There's a lot of talks these days about data-driven businesses. What does that mean, and why is it so important? Simply put, a data-driven business uses data to make decisions. That might sound obvious, but it's a radical change from the way most businesses operate today.
Traditionally, business decisions are made as a gut-level reaction to what's going on. It's hard to blame managers for this approach – if businesses have not been using data to drive their decision-making, they likely never had enough of it before to use it. That is changing fast with the rise of data science and its resulting mountain of information about customers.
A data-driven business might not be a perfect fit for every occasion, but it is much better suited to the modern business world than a business that doesn't use data at all. It's also a practice that can be adopted incrementally as more and more data becomes available over time. Here's why you should consider adopting it.
It helps drive better decisions.
Business isn't about luck – it's about making smart bets. Smart bets can be made on a hunch, of course, but data-driven businesses make the most informed guesses possible before putting their money where their mouth is.
There are two primary benefits to this approach:
It helps you outperform your competition.
While they may not advertise it, most companies operate differently: they react to what their competitors do and try to keep up. This is a fast-moving target at best, but one that's entirely avoidable if you become a data-driven business.
A data-driven business predicts what will happen before it does and gets a head start on the competition. By understanding what customers want and need, they can proactively provide it before anyone else even knows it exists.
It improves customer retention.
Happy customers are more likely to stick around, and data-driven businesses know how to make them happy. They do this by understanding what makes customers tick and using that information to give them what they want.
It also helps identify unhappy customers before they leave and can take steps to remedy the situation before it's too late.
Data-driven decisions are based on evidence, not guesswork, so businesses can be more confident in their choices. This leads to better products and services, which in turn attracts more customers.
It's not easy to make the switch to a data-driven business, but the benefits are clear. By understanding what data is available and using it to make informed decisions, your business thrives in the digital age. But for any business to truly achieve these benefits, it isn’t sufficient to just have data available, but more importantly, to ensure that the various systems, repositories, and databases, housing the information is effectively connected for efficient consumption across the entire organization.
February 8, 2022