Data rules our highly-digitalized world. From the videos we watch, the content we read to the products we buy and the updates we post, all digital behaviour is recorded.
However, many companies never use this data to their advantage. In fact, nearly 60% of companies say that they base at least half of their decisions on experience or gut feel rather than being driven by information and data. Moreover, companies that do rely on data only use about half of all available information for decision-making. This is a mistake that can be seriously detrimental to your business.
Most of your business decisions should be backed by facts, figures, or metrics related to your goals and initiatives. In this article, we’re offering 6 tips that you can use to make smarter business decisions.
1. Define Your Goals
Any business-based decision starts with having your business’ objectives in mind. So, before you begin the analysis, you first need to prioritize the most important goals. Ask yourself this: What problems do you want to solve?
Set a strategy to help you follow your business’ needs and define clear KPIs. Even though there’s a number of different KPI examples you can choose from, try not to overdo it and focus on the most important ones within your industry.
2. Find Relevant Data
Once you’ve identified your objectives, you can proceed to find relevant data. The term ‘relevant’ is crucial because there’s no point in wasting time going through data that will have no influence on your decision.
Therefore, you should focus on only collecting data that is related to your goals. You can use the following sources to find relevant data:
- CRM software
- Social listening tools
- Website analytics
- Customer feedback
- Business intelligence platforms
- Excel files
If you’re using Excel as a data source, you might be experiencing some issues. Large and confusing Excel files can often bog down systems and muck up processes. In that case, consider hiring Excel consulting experts who will help you make the most out of your Excel data.
3. Analyze the Data
This might sound like a no-brainer but once you’ve collected all the data, you then need to analyze it and try to extract meaningful insights and reports that will help you to make a data-driven decision.
Analyzing data is a process, so don’t hesitate to revisit your assessments. The human brain tends to leap to conclusions. Verify your data and make sure you’re tracking the right metrics. You should also consider relying on employees to get a fresh perspective. Try to understand where you might have gone wrong and address it immediately.
Sticking to the direction you have chosen at all costs can get you stuck. Even though stepping back and rethinking your decisions may feel like a setback, sometimes it is necessary as it will yield better results than if you decide to simply wait and see what happens.
4. Foster Collaboration
Currently, top-down is the dominant style of decision-making employed by nearly 40% of businesses. For comparison, only 18% of companies make their decisions in a collaborative or democratic fashion.
Companies that encourage a collaborative decision-making approach treat data more as an asset than businesses that have different decision-making styles. They’re also more likely to use data to predict future behavior or trends, identify new business opportunities, and generate revenue.
Here are a few tips that will help you move from top-down to a more collaborative style of decision-making:
- Increase collaboration in the two key areas for improvement: planning processes and data analysis.
- Use BI tools to enhance collaboration in data-based decision-making.
- Add software-based approaches to traditional methods of collaboration, like conference calls and in-person meetings.
5. Plan a Strategy
Once you have identified the problem you want to solve and analyzed the information, it’s time to come up with a plan of action in order to put your decision into practice. In this phase, it’s crucial to clearly define what you need to do, why you will be doing it, as well as what outcome you would expect.
So, instead of setting vague goals such as “this should be done by the end of this year”, try to be more specific. For instance, you could use data you collected to determine that having a rewards program in place will help boost customer loyalty. If that’s the case, your goal should sound like this: “Tom and Ema will put a points-based rewards program in place to improve customer retention within the following three months. This will enhance customer loyalty and boost retention by 20%.”
6. Measure and Improve
So, you made a decision based on data and you have the first results. That’s great but the decision-making process doesn’t end there.
Take another look at the information you collected and used it as a basis for your decision. Then, once the results are in, try to figure out whether your decision has had a positive effect on your business. If the answer is yes, then congratulations.
If not, no big deal. Sometimes knowing what doesn’t work can be also important. This will help you figure out where you went wrong. Here is a short checklist that will help you unlock the potential of the data you have and make better business decisions in the future:
- Improve the quality of your data
- Make data easier to find
- Reduce the cost of access to data
- Increase the speed at which data is made available
- Improve the way in which data is presented
- Encourage a collaborative style of decision-making.
Data is without a doubt a valuable asset for any company. In fact, businesses that use data as a base for decision-making decrease expenses and increase profit.
So, next time you make a business decision, be sure it is based on the information you have. Now that you have all the key ingredients you can make the best data-driven decisions for your business.