As human beings, we often make split-second decisions based on feeling and intuition, without taking the outcome or consequence into account.
We can’t always help it, we are emotional and empathetic creatures after all!
When it comes to making business decisions, however, it is crucial to take all external factors into account before taking any decisive action.
Through the process of data-driven decision making (DDDM) you can ensure that your business needs and objectives are guided by cold, hard evidence.
Continue reading to find out what data-driven decision making means, how it can benefit you and your business, and see some case studies on how it has brought success to brands across the globe.
What is Data-Driven Decision Making (DDDM)?
Technically speaking, data-driven decision making is defined as using facts, metrics, and data to guide strategic business decisions that align with goals, objectives, and initiatives.
In other words, data-driven decision making is a process that involves analyzing collected data, and drawing insights, to benefit a business or organization.
At its core, data-driven decision making allows for a better understanding of business needs by leveraging real, verified data, instead of just making assumptions.
You can either take a shot in the dark, or you can work towards business goals by leveraging analyzed data; which one sounds better to you?
Two Components of DDDM
There are at least two key components to successful data-driven decision making.
1. Data is accurate and relevant
Firstly, you have to ensure that your data is not only accurate but also relevant to what you are looking to achieve with your goals.
Making decisions based on inaccurate data can have huge implications on your business outcomes, and analyzing data that isn’t relevant to your goals just adds to the jungle of inefficiencies that you and your organization could be facing.
2. Data encourages others to think critically
And secondly, your organization needs to ensure that there is a ‘data culture’ that encourages employees to think critically.
In today's world, it is simply not enough to just have access to accurate, relevant data.
Having a culture that pushes people to be curious about the data and think critically about how to use and succeed with the data is the other piece of the data-driven decision-making puzzle.
The Benefits of Data-Driven Decision Making
Making decisions based on verified data helps everyone in your organization, from human resources to sales, and from marketing to leadership.
Here are three benefits our market research company finds when making critical business decisions with data-driven insights.
1. Making confident decisions
One of the greatest advantages to come with data-driven decision making is the ability to make decisions more confidently than ever before.
Whether you’re deciding to move into a new market, launch a new product, or discontinue an old one, the impact of your decision will be much clearer if you have verified data at your disposal.
2. Save money and increase ROI
Secondly, there’s a good chance you can save on costs if you rely on data from the get-go.
Instead of taking an approach where you guess and see what happens, with data-driven decision making you’re already up to date with all of the mainstream trends.
You can operate more efficiently and make decisions that are in line with what you know consumers need, not what you think they need.
For instance, ad concept testing can provide feedback on the messaging, design, layout, and other key components of your advertising campaigns before they launch.
Doing so assures your target audience will react and resonate with your marketing messaging as you intended.
3. Become a proactive decision-maker
Last but certainly not least, data-driven decision making turns you and your company into proactive decision-makers.
Too often, we find ourselves reacting to events in our lives that could have easily been avoided if only we had been willing to identify them beforehand.
By taking all pieces of information into account when coming to a decision, you’re being proactive and taking all necessary steps to ensure that you won’t run into any roadblocks in the future.
Being prepared with an arsenal of data can save you a lot of time in the long run.
Real-World Success Stories with Data-Driven Decision Making
Example #1: Lufthansa
With over 500 subsidiary companies, the Lufthansa Group is the second-largest airline company in Europe in terms of passengers carried.
It brings in billions in revenue, but at one point, there was no uniformity in terms of data analytics across the many subsidiaries of this massive company.
However, after deciding to use one analytics platform company-wide, efficiency skyrocketed 30% across the company.
Decision-makers across the company’s subsidiaries were able to make better-informed decisions after careful data collection and analysis, which allowed business objectives to be streamlined and more efficient.
By creating a data culture, Lufthansa empowered its employees to make better, more informed decisions.
Example #2: Walmart
During the summer of 2004, Hurricane Frances was barreling towards the Florida peninsula.
To understand what their customers needed when preparing for the storm, Walmart used data from stores in locations that had experienced similar environmental disasters in the past to analyze any areas where purchasing may have seen spikes compared to normal times.
Pop-Tarts and beer were two unique items that saw dramatic increases in demand during times of storm preparation.
As a result, Walmart was able to send an increased amount of these items to stores in the path of the hurricane.
By using verified data, Walmart was able to increase profit while aiding those in need, instead of guessing.
Drive Research is a national market research company located in Upstate New York. Our team conducts both qualitative and quantitative market research services to provide organizations with the insights they need to make data-driven decisions.
Interested in learning more about our market research services? Contact us today!
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Devan's love for learning serves him well as a market research professional. With two years of both quantitative and qualitative research in the healthcare space under his belt, he knows what it takes to answer some of the toughest market research questions.
Learn more about Devan, here.