Making tactical decisions has never been more crucial for companies seeking to grow. However, intuitive and experience-based decisions can suffocate possibilities and lead to uncertainty. It is in this regard that the idea of Data-Driven Decision Making has come to represent a practical and accessible solution for businesses of all sizes.
But what does it mean to be a data-driven company? This definition is applied as real information is accrued and evaluated to support safe and efficient decision-making.
In addition to streamlining processes and the possibility of predicting market trends, reducing waste from poor transactions execution decisions are made the right way. Read on for understanding the concept of data-driven decision making , how it works and how to put it into business routine. Take a look:
What is data-driven decision making?
Making data-driven decisions simply translates to using real information as a basis for the definition of new actions and strategies within a company. Such data can also be gathered from sources such as the behavior of customers, the results from running marketing campaigns, previously collected feedback, and even past sales.
The central goal of this strategy is to reduce the margin for error and devise new tactics for successful decisions. The crucial difference between this strategy and “traditional” decision-making is the full confidence in the numbers that have been collected and not just in the decision of the person in charge of the operation.
For instance, suppose you have an online store and you want to pick a particular product through which to enhance your advertising and consequently boost profits on that product during a particular seasonal period, like Christmas. Of course, the best decision would be to invest in the product that sells the most, but this is when data analysis comes in helpful.
Analyzing all the data can show exactly which product is most sought after by the public and discover which age group of the population is most interested in it. DDDM does not require fancy tools to be put into practice; it just requires the entrepreneur to change their mindset.
What is the advantage of using data-driven decision making ?
The advantages of a data collection-driven company are countless, but some stand out more because they follow certain guidelines. Understand:
- Satisfactory decisions: when a company trusts the data collected, the entrepreneur minimizes the possible errors that could be made, thus increasing the accuracy of choices. With less waste of money and time, more results will appear;
- Efficiency in internal processes: the data collected helps identify opportunities for improving business. For example, if you notice that consumers buy more at certain times of the day than at others, you can focus your marketing on those specific times;
- Competitive advantage: in competitive businesses, using data can be a differentiator that leverages your business in relation to the competition. Knowing what and which products your customers want can put you one step ahead of the others;
- Predicting future trends: Data analysis allows you to predict future trends. Keeping a close eye on searches and searches on your e-commerce site can show you which items need to be returned to stock next month.
Three companies that benefited from data-driven decision making
Three examples of successful companies can help you see in a practical way how applying data-driven decision-making can generate satisfactory results:
1. Itau Bank
Itaú Bank has implemented a project called Data Battle to seek specific innovations by bringing together talents specialized in the use of real customer data. This initiative aims to attract professionals with talent in data analysis to be able to face imminent challenges.
Among the results that were obtained, the improvement in the company’s internal processes stands out, such as the detailed understanding of the profile of the bank’s customers and the improvement of correct communication in the credit card loyalty program.
2. Marvel
The concept of data-driven decision-making has transformed entire industries, and Marvel is no exception. Relevant studios use detailed analyses of the behavior and tastes of the general public in order to create exciting cinematic works that achieve global success.
This practice eliminates the reliance on assumption-based decisions and significantly increases the company’s ability to meet customer expectations . A notable example is the Marvel universe, which dominates more than 40% of the top 25 box office hits of the 2010s.
3. Netflix
Another interesting example of this strategy is streaming platforms for movies, soap operas, and series. By understanding consumer tastes and behavior, these companies are able to identify standardized tastes and highlight content that is relevant and meets the public’s interests.
The central basis of all these recommendations comes from data-driven decision-making, shared in a real and conscious way by streaming consumers themselves. In fact, the use of data goes beyond the care over content: notable characters also become the “face” of the company because they are memorable, like those in the series Stranger Things .
6 tips to help you become a DDDM-driven company
Adopting a data-driven approach can revolutionize the way your company makes decisions and produces results. Learn now the essential steps to implement this strategy in your company’s day-to-day operations:
1. Set business goals
Before making a decision or taking any action, it is essential to determine what results are the business’s objective. Focus on establishing clear goals that are consistent with the purpose and culture of your business.
2. Identify accessible data sources
Talk to your company’s teams to identify existing sources of key information, such as market research, customer feedback or internal systems .
3. Gather and structure important data
Collect essential information to meet your goals! Make sure the data collected is true, up-to-date, reliable and organized in an uncomplicated manner.
4. Examine and interpret the data
Use visualization tools like charts to navigate the collected data more efficiently. Then, identify valuable patterns, insights, and trends .
5. Extract strategic insights
Modify the analyzed data and transform it into practical and applicable information that truly contributes to correct and coherent decision-making.
6. Implement the actions and share the results
Put the planned strategies into practice based on the data collected in the survey and share the information with your company’s teams. This exercise allows your business to promote culture and collaboration among employees.
Implementing data-driven decision making may seem challenging at first, but it is an accessible and indispensable business strategy for small and medium-sized companies seeking remarkable and sustainable growth .
