It is safe to say that with the events of the past year, it has been a scary time for businesses of all shapes and sizes. As we move into 2021, businesses everywhere are looking for ways to recover, adapt and move forward whilst navigating unprecedented levels of uncertainty. As your business begins to develop a plan of action for the months to come, your data should be the bricks that pave the path ahead.
Unfortunately, in times of insecurity, decisions often get made based on impulse rather than the right data. Regardless of whether we are talking about a social ads campaign gone sour or a global pandemic; relying on your data makes tackling any situation a lot easier.
What is data-driven decision making?
Data-driven decision making (DDDM) is the method of using your data to inform your decision-making process and provide validation for the actions you wish to take, before you commit to them.
This process can take many forms:
Collect survey responses – to enable you to identify products, services or features your customers would like.
Conduct user testing – to observe how you customers interact with a product or service and identify issues that need to be resolved prior to an official release.
Launch a new service/product to a test market – to test the market and gather information about how a product might perform.
Analyse shifts in demographic data – to identify business opportunities or threats.
The amount of data generated each day is more than 2.5 quintillion bytes! With technology now enabling businesses of all sizes to collect, analyse and interpret data into actionable insights; data driven decision making should be the first tool out of your box.
1-You’ll make more confident decisions
Reaching a decision that you’re confident with is much easier once you begin to collate and analyse your important business data. You can use this to tackle almost any business challenge, from discontinuing a product line to expanding into a new market.
Not only does your data serve as a benchmark for improvement, but it is also logical in a way that instinct simply is not. Having the ability to remove subjective elements from your decision-making process will instil you with confidence.
However, a decision that is based on data is not always correct and whilst your data may show a particular pattern or outcome; if your data collection process is flawed, then any outcomes would be inaccurate too.
2-You’ll become more proactive
If you are able to gather and collate the right types of data, it is possible to leverage it in a proactive way. An example of this is identifying and acting on business opportunities, before your competitors have identified them themselves.
3-You can save on costs
The most impactful way in which you can utilise your data is to decrease expenses. In a recent survey, of the businesses that implemented projects to do so, more than 49% have experienced added value in comparison to other initiatives.
How to become a more data-driven business
Have the right tools
You may have access to all of your data but if you don’t have the right tool to enable you to process it, it’s useless. Data is only a powerful commodity if you can learn from it, so using the right tool to extract the most value and insight is key.
There are a numerous analytics tools on the market but not all of them are equal. From experience, the best tool will not necessarily be the one with the most features; it will be the one that your business can use most effectively. Tableau, Google Data Studio, Microsoft Power BI and QlikView and are all examples of data analytics tools.
Choosing software that the vast majority of your employees can access, utilise and understand ensures that in times of crisis no one is left in the dark.
Look for more than just numbers
The value of quantitative data can not be underestimated when making business decisions, but when utilised correctly, qualitative data can also make just as much of an impact, especially if the two are used together.
There is no better way to fully understand how your product or service makes someone feel other than to ask them. Gathering more than just numbers gives you the perspective you might not have had.
Keep your data up to date
During any decision-making process, let alone a pandemic, it is vital to know that the decisions you make are based upon the most up to date and accurate data available.
Gathering new data is extremely important to any growing business but, it is also just as valuable to regularly perform data cleanses to clear out any legacy business information. Data storage solutions such as CRMs, although invaluable in terms of the functionality they offer a company, can become clogged with historic or inaccurate data, making it difficult to preform accurate analysis.
If your business needs to react quickly or make an on-the-spot decision, you will not have the time to go through all your data to assess what your most recent information looks like. Opting for a system or integrated tool that can extract data in real-time it the only way to guarantee you are prepared.
Look for patterns
The first step in becoming more data driven is to become more analytical. In basic terms, data analysis is to attempt to find patterns within or correlations between your different data points. Once these are identified insights and conclusions can be extracted.
However, becoming more analytic takes time and practice. So, whether you’re on the bus or doing your food shop look for the patterns in the data around you. You can then practice deducing insights and trying to come to conclusions as to why they exist.
There are many benefits to data–driven decision making and utilising the process can be transformational for a business. In 2021, it is not clear when normality will resume, so until then relying on the right data will ensure you can face whatever is thrown at you.