4 benefits of data-driven decision making
Data-driven decision making is gaining widespread importance in the current times. It’s because people use multiple electronic devices to perform functions from purchasing food and garments online to paying college fees and subscribing to OTT platforms. The concept of waiting in long queues for buying movie tickets has been wiped off. Now everything is done online, which is opening up new horizons for businesses. Online activities are a treasure trove for businesses as they can quickly extract tons of customer-centric information. This information helps create blueprints and strategies to conduct business conveniently and promptly. It also helps develop products and services that have a higher appeal to customers and increases their chance of buying it. Moreover, if a business gets a 360-degree perspective of their customers — their likes, dislikes, wants, aspirations, etc. — it will help them stay ahead of the competition and become a dominant player in the industry.
What is Data-driven decision making?
As described above, the data-driven decision-making process relies on collecting and analyzing customer-centric data and then using it for brainstorming product development strategies and formulating marketing communication plans. Moreover, data is also being used to finetune the customer service culture in call centers. For providing top-notch support service, it’s essential to provide solutions to customer queries instantly and at any time.
The following points explain the steps for conducting data-driven decision-making:
- Conduct surveys to know what products, services, and features your target segment is more likely to consume.
- Conduct user testing by launching the initial prototype and monitor the response of your customer base. Identify the potential issues and correct them before the final release.
- Study the changes in demographic data and perform a SWOT (Strength, Weakness, Opportunity, Threat) analysis to carefully analyze the market.
Although data-driven decision-making is essential for any business to survive and thrive in the present market conditions, it’s not as easy as it sounds. You will be surprised to know that humanity produces about 2.5 quintillion bytes of data every day. And it isn’t easy to analyze, manipulate, and extrapolate essential business information from such a massive pool of data. New technological developments make it easier to extract relevant data and build actionable insights in less time, but still, there is a long way to go.
Let’s study 4 benefits of data-driven decision-making:
You will make more concrete decisions
Data allows for making concrete decisions. Instead of using gut instincts and whataboutery that often lead to wrong choices, data will enable you to look at virtually all business challenges through the eyes of logic and rationale. From deciding to invest in Enterprise Resource Planning (ERP) software and building marketing communication to launching a new product and introducing a new brand in the market.
Moreover, data lets you evaluate your current condition and compare it with the industry benchmark. This helps to finetune your operations and adopt a course-correction strategy if required.
However, you should know that data-driven decision-making can also furnish improper results at times. It can happen due to the following reasons:
- Use of unsuitable data collection techniques.
- Use of inappropriate data analysis methods.
- Inappropriately defined or undefined business VMV (Vision, Mission, and Values)
- Untrained data analysts, data scientists, and data engineers.
If all or any of the points mentioned above are valid, then you will get unsatisfactory results. Data analysis techniques can help you find patterns and decipher unsolved puzzles, but your data-based business decisions will be inaccurate and defective unless your business goals are crystal clear.
You will become more efficient and proactive
Data-driven decision-making allows you to monitor new developments happening in the industry. It also shows what your competitors are doing and alerts you in advance. For example, if your competitor is hiring more employees or downsizing the team, data will help you decipher the possible reasons behind the move. Or if the government formulates a new policy, data will enable you to understand both the short term and long term impact. You can identify hidden business opportunities and detect threats, which are otherwise impossible to catch.
The world has become a small village where everyone — people, businesses, and countries — are well connected. Most companies have multiple branches spread over various countries. For instance, a slight change in government policies in the United States will profoundly impact India and vice versa. With data in hand, companies can forecast the changes better and become ready to deal with them. Moreover, they can monitor the continuously evolving customer behavior and pace themselves accordingly.
You will provide excellent customer support service
Nobody can deny the importance of excellent customer service. It helps a company to keep the clients intact and not lose them to other competitors. Moreover, research proves that acquiring new customers is approximately five times more expensive than retaining existing ones. Thus, it’s compulsory to create a proactive support service system, understand customers’ needs, and provide solutions with a human touch.
This is where data comes in handy as it provides information with regards to the following essential parameters:
- Geographic data
- Demographic data
- Behavioral data
- Psychographic data
It’s easier to build blueprints, marketing tactics, and customer relationship strategies when accessing rich data.
AI chatbots are a recent invention that is being widely used across industries. They interact with customers 24/7 and collect information on the go. Customers put down their queries and receive an instant solution. The chatbots also create and maintain a repository of Frequently Asked Questions (FAQs) that customers can view at any time. Furthermore, if it fails to provide solutions, it finds an idol support service agent in the call center and directs the customer to them.
- You can save a lot of unnecessary expenses
Every business seeks varied benefits of using data. Some want to understand their target segment well. Others are searching for ways to provide top-notch support services to build customer loyalty. There are yet others that want to decrease their expenses, thereby increasing their profits.
According to a NewVantage Partners survey, about 49% of organizations realized a decrease in expenses. This statistic is impressive and proves the worth of data-driven decision-making. Thus data allows businesses to realize the famous proverb “Money saved is money earned”.
Furthermore, data provides up-to-date information that helps to make informed decisions correctly and rapidly.
With more people using the Internet and the explosion of social media platforms like Facebook, Twitter, and WhatsApp, it has become easier than ever to collect raw data. The recent developments in technology, such as AI chatbots, have also made gathering data more comfortable and expeditious. Companies across industries are realizing the importance of data-driven decision-making and are implementing it widely. Although there are various benefits that companies can get by investing in data gathering and manipulation techniques, it’s not an all-or-nothing approach. Businesses should benchmark their performance, document everything, see what their competitors are doing, and adapt accordingly.
Nishant likes to read and write on technologies that form the bedrock of the modern-day and age like Web Apps, machine learning, data science, AI, and robotics. His expertise in content marketing has helped grow countless business opportunities. Nishant works for Sage Software Solutions Pvt. Ltd., a leading provider of CRM and ERP systems to small and mid-sized businesses in India.