4 Reasons Why Your Business Needs a Data-Driven Strategy
You see, life is a series of decisions, big and small. Maybe you made a decision to wear a white shirt today. Maybe you decided to skip the gym and go for a run instead. Maybe you took the decision to cook food at home instead of ordering it online. These are the decisions that don’t require much thought. And these aren’t wrong or right decisions, they’re just decisions.
However, when it comes to business, flying blind is not a clever approach at all. Guesswork can cost you much more than you can imagine in business. That’s why you should always take data-driven decisions for your business.
Want to know if a product will bring profit or not? Collect data first. Want to learn how to attract top talent? Collect data first. Want to expand your business internationally? Collect data first. Want to beat competitors? Collect data first.
In this article, we’ll list 4 reasons why a data-driven business strategy is far superior to your gut feelings. At the end of the article, you’ll also learn how professionals can help you collect and analyze data and make the right decisions.
4 Reasons Why Your Business Needs a Data-driven Strategy
- Business owners should not rely on guesswork and make business decisions using the right data.
- Collecting and analyzing data may help you predict future trends and modify your business accordingly.
- It’s hard to understand consumer behavior without collecting data from them. To serve customers well, one must collect customer-related data to make decisions.
- Data can also help create a better human resource strategy and attract and retain top talent.
- New business opportunities can be seized by collecting data and using it to fill gaps in the market.
1. Predicting future market trends
Well, let’s talk about data first. According to a survey by Statista, 39% of respondents said that short-form content had the highest return on investment. On the other hand, only 16% favored long-form videos. Also, the number of active TikTok users in 2022 was 755 million and is expected to rise to 955 million by 2025. Furthermore, in October 2022, Hootsuite reported that Instagram Reels ads reached more than 750 million users. Poor James! If he had this data and had made a data-driven decision, he could have saved a lot of cash.
And this is just one example. The world of business is filled with people who don't use data but their own instincts to predict future trends. The result? Well, sometimes, you may be right, and sometimes you could be wrong. If you’re wrong, however, you could end up wasting a lot of time, money, and resources. That’s why your best bet is to collect relevant data to predict future trends and move in the direction of the trend.
2. Understanding consumer behavior
3. Building a better workforce
We’ll consider employee retention today and discuss how data can help you keep top performers on board.
- Exit interviews: When an employee leaves, conduct an exit interview to collect insights on their decision. For instance, if an organization conducts 10 exit interviews and finds out that the reason behind leaving is an inconvenient location, they may consider moving to a central location.
- Performance measurement: You could use employee performance data to optimize performance, increase productivity, and employee satisfaction. For example, if you hire an operations consultant, they can analyze old processes and create new ones that can make employees more efficient at their job.
- Workforce trends: It’s important to keep up with the current employment trends by collecting data. According to a survey by Gartner, 43% of surveyees said that flexible working arrangements made them more productive. Furthermore, 30% of respondents said that reducing commute time increases their productivity. Data like this can be a lifesaver when it comes to employee retention.
Besides employee retention, you could also employ a data-driven strategy to recruit the best people, improve productivity, analyze employee engagement, optimize cost per employee, decrease absenteeism, and much more.
4. Grabbing opportunitiesIn the business world, you should grab opportunities before competitors. Also, you must keep tabs on any business or product that could become a threat. This is when a data mindset can be very beneficial. Take the SWOT analysis as an example. Every business needs to conduct a SWOT analysis to know its strengths and weaknesses, identify new opportunities, and reduce threats. For this article, we will focus on how data can help you seize opportunities.
Suppose an FMCG business conducts research to find out new growth opportunities in China. Through data collection, they find out that the Dairy Products & Eggs segment in China is worth a whopping US$154.80 billion in 2023. And also that the market is expected to grow by 9.70% per year until 2027. To grab this opportunity, the business could create relationships with local retailers in China and start grabbing a share of this market that is worth billions of dollars. Here’s another example. Suppose a company wants to cut operational costs. After collecting anonymous individual feedback, they find out that almost half the employees want flexibility. So, they allow 50% of staff to work from home and move to a smaller office to cut operational costs.
Final ThoughtsAll the examples mentioned in this article refer to a somewhat smaller size of data that you can easily process. In real life, however, data-driven decisions may be based on big data. If you don’t know, big data is almost impossible to process by using traditional ways. But don’t worry, this is when consultants come into play. Consultants are highly trained in collecting large quantities of data and use professional techniques to analyze it. They can turn several pieces of large data into actionable recommendations. Remember, data in itself is useless. It’s the insights you can get from it that matter.
If you’re looking to make intelligent data-driven decisions, we can help you find a highly experienced freelance consultant who has worked with top consulting firms. We have over 10,000 consultants in our talent pool, and we only choose the best. Get in touch, and we can connect you with one.