What Is Data-Driven Decision Making?
Data-driven decision-making is the process of analyzing existing information and extracting new data to support and inspire corporate behavior. This allows business owners and department heads to minimize the risks associated with choice and improve performance and productivity.
Why Data-Driven Decision Making Is Important?
In the digital world, everything can be tracked and monitored. The tools we use every day accumulate vast amounts of data and business intelligence tool that can provide valuable insights into markets, competition, customer behavior, performance, and more.
By relying on data instead of tips, assumptions, and instincts, you can dramatically increase your business's revenue and accelerate growth.
6 Key Benefits Of Becoming A Data-driven Organisation
- Quick and Confident Decision-Making
- Improve Transparency and Awareness Throughout the Business
- Agile and Quick to Adapt
- Cut Costs and Generate Revenue
- Data as Market Research
Advantages of Data-driven decision making:
In business, every decision you make often involves financial risks. By performing steps based on solid data, you can minimize the possibility of making wrong decisions and wasting money and resources.
When you give your customers what they really need and your service meets their expectations, you can expect more sales and higher profits. Improved product. Data from usability testing and customer research can provide valuable insights into how products can be improved.
If your actions are data-based, you don't have to guess how to satisfy your customers.
Reduced churn rates
By analyzing customer behavior and comparing patterns to other factors, you can find out why customers are leaving and how to keep them better.
Having the data before you in black and white eliminates any uncertainty when making important choices.
Everyone has their own perspectives and opinions that influence their behavior in specific situations. A data-driven work culture sets aside these personal prejudices and allows team members to focus on the facts instead.
By setting prices based on research and data, you can improve prices and grow your business without extra effort.
Whatever the problem your company is facing, analyzing the relevant data will give you an idea of where they came from and how to fix them.
5 Stats That Show How Data-Driven Organizations Outperform Their Competition
We’ll look at 5 statistics that show how becoming a data-driven business can help you outdo your competition. Profitability, customer understanding, and business strategy are just some of the areas where obtaining insight into the right data can be invaluable.
Data-driven organizations are 23 times more likely to acquire customers.
According to the McKinsey Global Institute, data-driven enterprises are not only 23 times more likely to acquire customers but 6 times more likely to retain customers and 19 times more likely to be profitable.
By leveraging this data, companies can make more informed decisions and improve the customer experience. The result? Customers who have returned many times and are satisfied.
Use case of Red Roof Inn
Businesses that use big data increase their profit by 8 percent.
A BARC study surveyed many companies and found that those using big data had an 8% increase in profits and a 10% decrease in costs. Both companies also list other benefits of moving to data monitoring. 69% mentioned better strategic decisions. 54% said big data improves control of business processes, and 52% said big data helps them better understand their customers.
Use case of Corel Software
62% of retailers report that the use of information and analytics is creating a competitive advantage for their organization.
62% of retailers (and 63% of cross-industry respondents) have stated that information and data analytics gives them a competitive advantage.
IBM identified that “the most effective big data strategies identify business requirements first, and then tailor the infrastructure, data sources and analytics to support the business opportunity.” Knowing how to use this data to enhance business activities pays dividends against the competition.
Use case of Baublebar
One-third of industry professionals highlight that the right technologies for data collection and analysis are essential for a better understanding of customers.
One-third of industry professionals have suggested that the right technologies are critical for a better understanding of customers, highlighting the empathetic advantages of being data-driven.
As a consequence, 63% of marketers have increased their spending on data-driven marketing in an attempt to reach out to relevant audiences with more targeted promotions. Adopting a data-backed methodology to understand customers’ needs is critical for making informed decisions.
Use case of The North Face
Insight-driven businesses are growing at an average of 30% each year; by 2021, they are predicted to take $1.8 trillion annually from their less-informed industry competitors.
The fifth Insight results summarize the impact of the above statistics. Data-driven and therefore knowledge-driven companies are always ahead of the competition.
By tracking consumer interactions and gaining a deeper understanding of their behavior, businesses can improve their customer experience and overall satisfaction. Therefore, this impacts lifetime value and enhances brand loyalty.
Use case of Slevomat
Let's take the example of Red Roof Inn. The hotels in this chain are near the airport, with an average of 90,000 passengers stuck per day due to the weather. The chain has found that the flight cancellation rate is 3%. Their marketing and analytics team worked with openly available data on flight cancellations and weather conditions to identify marketing and selling opportunities
Red Roof Inn's marketing team used this insight to launch a mobile device campaign in bad weather areas. This resulted in a 10% increase in sales.
Corel Software is a perfect example of a 106% increase in sales through better customer understanding. Based on website data and analysis, They started evaluating the purchase cycle to see how many times the average user revisited the page before making the final purchase. They also monitored the steps these customers take (newsletter registration, demo calls, etc.).
Based on this data, they successfully segmented prospects and created re-targeting advertising campaigns. Through this process, they were able to compose a message related to the buyer and persuade them to return to the website and make the purchase.
Baublebar uses big data analysis to stay up to date on fashion trends. Their mission is to provide trendy jewelry through e-commerce and catch up with the concept of "fast fashion".
Keeping track of different customer characteristics (demographics, interests, etc.) gives insights into current fashion and popular tastes. They compare their data to current social media trends and find specific patterns that help them take the next step.
The North Face consistently uses consumer data to deliver a tailor-made experience via its mobile app. With their voice recognition and purchase tracking, they create recommendations that really hit the spot for the user.
The first time you download the app, you’ll be asked a series of questions that help the software to understand you better and adjust the suggestions accordingly.
Slevomat’s discount portal has been around for almost a decade. Understanding their customers and rolling out offers for the right people at the right time is what enables their growth. Slevomat was never a stranger to data-driven decision-making. However, they used to rely on internal data reporting system with Excel files, often leaving the IT department overwhelmed and their data always stale.
The turnaround happened with the Keboola data innovation platform. It enabled Slevomat to access different data sources in one place and to always work with fresh, cleaned data. Most importantly, Keboola made working with data easy and efficient. Data-driven decisions became possible across the company, resulting in a 23% increase in sales.
The Data-Driven Era
The growth of data analytics solutions has led us into the data-driven era. Companies have turned to data to fast-track and enhance their decision-making. The statistics show that data helps companies to grow and expand faster than ever. Even more so, the fact that data analytics solutions are becoming more accessible to non-technical employees means that the barrier of entry to insights is eroding every day.
However, analytics isn’t a one-size-fits-all solution. A company needs to have a clear use case in mind to reap the rewards of the insights it acquires. Enterprises need to evaluate the potential business applications of an analytics platform before implementation, as this will generate the best results.