In the past, business owners made decisions based on instinct or observations. While it worked for many, a small mistake could lead to the demise of a thriving company. With the growth and efficiency of data in today’s world, these methods are fast becoming outdated.
Top organizations now rely on data for their business strategies. They collect data to make decisions in every area of their business. Data-driven decisions can help boost your business productivity and profit as well as take your company to the next level.
There are various ways your business can benefit from being data-driven, from increased productivity to a broader customer base, improved company outlook, and better customer support.
This article will take you through the many advantages of a data-driven business and show you how to get started.
The Role of Data for Modern Businesses
The role of data in modern businesses is to help make insightful and actionable decisions based on collected and processed data from various sources.
With data, you can identify a current or a possible problem and come up with solutions. This helps companies stay ahead of their competitors and proliferate.
This data-driven decision-making is fast becoming the norm for many companies today, and those who aren’t following suit are falling behind. For example:
- Statista reports that there has been an increase in companies practicing data-driven decision-making between 2018 and 2020.
- In 2020, there was a 12% increase in the companies operating using data-driven decisions. This shows the influence of data in the corporate world, and this figure will only continue to rise.
The sheer volume of information can make decision-making very complicated:
As you can see from the statistics above, around 79 zettabytes of data were created, copied, and consumed in 2021 globally, and the number is predicted to increase in the coming years.
This is a lot of data to handle and work with, but it is easier to differentiate relevant information from excesses through data analytics activities. With the proper guidance, this information can help organizations get their product or services in the hands of their target audience faster and easier.
You can do it with the data-driven business analytics that allows you to obtain better marketing, sales, customer service, and cost management. Data also helps organizations with thehiring process. Access to relevant information makes it easier for human resources to determine the right candidates for each role.
All of these contribute to a company’s revenue and profit by making them stay ahead of the competition and follow market trends.
What is a Data-Driven Business?
Now that we understand the role of data, let's identify a data-driven business.
|A data-driven business is an organization that makes decisions based on insights, facts, statistics, analytical patterns and predictions, and current niche/global trends.|
Such companies gather information from primary sources to reach decisions that will drive outcomes. It helps inform business growth as decision-making is based strictly on facts, not intuition.
Data-driven decisions will help to:
- find new business opportunities
- improve work with customers
- enhance performance and efficiency
- increase profits
This is because data enables business leaders to identify weaknesses in their business operations, get areas for improvement, and make changes in departments across the organization to refine products and relationships with customers.
Key Benefits of a Data-Driven Business
We already briefly touched on the benefits of data for businesses, so let's discuss 5 key benefits of having a data-driven business.
Streamlined business operations
A business thrives when leaders can make data-driven decisions based on the analysis of business operations. This helps to understand the needs of the company, as well as employees' skills and capabilities. It adds to the transparency of business processes and the availability of resources.
A thriving business is possible when every employee is skilled in their field, understands the company's vision, is productive, and is determined to add value to the company. This ensures that everyone works together to provide optimum value to the company and satisfy customers. Data analysis and data-driven decisions help make that happen.
A company actively using analytics and choosing the next steps based on insights can:
- have a better resource and procurement management
- hire needed talents
- identify staff training and learning needs
- improve finance and accounting operations
- reduce operational costs
These points represent that you have streamlined business operations, and inner-company functions are transparent and effective.
Empowered business agility
With data, a business can make accurate and quick decisions that will keep it at the top of its game.
By relying on data analysis of past patterns and present trends, the decision-making process of a business will become more reliable and faster. The organization can easily find information that will aid the growth of its business and give them a competitive edge.
All these allow you to keep up with market trends, stay ahead of the competition, adjust to market dynamics, and implement changes quickly.
Polished marketing strategy
One of the most important aspects of business promotion is its marketing strategy. When a company implements an actionable strategy that yields results, it gains the confidence to compete and find new ways to grow its business.
Each marketer and business owner knows that there are many metrics, statistics, testing, and analysis in implementing marketing approaches. Here data analytics comes in handy. You need to do marketing analytics to make more confident decisions and steps.
With solid marketing analytics, obtaining insights and making data-driven decisions are easier.
- review and empower existing approaches
- track marketing performance and team performance
- choose new channels
- abandon non-performing channels
- calculate a marketing budget better
- reorganize a marketing team
- prioritize tests and experiments
Overall, you can create a data-driven approach to marketing within your organization.
Refined customer service
Satisfied customers equal thriving business. When your customers receive the best service or product from you, it builds a level of trust that keeps them loyal to your brand.
Providing excellent customer service is one way to make this work. The ability to establish top-notch customer service does not necessarily involve a genius move.
Using data analysis, you determine the best ways to communicate with customers, customer needs and pain points, and levels of customer satisfaction and engagement.
This helps to understand the customers better and provide adequate solutions to their problems and tips to fix technical issues. As a result, you can make data-driven decisions and improve customer service.
Obtained growth opportunities
Simply taking guesses makes it impossible to figure out areas for improvement and detect growth opportunities completely. While seeing growth opportunities from afar gives a company a significant edge. This is possible with the utilization of data.
By using insights from data analytics, you can make data-driven business decisions to cope with blockers and challenges. Also, you'll obtain clearer goals, build a long-term strategy, evaluate risks, and identify areas for business growth.
Building a Data-Driven Business: How To Start?
There are various advantages to having a data-driven business, but how do you build one? Below are the steps necessary to make a business data-driven.
Step 1: Choose an area and set a goal
The first step is to choose one area, be it HR, marketing, finance, customer service, etc. By focusing on one area, you can get expertise and knowledge and not spend efforts on simultaneous changes. Then, you need to set a goal for this transformation.
For instance, you chose customer support. A customer service goal can be collecting data on all customers to improve customer support. Or your marketing identified that the company needs to experiment with new channels. In this case, the goal of marketing might be to increase the customer base through referral programs.
By doing this for each area of your organization, you’ll figure out your weaknesses and provide solutions to them.
Step 2: Collect data
After setting your goals, you can begin collecting data from relevant primary sources. You can collect data manually or semi-automatically through surveys, interviews, observations, online tracking, and social media monitoring, among others.
The fastest and most reliable way to data is through data synchronization and data integration techniques. This will ensure that the gathered data is accurate and up-to-date because errors at this stage can significantly affect the entire process.
For instance, you want to analyze the performance of Facebook Ads to understand whether you need to continue with this type of ad. You can automatically set up a third-party integration and export Facebook Ads to Excel.
Step 3: Manipulate data
The next step after collecting data is to manipulate this data to get useful information.
The data you have gathered is irrelevant until it has been cleaned, transformed, and standardized. Once it has gone through the entire process, it is now ready for presentation, which can be done through data visualization.
Data visualization presents information derived from data analytics in an understandable format from which data-driven business decisions can be made. It's possible in the form of graphs, bar charts, and other graphical representation formats.
As from the previous example, you have your Facebook Ads data in an Excel sheet so that you can build one of these graphs:
Of course, you can use specific tools for data visualization and data storytelling.
Step 4: Make data-driven decisions
Following the presentation of data, you can move on to making actionable decisions.
After analyzing collected and visualized data, the insights you see will guide you on the next steps to take, the best decisions to make, and plans to implement.
After that, you should monitor the progress of changes and allow it to guide you through another analytical iteration followed by a decision-making process.
With the right use and application of data, your business will have a competitive edge in the corporate world. You will have access to reliable information that can help build a trusting relationship with your clients, increase the efficiency of your employees, and boost your company’s revenue.
It can be easy to lose track when you have so much information to work with, but with the right tools and strategies, you can take your business to the next level. The process may be tedious and require a lot of effort and dedication on the first try. But with time, you'll gain insights to make data-driven decisions and appreciate the results.