“Companies in the top third of their industry in the use of data-driven decision making were, on average, 5 percent more productive and 6 percent more profitable than their competitors even after accounting for several confounding factors.” – Andrew McAfee, Co-Director of the MIT Initiative on the Digital Economy
Making big decisions for your company is tough. As the pressure builds for companies to perform and deliver within a limited span of time, it becomes all the more necessary to make quick and correct decisions that can drive growth. Tracking business growth plays a big role in decision-making, but how do you ensure the process you're using to make those decisions is effective? Companies today are vacuuming up big data to make better decisions about everything from product development and advertising to hiring and finances.
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Here are four ways data driven decisions can help your organisation.
Gut vs data
The best ideas are the ones that come from your gut, but tactical decisions are the right way to go when it comes to making serious decisions that can affect your business. Take the example of marketing analytics. What kind of marketing creative works best with your audience? Would it be great if it had a human element to it or if it just focussed on product? Now everyone has their own opinions about what will or won’t work, but having the ability to test different strategies to see what’s truly effective gives them greater confidence in their choices than relying purely on gut instincts.
Facts vs opinion
When it comes to making decisions, everyone has their own distinct suggestions and inputs. Opinions are essential, and as your employees become more mature at their jobs they will definitely form their own opinions. Many times, these opinions will be much needed and accepted to create positive change. Without the numbers to back them up however, those opinions are suppositions, not actionable data-based insights. For example, assume your employees urge you to develop an app for your store, but at the moment it makes little sense since you don’t have a customer base. You can always weigh the pros and cons and back them up with data.
Tracking development made easy
Data collection and interpretation is a great way to track progress. It provides data in concise formats such as histograms and graphs. You can filter and choose which aspects interest you and focus on collecting more data this way. You can extract data specifics to see cash flow, the number of active shoppers, online browsers, employees’ satisfaction and much more.
Quickly understanding and adapting trends
If you constantly monitor your website and see which actions brought you better results, you then have choices to pick the best from. For example, if 20 percent of your potential visitors access your webpage through an iPhone and you have no configuration to track such devices, you lose big time. But if you know that mobile apps are on the wave and you invest time into placing the appropriate tracking tools, it’s a win for you. Thus, analysing your actions can result in a breakthrough for your organisation.
As a business owner, you should focus on data collection from the very beginning. If you don’t, you won’t have enough data to extract any useful insights in the near future. However, if you collect data from the beginning, you will have enough to start drawing your primary conclusions. You start analysing the results to gain insights; the more useful those insights prove to you and your team, the more you would trust in analytics.
It’s a cycle. If you don’t invest (in data), you won’t be able to enjoy the returns (insights), and you will become even less likely to consider it in the future. If you DO invest, you will see its value, and you will focus more on it.