The Importance of Data-Driven Decision-Making in Modern Business

Everyone seems to be talking about data — and for good reason. Advancements in artificial intelligence (AI) along with numerous software platforms and tools have made obtaining and analyzing data easier. Even so, not all businesses are acting on the data they are actively collecting. This is a missed opportunity for finding and targeting consumers. The information collected can also help you create quality products and services and set your business up for future success.

Data-driven decision-making leads to more informed decisions that are backed up by facts as opposed to gut instincts. Here are three areas in which using data to make decisions may prove effective for your business.

1. Optimize Operations
   You want your business to be a well-oiled machine. When a company is functioning as intended, everything falls into place. Orders are fulfilled promptly and customers’ needs are met. Of course, while efficiency is the typical goal it isn’t always the reality. Many teams are bogged down with systems and tasks that take too much time. Using the right data, you can pinpoint these internal hurdles, allowing you to clean up processes and optimize operations.

   One example could be found within the HR department. If your company is broadening its hiring efforts to international employees, this can create an entirely new workload for recruiters. Rather than managing U.S. laws and regulations, the team is now deciphering new rules for other countries and cities. This may eat up a significant portion of their valuable time, causing frustration and confusion throughout your HR team. If your data shows an increase in international employees, this might be a challenge you need to address.

   One solution for this situation is to work with a PEO, or professional employer organization. This organization partners with small businesses to assist in the hiring and onboarding of new employees. It can handle everything from payroll to benefits packages to other employer-related administrative tasks. Since a PEO is already skilled in international hiring, your HR team will be free to concentrate on other tasks. By looking at the data, you’ll also be able to streamline operations and allocate resources more effectively.

2. Customer Insights
   You can guess all you want about what your customers are looking for. But unless you look at the data, guesses are just mere assumptions. Thanks to developments in technology, obtaining a vast amount of information from your customers and intended audiences is quite simple. From basic demographics like age and location to content consumption habits and purchase history, the possibilities are nearly endless.

   Instead of getting overwhelmed by this data, you should use it to your advantage! These insights can shape future product innovation, enhance customer experiences, and lead to more satisfied buyers. When analyzing customer data, look for trends and patterns. If you notice that cart abandonment is a common occurrence, for example, look at your lead process. Is there a way for you to tighten the funnel so the checkout process is easier?

   Web analytic platforms such as Google Analytics are a good place to start. These platforms can reveal shopping behaviors including how many visitors are completing actions on your site. An action might be anything from a customer purchase to a newsletter sign-up or completing a request form. In addition, you will also want to look at on-site and third-party review platforms to discover further insights. Reviews can affirm something you have already suspected — such as a long shipping process — or disclose customers’ wishes and needs.

3. Innovation
   Some of the top companies today have remained successful for decades because they were able to innovate. Netflix, which used to be an at-home subscription model for renting DVDs, is now one of the top-used streaming services. Amazon started as an online bookstore and is now the largest online retailer in the world. If Netflix or Amazon hadn’t taken steps to innovate their products and services, neither would be as successful as they are today.

   Data can assist in the process of innovation in countless ways. You might use data to expedite product development, giving your audiences exactly what they’re looking for. With products that have already launched, data may show what functionalities need to be adjusted to best serve the customer. Improving current products shows your customers that you’re not only listening but making an effort to respond with thoughtful solutions. This can generate more return customers and overall better customer loyalty and retention.

   Another way data can help businesses innovate is by unlocking new marketing pathways. If your target audience is college-aged students, perhaps marketing to their parents would also be valuable. If you’re looking to expand your customer base, maybe a collaboration with a complementary brand could help attract new audiences. Regardless of how you’re innovating, using data to make your decisions can propel your growth and market share.

Conclusion

It’s one thing to collect a lot of data and another thing to act upon it. Data is vital for modern businesses, allowing brands to make better, more informed decisions in real-time. Whether you’re contemplating your next product launch or how to improve your marketing strategy, data can give you the answers.

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