Have you ever noticed how when it’s time to buy a car, people go to the dealership well-prepared? They know if they want a sports car or a van, the make and model they prefer, the mileage they want, probably the color and definitely the price range. But no matter what, when they slide into the drivers’ seat, they’ll often just feel it: “This is it. This is the one.”
As much as we say we value data-driven decisions, we are lousy at following through with them. Emotions mar calculations, our gut says one thing while the numbers say another, and just like that we’re driving home in a convertible.
It’s the same with businesses, because businesses are run by humans. A recent survey revealed the surprising extent to which we rely on gut decisions, even when the numbers merit a very different course of action. According to the survey, 58% of respondents said that regular business decisions were based on gut feel more than half the time. Of those, 17% said that 75-100% of all their business decisions were based on gut feel or experience.
Why are these numbers so high? The reasons vary. Most often, businesses simply don’t have the necessary information to make good data-driven decisions—or the quality of the data they do have is not good enough, isn’t presented in a way useful manner, or is not available in a timely manner. Sometimes, businesses can’t even find the necessary information they need to make decisions.
This is the result of not having good systems in place to capture and make sense of relevant data. That’s why we’ve integrated Microsoft BI into our Managely software, giving you a complete overview of where you stand, where you’re going, and what you can achieve—all based on a robust data set.
This helps you make smarter decisions for your company, which allows you to move forward with confidence.
How Can You Make Data-Driven Decisions in Your Business?
The same survey that revealed how many business decisions are based on gut feel also uncovered something else: the best-in-class organizations deployed data-driven decision-making at least 60% of the time, whereas those who lagged behind did so 30% of the time.
Data-driven decision making is a powerful business advantage. But what does that actually look like in practice? It’s really about using historical information to identify trends and inform future decisions. Data-driven decision making allows you to focus on what has worked in the past, rather than what you think or hope will work in the future.
Here are the components of a solid, data-driven decision-making process:
#1. Identify where data will help business decisions
Data helps you make better decisions across a variety of functions and departments.
- It helps you make financial decisions, like cost-effective ways to promote new services or reduce waste.
- It helps you plan for growth by identifying opportunities to boost customer loyalty or deploy products and services with the most potential.
- It helps you choose the best advertising channels or focus on sales actions that consistently generate good leads.
#2. Prioritize your business goals
Which business goals do you want to focus on first? While data can be used across many business functions, it’s best to start with those decisions that have the potential for the biggest impact. Whether your goal is to generate more sales leads in a particular region or convince a particular group of users to upgrade to a premium product, it’s best to get specific.
#3. Focus on relevant data to achieve your goals
Sometimes too much data can obscure decisions, and in our digital world we tend to accumulate a lot more data than we can or even should use. If we focused on it all, we would waste precious time analyzing irrelevant data that didn’t have a direct impact on our most important business goals.
This is why it’s important to laser-focus on the key data for your top business goals, and to identify where that data comes from: Is it from your web analytics? Your CRM software? Customer comments and feedback? Or business intelligence software like Managely?
#4. Use historical data to make better future decisions
Predictive and prescriptive data analytics (learn more about them here) can help you use past data to understand what might happen next, and then make better future decisions.
For example, you might compare this year’s sales of a particular product or service to past years’ numbers in order to identify the seasons or events that correlate with higher sales. You might then use that information to uncover strategic opportunities for action. For instance, noticing higher sales figures during particular times of year, you might decide to invest in targeted marketing campaigns to would-be customers during that time.
#5. Get specific about your data-driven strategy
Once you have a business goal set and have analyzed the relevant data, it’s time to get clear on your strategy. Use the data available to define what should happen next, who should do it, why it should be done, and what kind of results you expect to get.
Instead of saying, “We will increase our marketing in September, when sales are highest,” challenge yourself to be extremely specific: “Our team, led by this particular person, will focus on these specific marketing channels for 30 days in September. We usually see an X% increase in sales during this time, but by investing X% more in our marketing and focusing on X customer segments, we hope to achieve an X% higher boost in sales.”
#6. Learn from your successes (and failures)
Articulating your goals and strategy clearly will allow you to better evaluate your performance later. What worked and what didn’t? Even unexpected results can be a valuable data point! This will help you make higher-quality decisions in the future.
#7. Make sure the tools you have are working for you
If you’re ready to get an overview of all of your most relevant data, all in one place, it may be a good time to try Bold Group’s Managely software, which incorporates Microsoft Power BI to help you make the best of the data you have and make better decisions in the future. Not sure if Managely is right for you? Schedule a free demo today!