How to make accurate decisions based on online data
How to Make Accurate Decisions Based on Online Data
Data-driven decision-making is an important part of business today. This strategic approach uses information as the basis of all types of informed choices. DDDM, as it is often called, involves the collection of data based on key performance indicators (KPIs), or goals that can be measured.
How Does Data-Driven Decision-Making Work?
The idea of data-driven decision-making is to identify patterns and come up with insights that will be useful to the company. These findings are leveraged so growth strategies can be developed. This places data at the forefront of the decision-making process rather than the use of intuition. In this way, goals can be achieved from actual measurable information.
How Is This Data Analyzed?
When making data-driven decisions, you need a way to analyze the information you are collecting. There are four basic types of analytic tools you can employ:
This form of analysis uses raw data to describe a particular situation. This can include conversion rates or monthly sales for a specified period. Data mining and visualization are often used for this type of analytics so the result can be envisioned.
The diagnostic approach seeks to learn why a specific thing occurs. This involves identifying patterns and analyzing data to find out why something that was previously discovered occurred. Business intelligence (BI) dashboards use this to find the root cause of issues occurring within an organization.
The predictive technique uses both past and present data to forecast the future. Companies can predict aspects of business such as sales, market changes, and revenue. Data scientists use data modeling and machine learning to make these predictions.
The prescriptive technique involves using the information gathered from the previous three techniques to find a possible solution to the problem being analyzed. For example, mobile GPS applications use prescriptive analysis to suggest the best route to a given destination.
What Are the Benefits of Data-Driven Decision-Making?
There are several benefits to using a data-driven decision-making approach. The first is that data is measurable. This means you can prove its existence and validity. If the data shows a specific technique is working in one area of business, you can apply it to others.
Data can be relied on because it can be seen. It is tangible in this way, giving you informed information to use when making future predictions and forecasting decisions.
What you learn when analyzing data is accurate. This makes for better business decisions than relying on gut feelings. While there are times when you may need to rely on your instincts to make important choices, it’s always better to use proven data when possible.
Data is less risky than a gut feeling when making decisions. Information enables you to measure the risks of any situation to determine possible loss and gain.
How Do You Begin Making Data-Driven Decisions?
The first step to making data-driven decisions is forming a strategy. Figure out what decisions you need to make and prioritize them. Create a list of the types of data needed for each decision and figure out where you can find it.
You need a clear plan of action that reflects the type of data you need, where you can find it, and the expected outcome. Think of it in terms of what you want to measure and why this is important.
Know Your Goals
Know your business goals and priorities. What do you want to accomplish? What issue would you like to improve?
Research is a critical part of decision-making. You need accurate facts and figures, so leave no stone unturned. How have other companies solved this particular problem? What statistics from other businesses in your industry might apply to yours?
Formulate a Data Collection Plan
Form a plan for collecting data. Think about ways to find the information you need and document them. What techniques will you use?
Web scraping, for example, is a great way to legitimately pull information from various websites. Oftentimes, residential proxies are used for web scraping to avoid being blocked. Figure out which web scraping tools you will use and how you will analyze the data you collect. You’ll most likely need several tools, so do your research carefully.
Select tools based on the type of data you are collecting. For example, a search engine crawler will help you find information about search trends.
Visualize the Result
Use visualization techniques to help you realize the result. This is necessary for properly presenting your data and gaining insights into the best business solutions.
Visualizing data helps you make important connections. This is how you will draw accurate conclusions when measuring data.
Use a combination of tools. Online data collection tools will help you gather the data while analytics tools help you obtain insights.
Create an Action Plan
Once you form insights from the data you collect, create your action plan. This plan will be made up of accurate information rather than conjectures. This is how you will move forward to implementing a solution to your problem.
Monitor Your Progress
Monitor the progress of your solution. This involves collecting and measuring your own data and making any necessary changes along the way.
One example of this is offering free shipping on certain products. You need data to determine which products to include in this offer. After collecting and analyzing data, perhaps you realize it might be better to offer free shipping on all orders over a certain monetary amount. Since the data provided valuable insights, you can implement the second solution instead.
However, it doesn’t end there. After implementing free shipping on orders over a certain amount, you’ll need to regularly monitor how this is affecting your sales. Are certain products selling better than others, and if so, is it due to the free shipping offer?
After monitoring your sales for a given amount of time, you can re-evaluate whether your offer is working or if you need to go with your initial option of offering free shipping on specific products.
Continuously monitoring and measuring data enables you to improve business processes as you go. The data gives you a real-time look at which changes are working and which are not. Keep improving older strategies and formulating new ones to ensure continuity.
How Do You Build a Data-Driven Company?
Data-driven decisions lead to a data-driven company. When you begin basing important choices on well-researched, accurate data, you begin to see potential outcomes. Consistently measuring the progress of your solutions will lead to better decision-making all around.
There are a few things to consider when implementing data-driven decision-making into your daily business routine.
Watch for Biases
One challenge of analyzing data is seeing the data you want to see and accidentally overlooking other valuable metrics. Eliminate bias by cross-referencing data from multiple sources or collecting data from other peers and sources. This data should always align with your goals, so keep them in mind when searching for information.
Continuously Gather Data
Don’t wait until you have the perfect business strategy in place to begin gathering data. Collecting as you go helps make your company more agile. Adding this flexibility to your strategy means you can reap the benefits of data-driven decision-making from the beginning rather than adding it in later.
Set Measurable, Realistic Goals
Gathering online data leads to great change, but using it to reach unrealistic goals can cause problems. Trying to analyze too much data, for example, wastes valuable time and resources. Instead, break your larger goals into smaller ones, and concentrate on reaching them individually. This helps you form the bigger picture rather than getting overwhelmed by it.
Data-driven organizations will outperform competitors. Research shows data-driven organizations are 23 times more likely to gain customers, six times as likely to retain them, and 19 times more likely to increase profits.
Leveraging online data helps you make more informed decisions and improve customers’ experiences. Satisfied customers not only return again and again, but they also tell others about your business. This results in rapid growth and expansion into new markets.