When making business-related decisions, you cannot miss hearing a thing to do with big data and data-driven decision-making.
Even though the two have become buzzwords within the business industry, they have some pretty good reasons to exist. According to research, businesses that utilize big data in decision-making increase their profit by 8%.
Data enables business owners to continue exploiting the endless insights within the digital marketing space currently available at their fingertips, and they can embrace them anytime. The power of data-driven decision-making is seen when it comes to making decisions that impact businesses’ continued growth and development.
The only secrete is to learn and master how to measure and analyze your business data accurately and utilize the most appropriate tools when creating data reports. You will be better positioned to conduct data-driven decision-making, which elevates the performance of your business brand.
The current business world mainly relies on well-defined data-oriented decisions depending on the business progress. Even though sometimes it is good to go with your gut, your decisions need to be based on facts and data values. This is mainly meant to give you a solid backup if things go south.
What is Data-Driven Decision Making?
When you talk of data-driven decision-making, you mainly focus on the key performance indicators (KPIs) that determine the business’s success. The facts and patterns generated from the business operations are analyzed, and the fundamental insights are generated and used in developing strategies that impact the development of the business.
Instead of relying on guesswork, data-driven decisions allow the business owners to evaluate analyzed data values and insights that offer guidance and touchpoints necessary in decision-making. Besides, you need to understand specific sections within your business where you can extract valuable data.
To get better results, you should extract valuable data that is accurate and aligned with your business goals and objectives.
By collecting accurate and valuable data from your business operations, you stand a better chance to make prudent development decisions within the shortest time possible.
Initially, doing data analysis was one of the most complex tasks you can engage in. Thanks to data visualization charts (bar chart, line chart, pareto chart, comparison charts, etc.), which has made everything easier since you can visualize your business data and generate insights in a matter of minutes, and you have the entire job done. You don’t need to possess technical expertise in order to visualize your data and generate insights.
As a business owner, you need to understand all the aspects of data to identify the best approach to analyze and visualize your data. Quantitative data analysis mainly focuses on numbers and statistics such as standard deviation, median, and any other form of descriptive statistics.
This data format is especially measured instead of being observed and making conclusions.
This method of data analysis is mainly used by those searching for facts and figures that they cannot ignore during decision-making. Remember that all the decisions made by the business owner are mainly made in favor of the business.
Qualitative data refers to data values that cannot be defined by looking at the metrics, statistics, or the provided numbers. This data type is mainly collected from anecdotes, conversions, and interviews. This is contrary to quantitative data, which is primarily gathered based on measurements, among other factors.
Why Data-Driven Decision Making is Crucial for Business Success
Data-driven decisions play an integral role in the well-being of businesses by enhancing consistency and growth. In addition, data analysis enables companies to identify to secure new business ideas, thus increasing their chances of success. It aids in generating more revenue, preparing the business for greater success in the future.
Also, using data in decision-making ensures that your business is running in the right direction and optimizing both the current and the future trends, making it easier for the company to identify valuable insights that impact the business growth.
When all these are conducted accurately, the business is better positioned to grow over time and operate in the constantly changing industry.
Given that the business industry is constantly changing, businesses must use data in decision-making in order to align the decisions with the changing nature of the industry. Also, it becomes easier for companies and organizations to adopt the nature of the industry since data insights offer guidance about the way forward.
Note that data-driven decisions have the ability to make or dismantle your business. This enables companies to connect with one another more effectively since they get proper guidance and directives from data insights. With valuable data in hand, companies get it easier to secure potential customers within their target markets without any complexity.
Factors to Consider for Better Data-Driven Business Decision Making
Incorporating data in your business decisions makes them accurate, placing your business brand on a more competitive edge. In order to make a data-driven decision-making strategy that can work for your business,
you need to have an action plan that will back up your data. Below are some of the factors to consider for better data-driven business decision-making.
1. Identified Unanswered Questions
After identifying your business goals and having a clear strategy for attaining them, you will probably get it simple to achieve your objectives.
This works well if you have searched multiple questions that you haven’t found answers to. Identifying the right questions during data analysis makes it easier for your team to focus on the appropriate data.
This makes the process shorter since you will have no problem identifying the data that matters to you. Also, you will cut short the time you spend doing data analysis since you won’t focus on the irrelevant data values that don’t add value to your business.
2. Consider Alternatives
Sometimes, it is fair to be reluctant to consider alternatives. This mostly happens if you have already reached a conclusion and you feel like you have all your problems covered. However, in the process of data analysis, it is essential to reevaluate your data one more time before coming to a conclusion and closing the chapter.
It doesn’t matter if you have already invested in whatever you do. It is always good to be mindful about every step you make since you might be going in the wrong direction. Taking some additional time to rethink and evaluate the data you are using in decision-making opens up your mind to think outside the box and explore more opportunities.
3. Define Your Objectives
If you do not state your business objectives clearly, you will most likely be rendered pointless. Before diving into any form of data analysis, ensure that all your business is well-defined and aligned to the data you intend to use. By defining your objectives, you get the most out of your data, thus increasing your business success.
Identify and define all your key selling points to better picture what you want in business. This will help you operate on the basis of a robust business foundation, increasing your chances of success within the industry.
4. Collect the Right Data
You might spend a better amount of your data collecting invaluable data. Regardless of the kind of business you are running, the process of data collection should start as early as possible. This will allow you to avoid cases of mainly relying on your instincts instead of gathering the real values that determine the business background.
Also, ensure that you maintain a higher level of accuracy since the final response you get is determined by the accuracy level of your data values. Do not take the responsibility to fill some values from your head; get every value from the business operations!
5. Set Measurable Goals
After putting into consideration all the vital elements, you now come to the most complex part of decision-making. This is the exact point where you need to apply all the insights gathered from the business data. Besides, the final decision should focus on not only the data insights but also the business goals and objectives.
You might need to go the extra mile and ensure that your decision is not only supported by the data since you need to work in favor of the business goals. The only way you can make this easier is to set measurable goals for your business, and you will have every aspect sorted out.
6. Conduct Detailed Analysis
In order to answer any question in business, you need to carry out an in-depth research and analyze different case studies before coming to the bottom line. If you want to conduct a more detailed research, consider using user feedback and evaluate every aspect before making any conclusion to avoid negatively affecting customers.
Also, it is valuable to know the context to understand how you can use the data you have in the best way possible. This will enable you to make decisions that favor both customers and your business.
The research conducted by Mckinsey Global Institute has revealed that organizations that have implemented data-driven decision-making are 23 times more likely to acquire customers with ease. This brings out the power of data-driven decision-making in elevating business performance from one level to the next.
Author Bio: Lori Gillen is a Blogger/Content Creator who is specialized in the field of Digital Marketing & Data Analysis with 5 years of experience. Currently working at ChartExpo as a Senior Content Creator.