A Guide to Data-Driven Decision-Making
From the online markets you order to the petrol stations you fill your car’s tank, data is everywhere. Thus, the amount of information collected is great enough to be taken. Organizations have a big chance to benefit from this information to understand their customers’ behaviors, their inventory status, and even how to increase profit. In this blog post, we deeply examine data-driven decision-making to give you a wider horizon regarding the topic. Reading further you will understand data-based decision-making definition, advantages, examples, and more. Let’s begin!
What Is Data-Driven Decision-Making?
Though millions of people rely on their gut feelings while making personal decisions, this can be a little risky regarding corporate plans and objectives. Many times, famous business people and philosophers overrate intuition as a sacred gift and a great tool for encouragement. Along with being partially correct, intuition should be supported with facts. Facts backing corporate aim must be included in important decision-making, especially when things seem uncertain.
What is data-driven decision-making? The answer to this question is clear enough: the process of using the information to prove actions before taking them. For example, you run an online open market platform and collect data from your customers, such as their e-mail addresses and mobile phone numbers, to make campaign communication. Without this information, you don’t have a chance to reach them again. This datum also makes you send order status information to your customer, which is vital for both parties.
That’s why setting a data-driven decision-making culture in the company is key across all job levels in many aspects. A data-driven approach can be quite useful to get powerful insights for effective decision-making. Now that we understand the definition of data-driven decision-making, it is time to move on to its benefits.
Benefits of Data-Driven Decision-Making
Here are the most common benefits of data-driven decision-making:
- Data-driven decision-making tends to decrease a firm’s risks.
- Thanks to the required information, you become more confident in voicing your decisions. Unlike when your intuition is included in decision-making, your thoughts are backed with concrete facts instead of vague gut feelings.
- Data tell you facts about many things about your business, your customers, your partners, and even your competitors. That’s why when you see the information, you want to react to it. At this point, you become more and more proactive.
- You will be a better communicator. Whether it is finance, sales, strategy, or marketing, if you work with strong data, your executives’ communication will improve.
- Decision-making based on data gives you great insight opening to new opportunities. Once you see the factual information before your eyes, you have the key to unlock new doors through the company’s core activities.
- As the data will be consistent and continual, the company growth will also be evitable.
Examples of Data-Driven Decision-Making
If you want to hear some real success stories of worldwide giants that make data-driven decisions, keep reading the rest of our article. Below you will see what Netflix, Uber, and Coca-Cola do by data-based decision-making.
The Uber app we use almost every day perfectly uses the data analytics. Though it is a big challenge for them to meet the huge demand every second, they manage it by analyzing data and key metrics such as the number of ride requests, fulfilled trips, and happening time and day of the rides. Without this invaluable information, Uber wouldn’t be the Uber as we know it. This analysis helps Uber get insight into many aspects to meet the increasing demand.
Coca-Cola is one of the biggest marketers worldwide, spending billions of dollars yearly on only digital ads. And it is hard to believe that they admit that sometimes they waste a vital part of their advertisement budgets because of wrong channels and strategies. Based on that fact, data and analytics is the most suitable tool to commit, and Coca-Cola does it well. The world-famous brand makes the best of image recognition technology and data to impress its available and potential customers. More personalized ad ideas are made thanks to data-driven decisions, and Coca-Cola remains one of the giants at the top of the pyramid.
At the beginning of this post, we talked about gut feelings. Say that Netflix relies only on intuition to offer you products you might be interested in. You will probably freeze or stop your membership at Netflix and start looking for another platform instead. Thankfully Netflix doesn’t do so. They know how to smartly leverage their customers’ data to understand better if a product feature is worth developing or well-received.