Data analytics provides information that is crucial to the success of any business. Companies, big or small thrive to collect their consumer data. It is because this data is the base of all their business processes. All information regarding the demand for the product, performance, and feedback can be gathered from the data provided by the customers. This data is then studied for patterns and business strategies are formulated. Therefore, companies should keep in view their technological demands while hiring individuals and make provisions accordingly in their talent acquisition initiatives, given the demand to have a more focused and skilled workforce.
Data-Driven Decision Making
Data-driven decision-making is the process of making an informed decision regarding business processes and making strategies. It is a way of backing up your decisions with the available data.
The amounts of data and quality of data are of optimal importance here. There should be a considerable amount of data showing the same patterns before it can be considered and used as a base to make a decision, whereas the data collected should be accurate and refined.
Data collection is done in several ways, for example:
Surveys – To find out customer preferences regarding a product or service.
Testing – to see how consumers react to a product and to remove any errors before the real launch.
Test Market – soft launch a product to observe how it will perform in the real market
Demographics – shifting demographics to analyze the market for more opportunities
Advantages of Data-Driven Decision Making
- Confident Decision Making
Once you start collecting data and analyzing it, all decisions you make are based on the findings of the data. There is no room for guesswork or gut instinct. This gives the managers more confidence in decision-making as they have some proof of pattern and data to base their decisions. Their decisions conform with the data that allows them to make decisions freely without any fear.
These decisions could be regarding any business-related process, discontinuation of an old product, the launch of a new product, upgradation, and improving policies to anything.
A decision based on data may not always be correct and may be subject to errors and inconsistency. Even if the data shows a certain pattern, if the process of collecting data is flawed and the interpretation is inaccurate, all decisions based on this data will be wrong. Therefore, careful monitoring of all business processes is very essential.
- Proactive Approach
While data provides insight into product performance and assists in decision-making. A careful study of data may also reveal certain opportunities and threats. For example, if the data shows a problem area repeatedly, companies should take a proactive approach to eliminate it before the problem becomes too big. Similarly, if the data shows client inclination towards a specific type of product, the companies should realize this opportunity and start their research on the development of the product before their competitors realize the opportunity for it.
- Cost Reduction
Many companies have used data analytics to decrease their expenses. About 49% of the companies that undertook the initiative to decrease expenses have been successful, while the remaining ones have shown mixed results.
Ways to Become Data Driven
- Finding Patterns
Data analysts look for patterns in large amounts of data, they try to find correlations between different data points. These patterns then formulate the basis on which conclusions are based. Hence, a close study of data and accurate interpretation and correlations of patterns are essential to good quality data.
Whenever a decision has to be made, business or personal in nature, it is always best to base it on some past experience or available data rather than relying on your gut instinct. This helps make a conscious and well-informed decision.
If there is a lack of data or no data available it is better to collect data and base the decision on the findings. The idea is to instill analysis naturally in the decision-making process. This increases confidence and reduces fear in decision-making.
- Graphical Data
Large amounts of data are merely numbers that can be mind-boggling, sorting this data and finding correlations through charts, graphs, and tables help make sense of that data and understand it.
Data-driven provides a strong basis for future decisions and the progress of a company. But special attention should be made to the data collection methods to make them as accurate and error-free as possible. Companies should hire competent people skilled in data collection and any insubordinate employee who is a cause of disturbance should be terminated to keep the business processes smooth and on track.