Why is data necessary? Why should organizations seek to be data-driven? What are the benefits of a data-driven culture? How can organizations become data-driven? These and many more are the related questions I have heard business owners, executives, and employees ask in conferences, workshops, and knowledge-sharing events.
The term “data-driven” means that an entity is oriented to make tactical and strategic decisions based on data rather than instinct, personal opinions, general observations, or pure hope. Put in another way, data-driven also means that an entity has the data it needs to make decisions that lead to outstanding outcomes.
Becoming data-driven goes beyond installing the suitable applications and tools, hiring a dedicated team of data professionals, committing to a significant data infrastructure investment, or running a one-off data literacy program. It is more about making data and analytics a fundamental part of your business strategy, organizational culture, processes, and throughout all echelons.
A data-driven organization is one that not only recognizes the importance of collecting raw data but also understands that they shouldn’t make business decisions using raw data alone. Instead, they collect, analyze and derive insights from data to address business problems, identify new growth opportunities, and drive profitability.
In essence, data-driven organizations use data for several use cases, such as analyzing customer survey responses and demographics, observing customer behavior, purchase patterns, and more. Such enterprises have built a data culture that permeates the entire organization, not just within some functional regions or at the executive level alone.
Based on experience as a data scientist, I believe that every organization generates data and can become data-driven, regardless of their business size, domain, and service offering (as long as they adopt the right strategies and do things properly). If you are not convinced that your organization is generating data, a good place to start would be to examine and think about every facet of your business, the kind of customers you have, what they say about you on different social media platforms, e.t.c. I bet that you will discover possible data sources and valuable information you can start to extract, aggregate, and analyze to drive your business forward.
Why is Data Important For Every Business
Data is one of the most valuable assets for every organization. It is a gold mine and a very strategic, invaluable resource that has the potential to transform the world, enhance how we live, grow a business, and enable cheaper, faster, and better business processes.
Unlike traditional companies, data-driven enterprises don’t scale linearly, and I believe that one of the reasons giant companies like Google and Amazon always record exponential growth is because their business models are fundamentally built around data.
According to this post from PwC, data-driven organizations can outperform their competitors by 6% in profitability and 5% in productivity.
This study also reveals that data-driven organizations are 162% more likely to surpass revenue goals and 58% more likely to beat their revenue goals than non-data-driven counterparts.
81% of organizations also agree that data should be at the heart of all business decision-making.
I could provide more stats showing the importance of data and why organizations need to be data-driven.
Before you get carried away by the mind-blowing numbers, one key thing you need to always keep in mind is that data “just like untapped gold” in its raw form may not be very informative or immediately helpful. To get the very best out of your data, you need to collect the appropriate data and transform it into a reusable form. That said, the following are some important reasons every organization should start using their business data effectively:
1. Understand Customer Behavior and Improve Brand Customer Experience:- We live in a world where products or services are countless, and your current/potential customers have several options about where to place their money. In addition, the competition between product suppliers has never been less tense. One very strategic way to improve brand awareness and become relevant in your business is to understand what your customers say about you and their sentiments about your brand. But without data, it becomes pretty challenging even to know who your customers are, whether they like your products and services, or if your marketing strategies/campaigns are effective. In contrast, you can easily achieve all of these by rolling out customer surveys, reading social media comments/online reviews about your brand e.t.c
As soon as you gather data from your customers, you can analyze the data points to understand their pain points, what they think about your business, what products or services they’d like you to offer, what your organization needs to improve on, and more importantly, their willingness to choose you over a competitor. Eventually, the insights generated from customer feedback would be beneficial for customer care, cross-selling, and up-selling services, and/or product innovation. In most cases, I believe that business profits are closely linked to data-driven, customer-centric, and strategic business processes and decisions.
2. Make Better, Informed Business Decisions:- Decision-making is one essential aspect of every business that often involves several business executives, shareholders, and millions of dollars that business owners can’t afford to lose. With the right data at your disposal, your organization won’t have to make significant business decisions based on hunches, best-guesses, wrong assumptions, anecdotal judgments, or unsure consumptions even in times of crises or stress. However, your business data will provide the facts, trends, statistical numbers, and insights you need to make informed, calculated decisions or understand performance.
3. Measure Business Performance and Understand Employee Engagement:- In addition to helping you understand customer behavior, improve brand awareness, and make better business decisions, analyzing business data also enables you to measure business performance, build more reliable, long-term hypotheses, and a very vibrant workforce. You can drill into business data to understand whether you are meeting your most important business indicators or not.
Undoubtedly, data is central to any business. It’s importance through every facet of business increases daily with the massive growth in Big Data and the possibilities good data offers. I believe that one of the best ways for organizations to position themselves, outperform competitions, drive innovation programs, and take market leadership over the next decade would be to use data innovatively and creatively. Of course, to achieve this, organizations also need to foster a culture that supports data-driven decisions.
Reach out to Emmviron today to set up a Data driven model for your Organization so as to make better decision making that can help to scale up your business operation.