An Introduction to Data-Driven Decision Making
𝐃𝐢𝐝 𝐲𝐨𝐮 𝐤𝐧𝐨𝐰? 𝐃𝐚𝐭𝐚-𝐝𝐫𝐢𝐯𝐞𝐧 𝐨𝐫𝐠𝐚𝐧𝐢𝐬𝐚𝐭𝐢𝐨𝐧𝐬 𝐚𝐫𝐞 𝟐𝟑 𝐭𝐢𝐦𝐞𝐬 𝐦𝐨𝐫𝐞 𝐥𝐢𝐤𝐞𝐥𝐲 𝐭𝐨 𝐚𝐜𝐪𝐮𝐢𝐫𝐞 𝐜𝐮𝐬𝐭𝐨𝐦𝐞𝐫𝐬, 𝟔 𝐭𝐢𝐦𝐞𝐬 𝐚𝐬 𝐥𝐢𝐤𝐞𝐥𝐲 𝐭𝐨 𝐫𝐞𝐭𝐚𝐢𝐧 𝐜𝐮𝐬𝐭𝐨𝐦𝐞𝐫𝐬, 𝐚𝐧𝐝 𝟏𝟗 𝐭𝐢𝐦𝐞𝐬 𝐦𝐨𝐫𝐞 𝐥𝐢𝐤𝐞𝐥𝐲 𝐭𝐨 𝐛𝐞 𝐩𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐥𝐞!
Using facts, metrics, and data to inform strategic business decisions is known as data-driven decision making. It involves making choices that are then further motivated by insights obtained via the analysis of data.
Different systems, including ones for data collection, processing, and visualisation, must be in place for data-driven decision making to take place effectively.
📌 The Benefits of Using Data in Decision Making
90% of enterprise analytics and business experts agree that data and analytics are essential to their organisation. However, many businesses are still hesitant to take the leap and start incorporating data into their decision making, as they are unsure of the benefits of adopting a data-driven approach.
Incorporating data into your decision making process comes with many benefits. Some of which include:
Increased likelihood of acquiring customers — Data-driven businesses are 23 times more likely to acquire customers.
Saved money, increased ROI, which in turn leads to increased profits — Organisations that utilise data in their decision making see an 8% increase in profits
Deeper understanding of customers’ needs and wants — In an effort to tailor promotions to effectively target consumers, 63% of marketers have boosted their spending on data-driven marketing.
Outperforming competitors — Data-driven businesses are predicted to take $1.8 trillion annually from their less-informed industry competitors.
📌 5 Steps to Follow to Make Data-Driven Decisions
1️⃣ Develop a Strategy
To get started with data-driven decision making, you should first consider the issues that exist in the industry and market that you are in, and decide what business questions you want to have answered.
Having this information will enable you to expedite the data gathering process and save money by figuring out the specific questions you need to answer. By eliminating all the data that isn't useful for the question at hand, you can concentrate your attention on what matters.
2️⃣ Understand Where Data Flows From
Data comes from many sources, and it's crucial to decide which ones would be most helpful. If you're combining data from several sources, finding common variables across each dataset may be challenging.
It might be simple to focus on the short-term objective of using the data only for your present project, but it's also a good idea to consider whether this data can also be useful for other analyses in the future. If so, you should work to come up with a plan for where to gather the data from, and how to deliver the data so that it may be used in a variety of different contexts.
3️⃣ Organise and Clean Your Data
Here, you should focus on which datasets will provide the comprehensive answers to all of your pressing concerns, and streamline your data. Targeting data to make them in line with your company goals can ensure that you're receiving the most insightful information while also lowering the expense of data storage.
Data that is inaccurate, lacking, or irrelevant are removed or corrected as part of the "data cleaning" process, which is the process of preparing raw data for analysis. Consider making a data dictionary, which is a table that lists all of your variables and describes what each one means to you in the context of your specific project. This allows you to keep track of your data in an organised manner.
4️⃣ Analyse Your Data
In this stage, you will create models to evaluate your data and provide answers to the business questions you had in earlier stages. Testing several models, such as decision trees, linear regressions, and others will assist you in identifying the model that is most appropriate for your data analysis.
It is ideal to have a clear idea of how you want your information to be presented, as this will allow you to stay organised when it comes to interpreting the data. Keeping your data organised also increases the potential for your employees to derive insights from it during data analysis.
5️⃣ Turn Insights Into Action
The value you derive from the insights you draw from the data will depend on how you present them to the rest of your organisation. It's important to make the insights accessible so that it's clearer what has to be done.
The findings from your study will eventually assist your firm in making better decisions and guide future strategy.
📌 Ready to Let Data Drive Your Decision Making?
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VKT offers strategic consulting focused on accelerating your company's growth. Expect not only solutions in Data-Driven Decision Making, but also a variety of other services ranging from Digital Marketing to Supply Chain.
With our experienced MRA & EDG Certified Consultant, VKT boasts a proven track record in achieving a high EDG application success rate that grants your business up to 70% funding for SMEs and 50% for non-SMEs. So wait no longer, and contact us for a coffee chat to discover more about how you may start your data-driven journey and leverage our expertise!