Why Every Major Business Decision Must Be Backed By Data
A gut feeling is something you intuitively accept and believe. The thought seems so undeniably true that it often influences your decisions automatically. If you’ve ever made a decision for your business based on a feeling rather than an objective measure, you’ve made a gut decision.
In general, gut feelings are pretty good at guiding simple everyday decisions – like what to wear. That being said, industry experts suggest that using gut feelings to guide big decisions can be extremely dangerous.
In the long run, every important decision you make – whether it’s in your personal or professional life – should be backed by data and logic, not just emotions or gut feelings.
Below, you’ll learn why every major business decision must be backed by data. This article will also provide five tried-and-true steps that you can implement in your daily work to make more data-driven decisions.
The power of data-backed decisions
According to VisualCue, a Big Data visualization tool, almost every company has valuable data at their fingertips – it’s just difficult to connect the dots in the data. For example, if your business has a website or a social media presence, it harnesses data that can help improve its operations.
One of the main ways companies use data is to learn more about their customers. Thanks to Big Data, it’s easy for companies to get better insights into what their customers want, what they will use and how they will complete future purchases.
Data can also be used to improve a company’s internal operations. Simply put, if you want to improve the way your company ships its goods, you can look to Big Data for help.
Step One – Your goals
The first step to making data-backed decisions is to identify your goals. You might be interested in using data to look for new leads. Alternatively, you might want to use data to improve your customer churn rates. No matter what you are using it for, there is sure to be an area of operation where data can help you run a more efficient business.
Take a few moments and outline three to five business objectives and build a strategy around them. Search the internet or reach out to a data visualization company that can help you understand what data you’ll need to analyze to inform your objectives.
Step Two – Data sources
After you understand what data you need, identify where it can be found. Data flows from all directions, so you’ll need to evaluate every source of data to understand which areas will bring the most benefit.
During this step, you might also consider adding in new data collection procedures. For example, if your company is trying to improve your customer experience, you might want to start using a customer relationship management tool that can help inform your insights.
Step Three – Resourcing
The third step is to decide who will work on this project. If your project relies on simple analytics that can be easily managed in Excel, you can feel confident completing the project in-house. If your data requires more in-depth analytics or you need help connecting all of your data sources, you might want to work with a third-party software as a service provider. Image Source: FinancesOnline
Step Four – Clean and test your data
This step is one of the most time-consuming in the process – it’s also one of the most important. During this step, companies must clean and test all of the data they collect.
Once all of your data is in one place, you must go through it and make sure it’s clean. In many cases, Big Data provides more information than what’s required. Someone will need to go through the data to remove extraneous details.
After the data has been cleaned, several tests must be conducted. Testing Big Data can be very challenging for organizations, especially if they aren’t privy to various testing techniques. However, there are certain basic aspects of data processing that every organization should be able to learn and conduct.
Step Five – Turn insights into action
The final step in the process is to turn your insights into action. In general, it’s best practice to transform your data into visualizations so you can have a clear picture of what actions need to be taken. Here, you might want to use a business intelligence tool that can help you turn your complex sets of data into clear, all-in-one pictures that will be easily accessible for your entire organization. The aforementioned VisualCue has quickly made a name for itself doing just that. The tools they provide offer real-time data analysis made easy through visual tiles.
It’s important to understand how and why you should use Big Data, but it’s not everything … To gain a real understanding of the results Big Data can create, it’s important to look at companies that are using data to inform their decisions.
In 2016, a digital business named Commonbound used Big Data to improve their student lending platform. They used data-derived insights to better connect students and graduates with alumni investors and accomplished professionals. With their help, students were able to save thousands of dollars on their repayments.
The Fortune 500 company Netflix used data and analytics to study international viewing habits last year. Thanks to their insights, they were able to purchase and create programming that’s more easily embraced by large audiences.
Walmart also spent time analyzing Big Data last year to forecast demand for emergency supplies. When this year’s hurricanes struck, Walmart used Big Data to inform their supply chain so it could both meet and anticipate demands. The retail corporation was able to keep products fresh and fill their shelves based on the information they collected the previous year.
Making the change
Whether you’re a small entrepreneurial venture or a large, established company, you need to use Big Data. Overall, being a data-driven organization takes more planning than being an insight-driven organization, but it’s so worth it. (No offense, Oprah.)
Developing the right infrastructure or implementing the right tool that will help you create valuable insights from your data will allow you to compete like never before.
Right now, whether you realize it or not, you’re probably collecting valuable data that can be used to improve your operations. All you need to do is to identify some objectives and get to work deriving targeted insights from your data.
Now, it’s time to hear what you think! Are you currently using data to inform your business decisions? If so, what are your results? For those not yet using data to drive insights, what’s holding you back? I’m excited to start a conversation with you in the comments section below.
Guest Author: Lucas Miller is a Freelance Copywriter and Founder of Echelon Copy. When not writing, tweeting or attempting to play pickup basketball, he’s working tirelessly to perfect what he claims is the “World’s Greatest Pompadour.” To get more tips on how to start your own six-figure freelance copywriting business, join his free newsletter.
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