The concept of intuition-driven decision-making is one that has been around since the beginning of time. Groups, clubs, organizations, and companies have operated under the principle that the people at the top have more wisdom than those below them. By relying on their own judgment and experience, leaders can make decisions that are best for everyone under their influence.
However, as technology improves, many companies are turning towards data-driven decision-making instead. Data-driven decision-making means basing important business choices on data rather than intuition or personal experience. While this concept may seem contradictory because it runs counter to what we’ve believed in for thousands of years, it has several advantages over the human instinct to guide important decisions.
The rise of technology has facilitated information collection like never before in history. By using advanced analytics solutions to gather all available relevant data and then implementing modern tools such as big data analytics, companies gain access to exponentially more information than ever before at an infinitely faster rate than any human could ever glean through experience or intuition alone. Earlier it might have taken a group of people several months to come up with a decision that a company acted on for years. Now, companies can act on information in real-time.
In this article, we will discuss the main advantages of data-driven decision-making and why every business should consider using it to guide their important choices.
What is Data-Driven Decision Making (DDDM)?
Data-driven decision-making is the process of basing business decisions on evidence and facts. This can include looking at sales statistics, research studies conducted by competitors, survey results, and other relevant information that is gathered using new technology.
Data can be used for many purposes throughout a business. It is useful to look at sales statistics and market demand and even consider customers’ opinions to make decisions. For example, data can help businesses decide on new products or services they need to offer their customers. By collecting information about what customers are looking for, businesses are able to make more accurate choices about what they need to include in their inventory.
Examples of Data-Driven decision making :
When it comes to data-driven decision-making, there are a few things that businesses should keep in mind.
- First, it is important to have accurate and up-to-date data.
- Second, the data needs to be analyzed in a way that makes sense for the business.
- And third, the decision-makers need to be comfortable with using data to make decisions.
Here is how some successful businesses leveraged data-driven decision-making to grow and be more profitable:
OpenTable using User Data To Reduce No-Shows
OpenTable, a restaurant management service, uses customer data to determine which menus are the most popular among customers. This information is used to inform other trends throughout the company.
For example, OpenTable knows that customers order appetizers more often than desserts or soups and salads. This information is used to inform decisions about what dishes the restaurant will offer its customers.
Under Armour Analytics-Driven Approach To Product Development
Under Armour, a sportswear company is constantly looking at data to inform their product development. They know that customers are looking for running shoes, so they will research what types of athletic apparel runners need most in order to create new products that will be successful.
By collecting information about what the customer base wants and needs, Under Armour can use this data to create new products that will best serve their customers. This allows Under Armour to remain competitive in the market by producing in-demand items.
Amazon Using Customer Data To Drive Retail
Amazon, an online marketplace, uses data to drive its business. They consider data such as the location of prospective customers, their buying trends and preferences, and general demographic information.
By collecting this information about who buys from them and how they buy it, Amazon can use the data to develop new strategies for growing its customer base and increasing sales.
5 Advantages of Data-driven decision making
Businesses that are able to incorporate data-driven decision-making into their operations can reap a number of benefits. Here are some of the biggest advantages of DDDM:
Make More Efficient Decisions
One of the most important benefits of data-driven decision-making is that it makes companies more efficient. By focusing on actionable insights gleaned from data analysis, employees can save time and resources by avoiding costly mistakes.
Even when mistakes are made, having an understanding of how they occur allows managers to take steps towards preventing them in the future. This process also helps companies focus their attention on the most productive areas for improvement, saving them money by cutting out unnecessary tasks.
Reduce Business Risks
Data-driven decision-making helps businesses improve their risk management systems. By analyzing the information gathered from data analytics, companies can better understand their business environment and discover which areas might be placing them at risk for problems later down the line.
With access to accurate information about how changes in the market could impact long-term strategy, managers can work to head off potential issues related to the market before they happen. This allows businesses to continue focusing on meeting customer needs while identifying and protecting themselves against any risks that could affect company operations down the line.
When properly leveraged, data analytics can allow businesses to increase revenue and expand their customer base. When companies are able to use data analytics tools to identify areas where they might grow their business, they can create strategies for how best to implement those changes.
By improving the company’s focus on market trends and offering quality products and services related to these trends, businesses can achieve an edge over competitors while also increasing revenue opportunities.
More accurate forecasts and predictions about the future
DDDM helps businesses make more informed decisions about the future, which in turn allows them to become better prepared for whatever might happen. With access to improved data about their market and customer base, companies can use this information to gain a better understanding of how changes will impact business operations.
By seeing where there might be room for improvement or growth in the future, managers can adjust their long-term strategies in order to prepare for whatever might come. For example, sales trends, and changing customer needs can all affect long-term estimates for growth, making DDDM tools an essential part of business planning.
Better customer service (ex. surveys, targeted promotions)
DDDM can also help companies provide better customer service. By using data from past interactions, businesses can work to improve customer satisfaction by identifying areas for improvement and implementing processes that might address common complaints.
In addition, DDDM tools allow companies to get a more detailed picture of their customers’ needs and wants, allowing employees to better understand how they can help customers.
The Future of Decision Making
As technology becomes more advanced, businesses will be able to collect more accurate data from a greater number of sources as well as access it faster than ever before.
In some cases, companies may even have access to real-time information that is constantly being updated as new events occur. This means that making data-driven decisions will become easier and more reflexive in the future, allowing organizations to operate more efficiently than they ever have before.
How can MajestEye Help?
At MajestEye, we believe in the value of data. We provide data analytics that allows businesses to gain a better understanding of their market and how they can become more competitive. By using robust technology to solve your business problems, we help you make informed decisions in order to grow your company.