Data globally is growing rapidly, from 45 zettabytes in 2019 to a projected 175 zettabytes by 2025, according to IDC. The drivers behind this growth are increased internet access, broadband access, mobile phone use and social media use, according to Our World in Data. For businesses, the most important thing is not the volume of data, but rather knowing how to use it effectively.
Organizations that are using data to drive their decisions are seeing results and thriving. According to a Forrester report, data-driven companies are growing at an average of 30% annually. Those who don’t adopt a data-driven culture risk falling behind their competition.
A data-driven culture is one that uses data and analytics to get business insights and improve. Data-driven organizations have a competitive advantage.
What Does Data-Driven Mean?
A data-driven approach to business can help companies identify new opportunities, serve customers better, grow sales, and improve operations. This approach uses evidence-based data to make decisions and plan carefully to pursue business objectives.
A data-driven decision is one that is based on evidence and research, rather than on a hunch or a feeling. This allows business leaders to make informed choices that will lead to positive outcomes, rather than decisions based purely on speculation.
Business leaders who understand the value of data are more likely to be successful in acquiring new customers and retaining them. However, in order to make data work for them, they need the help of data professionals who can show them how to collect, store, and analyze data correctly. Data professionals can also help business leaders understand how to protect their data.
What Is the Value of Data?
Data by itself is not valuable, but it becomes valuable when it is analyzed to reveal business insights. Data-driven organizations use data analytics to find value in data. Data analytics is the process of analyzing data to acquire business insights. The data can then help add business value, like solving business problems or improving processes. The value of data is that it enables business leaders to make informed decisions that can lead to enhanced business performance, streamlined operations and stronger customer relationships.
Executives believe that a data-driven culture is beneficial, especially when they understand that other companies are using data to get ahead. The results of a study done by NewVantage Partners showed that 91.6% of successful companies are increasing their investments in big data and artificial intelligence, with 75% of them saying that they are doing so because they are afraid of being disrupted by their competitors.
The following resources provide information on what it means to be data-driven.
- CIO, “What Exactly Is a Data-Driven Organization?” — A data-driven culture is one where data is viewed as valuable at the leadership level of the organization.
- Forbes, “Why a Data-Driven Culture Matters and How to Get There” — What is a data-driven organization and why does data matter so much for business?
Benefits of Data-Driven Decision-Making for Business
There are many advantages to data-driven decision making for businesses, including improved operations, increased sales, and better decision making.
Data can help businesses to identify areas for improvement, understand customer wants, and find new opportunities.
Having accurate and up-to-date information can help businesses make better decisions overall.
Better Serve Customers
Data can help organizations learn about what consumers prefer. For example, data can help customer support centers find the most cost-effective way to address customer questions and issues, reducing problem resolution times and improving customer experiences.
Identify New Business Opportunities
The data can help businesses to find new ways of making money by developing products and services that people want. For example, a company that sells women’s shoes can see from the data which styles and brands are popular, and then adjust their products and services accordingly.
Grow Sales and Improve Processes
Every business wants to grow their revenue. In a competitive global marketplace, data is key to identifying and translating opportunities into revenue growth. For example, if sales growth is slowing down, it could be a sign that the sales team’s performance is mediocre. By digging into the data, a leader can identify problems and develop sales and marketing strategies to improve performance and grow revenue.
Create a First-Mover Advantage
Data and analytics can help organizations predict future trends, identify consumer behaviors, and detect new business opportunities more quickly, creating the potential for obtaining a market advantage.
How to Create and Adopt a Data-Driven Culture
If data is not used effectively, it will not help an organization grow. Here’s what encompasses adopting a data-driven culture at an organization:
1. Clearly define your goals
Before you even begin looking at your data, you need to define what you’re trying to achieve from it. Defining what goals you want to achieve in a data-driven culture is the first step of adopting it. You need to establish what you want to learn or prove from analyzing your data. Once you have done that, you can start looking at your data and trying to achieve your goals.
Your goal could be improving customer engagement and reducing churn. To do this, you need to look at data on how customers engage with your business at different stages of the sales cycle. You also need to look at metrics such as engagement rate on your campaigns and response time to support requests.
2. Identify your performance parameters
Technology allows us to have access to an unlimited amount of data, but that doesn’t mean every metric should be used to measure performance or success.
After you have decided on your goals, identify which metrics will show your progress towards them.
If you’re trying to reduce your customer churn rate, it’s better to look at your customer engagement rate at the time of sign-up or subscription than the number of repeat visitors to your website.
If you want to improve the customer experience, you should look at the number of support queries and how many of those queries were resolved. Another key metric is your NPS (Net Promoter Score).
3. Commit to gathering changes that are needed
When you adopt a data-driven culture, everyone in your workforce will need to make some changes to the way they work. This includes everyone from the most senior members of staff to the newest members of the team.
The goal is to get all departments on board with using data as the core driver of all decisions and to make them commit to it. You need to clearly communicate your purpose for using data, goals, and performance metrics across all departments.
4. Include all stakeholders in goal-setting
The most successful companies are those whose managers and stakeholders are heavily involved in the data-driven decision-making process from the start. By being an early adopter of this approach, you can give your company a leading edge.
Every stakeholder will be more likely to listen carefully and get engaged in the action plan if the person leading starts by explaining why customer acquisition and retention is important, and giving some data to back this up.
5. Narrate your data
When creating a data-driven culture, it is important to make it look easy to apply. Simply presenting your team with numbers across different functions and processes may overwhelm your workforce. Not everyone is good at working with numbers!
Telling your data story in a way that is easy to understand is essential.
- Identify your storyline: What are you trying to explain, what are your goals, your outliers, what comparisons can you make, and what correlations support your goals?
- Be aware of your audience: Who is your audience, is the story relevant to them, how does it add value, and have they heard your story before?
- Build your narrative: What do you want your audience to know, what do you want them to do, and how can you use data to make your point?
- Leverage visuals: What data can you present with the help of visuals, such as graphs, infographics, and so on?
6. Leverage automation to save time
Wouldn’t it be nice if someone took care of all that Google Analytics data for you so you could just focus on your goals?
This is where automation comes in.
The right automation software can help you automate data collection and report generation on a daily, weekly, monthly, or yearly basis. This would give each team access to timely reports so they can track their progress and create a plan of action that is tailored to their performance.
7. Enable data accessibility
To get people to use data to inform their decision-making, you need to make data accessible.
Most organizations only allow managers to see all the data, which makes it hard to promote a data-driven culture. If data was more accessible to everyone, it would be easier for people to plan their day-to-day tasks.
3 Best Examples of a data-driven culture
There are many different ways that organizations around the world use data to achieve various goals. A data-driven culture can be seen in a variety of different ways. Some examples include using data to make decisions, improve processes, and track results.
1. Google: Using analytics to create a better workplace
The backbone of any organization is its workforce. It’s essential to stay on top of employee productivity and morale, especially when everyone is working remotely.
An example of an organization that uses data and analytics to understand its workforce better is Google. Google uses team reviews, performance reports, and employee surveys to get insights into what may be blocking the productivity of their employees, what can help them do a better job, and what can keep their morale up.
Google decided to extend their maternity leave policy after looking at data that showed it would improve employee welfare and reduce the number of new mothers leaving the company.
2. DBS Bank: Using data to serve customers better
DBS had long been a voice for digital banking in Asia, but it lacked the technology infrastructure to support it. The company’s IT structure was so siloed that it was difficult to make changes quickly. The DBS Bank is a great example of how beneficial it can be to have a data-driven culture. The bank has invested in training its employees in big data and data analytics in order to embrace a data-driven culture.
Using artificial intelligence (AI) and data analytics has allowed the bank to survive in a competitive fintech market.They use the technology and the insights to provide customers with hyper-personalized recommendations to make better financial decisions. This, in turn, is helping the bank serve their customers better and improves customer loyalty.
3. Netflix: Using data to develop new products and services
Even industry leaders aren’t safe from market trends and preferences changing often. They see a response that fluctuates whenever they launch something new.
However, Netflix has discovered how to use data and analytics as well as social listening to comprehend user inclinations. This has allowed them to release successful series in various genres and present new languages and formats in the past few years. Consequently, their user engagement and retention has enhanced.
Driving growth through retention with a data-driven culture
This means that businesses need to focus on both expanding their customer base and retaining their current customers if they want to grow sustainably.
An organization with a data-driven culture is able to reduce turnover and boost employee retention by understanding their needs better. This leads to increased employee morale, engagement, and productivity levels, which positively impacts the organization’s ability to achieve its goals.
When teams from different departments work together more closely and use data to guide their decisions, they will have a better understanding of their target audience. This will also help them retain customers more effectively.
Establishing a community of customers who stick around will enable organizations to make twice as much money and revenue, which will help them grow sustainably.
If you want your company to grow, you need to establish a data-driven culture. This will help you acquire customers in high-competition markets.
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