Turning Data into Dollars: How to Secure Long-Term Data Investments

The “activation hall” at Coalesce 2024 buzzed with energy as vendors and data practitioners filled the conference room, eager to connect and share insights about the challenging business problems they tackle and innovative data approaches and tools they use.

While many were excited about the business headaches these approaches could help solve, few discussions addressed how to convey the value of those solutions to stakeholders 100% focused on the bottom line. During presentations and in hallways, individuals asked, "How can I prove the value of my data team to my organization?" but they often received vague, hand-wavy answers.

However, completely answering this question is crucial for securing ongoing investment in your data initiatives. Your organization’s ability to generate new revenue, reduce costs, and improve operational efficiency can rely heavily on the data team’s capacity to surface insights and effectively recommend ways forward. The challenge though, is that establishing a clear link between our data work and its financial impact isn’t always straightforward to quantify.

In a conversation with an experienced data leader, I bumped into in one of those hallways, I heard an answer I liked. “Stay focused on immediate revenue, not future projections. If you can demonstrate how your insights will quickly boost cash flow or cut costs, gaining buy-in will be easier.” It sounds simple, but I thought his advice was remarkably impactful.

In other words, he recommended putting a dollar value on your data solutions. How? Start with clearly articulating how data projects directly support key business objectives and how additional investment can unlock new growth opportunities.

How Data Projects Directly Support Key Business Objectives

Clearly articulating how your projects support key business objectives strengthens the link between your work and the value you provide. Here’s an example.

Problem: You're losing revenue due to misdirected or delayed shipments.

Solution: Investing in tooling to automate inventory tracking and analysts to identify inefficiencies and enables real-time monitoring and faster resolution of discrepancies. This reduces your time spent on ad-hoc requests and reactive fixes, allowing you to make more proactive, data-driven decisions to address inventory issues.

Here's how to frame the value of your solution in dollars.

1. You’ll save money by reducing wasted employee time to identify and fix problems after the shipments have gone out. To do this, take an average employee's salary and calculate the hourly rate. Next, estimate the hours weekly spent on this task. Multiply those two together and you’ve got $X spent weekly. Multiply by 52 weeks and you’ve got annual revenue impact via wasted time.
2. You’ll save money by minimizing inventory losses. Historical loss data can then be leveraged to estimate the dollar impact of an expected X% reduction in losses, demonstrating clear cost savings. If you’re unsure what X% to use, provide a range of outcomes. What are the savings with a 2% reduction versus a 10% reduction? This range helps your stakeholders evaluate the range of potential savings when deciding to greenlight your proposal.

How Investment in Data Platforms Unlocks New Growth and Revenue Opportunities

Another effective strategy for data teams to secure financial buy-in is demonstrating how investment in a data platform project can foster growth, even if the actual project isn’t materially related to a specific revenue outcome. Here’s another example.

Problem: Your marketing, customer service, and product teams are siloed off from each other, an organizational pattern reflected in your data warehouse: none of their datasets are joined or otherwise easily linked. As a result, it takes a lot of effort to discover proactive insights or measure the impact of a team initiative.

Solution: Invest in modern data ingestion and transformation tools (e.g. dbt and Fivetran) enabling robust version control, traceability, and streamlined identification of issues or outages. The additional governance afforded by these tools accelerates the seamless migration of your siloed data sources into a unified repository.

The solution can feel like a major investment with an unclear payoff. This introduces an opportunity to engage with your stakeholders and educate them on how dimensional modeling will help combine their teams’ otherwise disjointed data to help gain deeper insights. Beyond the educational component, you need to calculate the value in dollars of potential outcomes made possible only if the business makes this initial investment. Here’s how to frame those two outcomes.

1. Say that you can only discover that customers acquired through a specific ad campaign have a longer payback period by unifying marketing attribution data and order data. Now the product team can work on shortening the payback period for this segment, boosting short-term cash flow significantly. For instance, if this segment’s current payback period is 12 months, and generates $1M annually, reducing the payback period to nine months would gain an additional $250,000 in cash flow within the next fiscal year!
2. Your sales and customer success teams lack visibility into each other’s data, leading to missed opportunities to deepen engagements. Integrating CRM data with support ticket and engagement metrics into a unified customer model addresses these gaps, enabling proactive strategies to boost revenue and retention. For example, with a total portfolio of $10 million, unifying this data helps the sales team reduce churn by 5% for high-value accounts, retaining $500,000 in annual revenue. Additionally, the data helps identify upsell opportunities, further increasing value. Ultimately, this solution delivers a combined impact of $500,000 — $750,000, making a strong investment case.

Keep Reminding Stakeholders How Data Delivers Value to Your Organization

It’s complex to tie the value of data projects to bottom-line financial impact. But that doesn’t mean you should give up! By focusing on how your data initiatives can lead to immediate revenue gains or cost savings you can gain buy-in from your stakeholders. When you deliver on these projects, calculate the financial impact again and remind your stakeholders. This will increase trust, build confidence in your efforts, and secure continued investment in your data initiatives. 

Need help calculating the impact your data team provides your organization? Contact us. We can help you make a case for why your stakeholders should continue to invest in your data initiatives by showing them the financial value they provide.