We talk about data every time. We hear about its importance every second minute. We constantly hear of the need to rely on data and it’s growing importance.
But what does it mean to be data-driven?
In a nutshell, being data-driven means relying on data and smart analytics to make important business decisions.
The first reason why your company should be data-driven is that it helps you set realistic business goals.
When you make business decisions based on data, you make use of the combined result of measurable goals, pattern analysis, and insight assessments to develop strategies that will work for your business.
Thus, relying on data to make business decisions helps you set realistic targets and business goals that are actually attainable without burning you or your employees out.
Whether you want to set a marketing budget for your next campaign or identify the right social media channel for your target audience; data says it all.
When you make business decisions based on facts, metrics, or figures; you are actively relying on data-driven insights to make decisions. This means that you are making use of actual proven facts to make logical decisions.
Moreover, by eliminating the need to resort to your gut feeling to arrive at a particular business decision, it helps you make rational and unbiased decisions.
So the second reason why your company should be data-driven is that data helps you make informed and unbiased business decisions.
Data-driven organizations are 23 times more likely to acquire customers, 6 times more likely to retain customers, and 19 times more likely to be profitable vis-à-vis their competition. In other words, it makes companies more profitable.
By leveraging industry insights and collating market research, data helps you pinpoint what makes your competitors profitable. Knowing what makes your companies profitable in turn helps you identify the gaps in your business model, which helps you work towards improving it.
Without knowing the flaws in your business approach, you can never come to a point where you can fix it. And without fixing the shortcomings in your business approach, be it a marketing tactic or a sales pitch, you cannot turn your company profitable.
To conclude, the third reason why your company should be data-driven is that it makes you more profitable by helping your beat or meet market competition.
In a data-driven company, business leaders are consistently informed. They know if their customers are satisfied with the product or not and if the sales are going up or dwindling down. In other words, important stakeholders of a company are informed of the feasibility of the product they are building and the services they are offering.
Knowing the feasibility of a product or service helps a company strategize their way to success as they know what works and doesn’t work.
Backed by data, everyone in the company, especially those working on the product or service are empowered to innovate and rework on new ideas. Based on data results, they can either build a new product or modify existing products and services to effectively cater to their target audience. In the long run, using data helps companies ideate and launch a product/service that works.
One of the biggest merits of being a data-driven company is using proven metrics. It helps you implement efficient management practices as it enables you to accurately track the performance of each employee.
Extracting insights from performance data has far-reaching advantages.
For example, it helps a company track and evaluates the individual performance and productivity of each employee. When tracking this data over time, a company can successfully pinpoint if an employee is working to their full potential or not.
Thus, it helps a company in formulating workable policies that could be implemented at an organizational level and at a case-by-case level which enhances the scope for improvement.
In other words, it helps advance the productivity of the company at the micro and macro level.
When people reach optimal levels of their productivity, they unanimously help an overall profitable business model.
The power of data is a force that cannot be undermined. Its consequences are far-reaching and its use has endless advantages for any company. This is why most companies should shift their approach to facts and figures that are backed by data.
I have cited 5 unique reasons in this article to elucidate why your company should be data-driven.
In case you missed it, here’s a short summary of this article: