You may not know this, but data-driven businesses are three times more likely to make major improvements in their decision-making process, and for good reasons. Data-driven decision making or DDDM is the process of using data, facts, metrics to come to decisions that align with your organizational goals, initiatives, and objectives.
It may come as a surprise, but a majority of Americans rely on their gut and instinct to make decisions. This can be a dangerous concept when it comes to doing business. While we cannot refute the power of intuition, we can’t afford to overlook the fact that business is driven by data, facts, and strategies.
With data, every department in your organization will make informed decisions. In this guide, we’ll explore how you can leverage data to make the best decisions for your business.
- 1 The Importance of Data-Driven Decision Making
- 2 How To Use Data To Effectively Make Data-Driven Decisions
- 3 Leveraging Data-Driven Decision Making for your Business
The Importance of Data-Driven Decision Making
The world is running on data. Every day, more than 2.5 quintillion data bytes are created.
The only thing you have to do is find a way to access the data you need, measure it, and leverage it to your advantage. All businesses have an aspect of risk, but one of the most important benefits of using data to make organizational decisions is that it makes you less vulnerable to risk.
Essentially, this puts you in a position where you can do more of what works instead of what may or may not work. Collected data will help you make smarter decisions. Some of the biggest decisions you can make using data concern finance because you can gauge the most cost-effective ways to conduct different operations of your business.
You can also use data to make decisions concerning growth because you’ll be able to measure how to improve customer loyalty, how to prevent churn, and how to do other things that impact your overall business goals. With data, you will understand what activities will help you generate more leads and sales, and which channels are best for improving customer services for your type of business.
How To Use Data To Effectively Make Data-Driven Decisions
To use data to your advantage, first, you have to find the right data. There are many advanced analysis methods you can use. Here is a step-by-step guide on using this data effectively.
Start By Identifying Your Business Objectives
When it comes to business, every decision that you make starts at the core of business goals. The first question you have to ask yourself is what goal you want to improve. For instance, you may be trying to get more customers to subscribe to your business, which means getting more sign-ups would be your main priority.
You may also be trying to increase website traffic or brand awareness. Deciding what objective you want to achieve will help you identify the key performance indicators and metrics that will influence your decisions. This will help you understand which data from your storage to analyze.
Find Relevant Data
Now that you know what’s the problem you’re trying to solve and the decisions you want to make, you need to find relevant data to help you make data-driven decisions. The trick here is to find RELEVANT data that will help you achieve those goals. The last thing you want is to spend hours upon hours analyzing data that will not impact any vital decision in the end.
You may have an influx of data to look at, but it’s important for you to keep the data that only relates to the overall objective. Some of the best places to find data for review include CRM software, website analytics, social listening tools, business intelligence platforms, and more importantly feedback from your customers. Customer feedback is by far the most crucial source of information that will help you make the best decisions.
Engage your customers on various communication channels, especially social media platforms. Get involved in discussions and ask them why they became your customers or how they would like you to improve your business.
Collect and Prepare Your Data
It’s important for you to involve all departments in an organization to get the right data for your long-term goals. Accessing quality data is not an easy task, especially if your information is stored in various disconnected sources.
Start with the sources that are bound to have high impact and low complexity. Go for those with the biggest audiences and use them to build your high impact dashboard.
Draw Conclusion From Data Collected
Now that you have collected the most relevant data from the best sources, you need to take a look at history. This will help you identify trends and patterns that will help you make data-driven decisions in the long run. For example, consider the fact that you may be trying to reduce churn in your business.
To make a data-driven decision, you would have to look at the historical data. Gauge whether you need to rewrite your onboarding email sequence to improve the results.
Depending on the data you collect, you can easily rewrite your sequence in a way that will make it more successful than it has been in the past because you know what to change. If you were to use your guts on this, you could change that copy without changing the tone, which would give you the same results and no improvement at all.
Plan the Next Strategy
After analyzing all your data and understood what changes need to be made, you need to plan your next strategy. It’s important for you to create a plan of action that involves what has to be done, by when it has to be done, who has to do it, and why it’s being done. It’s important to make clear data-driven goals with clear timelines to drive your business growth.
Measure Your Success
After making data-informed decisions, you need to measure your success so you can repeat the process. Your data-driven decision making process doesn’t end.
You need to compare past and current results to see whether your decisions made any impact. You can do this once your timeline comes to an end so gauge whether your decisions had a positive impact.
Leveraging Data-Driven Decision Making for your Business
Now that you fully understand the intent behind leveraging data-driven decision making, it’s time for you to get it done. With big data available and so many tools that can help you collect relevant data, your business can benefit immensely from data-driven decisions.
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