on hard facts rather than intuition, observation, and anecdotal evidence.
The reasons for adopting data-driven decision making are not always the same. For some businesses, it is about growth—what products or markets have proved over time to be the most lucrative. For others, it can be as straightforward as cutting costs: anyone who has ever tried to reduce their spending will know the first step is calculating total income and expenses and then creating a budget.
But data-driven decision making is also more than simply a system for selecting a path for your business—it’s a cultural choice as well. Businesses that have successfully adopted data-driven decision making to power their growth, such as Amazon, encourage a curious and analytical mindset at every level. It’s not enough to think something might be a good idea: there should be an empirically based way to show that it is.
That said, data analysis won’t necessarily always lead to the right decision. The future is unpredictable, data isn’t always complete, and no system is perfect. But it does provide a range of benefits to a business that can’t be ignored.
What are the benefits of data-driven decision making?
Aside from helping you make more accurate predictions and choices for the direction of your business, data-driven decision making also has a range of other benefits.
Transparency and accountability
One result of adopting a data-driven decision-making process is that it’s easier for everyone in a business to see opportunities, risks, and the reasons why certain courses of action are chosen over others.
Managing, organising, and prioritising based on facts and information helps to ensure goals are concrete and that results are measured and assessed accurately. This can improve staff morale, encourage everyone to pull in the same direction, and mean responsibility is taken for both successes and failures.
Choosing with confidence
For those who trust their gut, making decisions based on instinct alone is easy. But for others, particularly when the stakes are high, relying on intuition can instead lead to indecision and confusion.
Having a data-driven-decision making process in place allows you to take action confidently, safe in the knowledge that there’s sound reasoning behind your choices. Whether you’re coming up with a new marketing plan, deciding what suburb to focus your efforts in, or looking at expanding your services, having all the relevant data at hand will allow you to benchmark current performance and forecast potential impacts, positive or negative.
Once you’ve started monitoring and benchmarking your key business metrics, it becomes much simpler to actively work towards improving them, even if only incrementally. In this sense, data-driven decision making creates a positive feedback loop where measuring the impact of good business choices leads to the ability to make more in the future.
The particularly powerful thing about this concept is it can be applied to almost any measurable aspect of your business, from staff productivity to revenue. Simply establish your baseline, use the information you have to decide on a course of action, measure the results, then continue to optimise your approach.
As you continue to make data-driven decisions, the consistency of the direction in which your business is moving will also increase. Once you and your colleagues have learned to identify key metrics and their implications, it’s much easier to act accordingly in response.
Similarly, having a codified data-driven decision-making process also makes it clear to everyone in the business why certain decisions are being made, which cuts down on potential internal confusion.
One of the clearest examples of where data-driven decision making is highly effective is in the area of cost-savings. It is challenging, if not impossible, to create a workable plan for reducing expenses if there is no baseline measurement of what those expenses are and where they arise within the business. Likewise, without some element of data analysis, it is very difficult to predict the potential impacts of any cuts to certain expenses.
Initially, any data-driven decision-making process will be relatively reactionary, as you’ll need to establish a baseline of where your key metrics sit before you can start responding to them.
But once you and your colleagues are more familiar with the lay of the land and have some goals in mind, it’s possible to use data-driven decision making to be proactive instead. Rather than responding to trends, it can become possible to anticipate them. That means you can either ride them to get ahead of the competition or act to minimise their impact if they threaten your core business.
How to start making data-driven decisions
While adopting data-driven decision making is a major change for any business, having the right attitude and tools can ensure the shift is much simpler.
Adopting a data-driven attitude
It’s worth repeating that embracing data-driven decision making is as much about changing mindset as it is about changing processes. To become a data-driven organisation, it’s necessary to adopt a more analytical way of thinking at every level.
For a start, that means developing your ability to look for patterns in data and draw conclusions from them. For those who don’t think like this naturally, this can take genuine mental effort, but it’s worthwhile in the long term.
You should also try to think less instinctively and emotionally. Approach business decisions in an open-minded manner and examine the evidence before leaping to conclusions. And, if the right sort of evidence is lacking, think about how it could be gathered.
Finding the right tools to make data-driven decisions
The other missing piece when it comes to instilling data-driven decision making into your business is possessing the right tools—not only to collate data but also to draw insights from it. Even for the most experienced analysts, having the right software to process and visualise data is a must, making it much simpler to both identify trends and gaps in knowledge.
There are a wide range of business intelligence and data analysis tools available on the market aimed at both experts and novices alike. But for property managers, there are even more specialised options on the table.
Through Insights Pro, Console Cloud offers the most advanced business intelligence reporting tool on the market. It enables agencies to undertake deep data analysis, identify underperforming properties in their portfolio, gain keen insights into the total value of their rent roll, and more.
It offers data visualisation tools that can be used by principals and senior property managers alike, allowing oversight of almost every aspect of your agency’s performance and profitability. Even better, once you sign up, it’s integrated into your Console Cloud account, so there’s no need to worry about importing data—it’s all right there at your fingertips.
Want to read more? Find out what growth looks like for Console Cloud customers or take a look at 10 property management courses to upskill your team.