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Big data. Business intelligence. Data mining. These aren’t just buzzwords — they’re essential to success in the modern business world. Leveraging data and analytics empowers you to make more strategic choices — ones backed by evidence rather than gut feelings or intuition.
But what does it actually mean to make data-driven decisions?
Contrary to what you may think, data management doesn’t have to be a big, scary endeavor. With a little knowledge and the right tools, you can start collecting and analyzing data for your organization today.
To help you get started, let’s take an in-depth look at data-driven decision making — what it is, why it matters and how to harness it for your business with a simple, three-step approach.
What Is Data-Driven Decision Making?
Data-driven decision making is the use of actual numbers to guide company policies, plans and programs. It involves collecting, measuring and analyzing data on people, processes and technologies — and then using the findings to make informed decisions. Organizations with strong data cultures regularly make decisions based on evidence rather than observations, anecdotes or best guesses.
Why Data-Driven Decisions Are Important for Businesses
You need data to inform decisions to drive innovation and results. Data is the lifeblood of the modern business world, and it opens the door to untapped opportunities:
- Data-driven organizations are three times more likely to report significant improvements to their decision making compared to organizations who leverage their data less.
- A McKinsey report indicates that data-driven companies can achieve EBITDA increases of up to 25%, highlighting the significant financial benefits of leveraging data and AI strategies.
- A Deloitte survey of 1,600 global leaders revealed that companies focusing on data analytics, AI and cloud platforms derive significant enterprise value, enhancing operational efficiency and customer loyalty.
These studies are just the tip of the iceberg. The more you harness your data, the more opportunities you’ll discover. Customer interactions, sales transactions and employee digital activity all offer important insights. The sooner you use them, the better positioned you’ll be to boost productivity, performance and engagement.
Benefits of Data-Driven Decision Making
Some of the top benefits companies gain from data-driven decisions include:
- A better customer experience: Why guess what your customers need when you can find out for sure? Data tells you exactly what your customers want, making it easier than ever to create personalized experiences.
- More productivity: With data-driven insights to guide them, employees gain a clearer understanding of goals and how to achieve them. This helps employees work smarter, not harder, resulting in better productivity and well-being.
- Fewer mistakes: Using data to drive decisions reduces mistakes, helping you pinpoint when things go wrong and why to prevent similar issues in the future.
- Faster buy-in: With data on your side, it’s much easier to make a compelling case for new projects and goals.
- Measurable goals and outcomes: Numbers don’t lie. Data collection lets you see when your team reaches new milestones and empowers you to reach for newer, bigger goals.
- Greater accuracy: Optimizing your headcount, reducing costs and planning for future changes are all much more precise when you have data to guide you.
There are plenty of other ways to put your data to work — to improve marketing campaigns, land more sales, guide product development and more. But what does this look like in practice? Let’s take a look at several real-world examples.
Examples of How Companies Use Data-Driven Decision Making
What does data-driven decision making look like in the business world? Here are a few examples from companies that use ActivTrak.
1. Ship Sticks improves customers service
Ship Sticks managers knew they needed to improve customer service, but wanted to understand why. A quick look at workforce data revealed the underlying issue. Turns out, reps had to open multiple applications to service one customer. Switching back and forth between apps created frustrating delays for customers. Armed with this information, the team sped up service by eliminating unnecessary applications and streamlining technology.
2. Echo Global Logistics increases pricing accuracy
At Echo Global Logistics, accurately pricing services for each client is critical. But it wasn’t always clear which client operations were simple and straightforward, and which ones required more billable time and effort. By using ActivTrak to measure how much time employees spent on each task, the company was able to more accurately price each client deliverable.
3. FAM Brands enriches the employee experience
For apparel manufacturer FAM Brands, data visualization helped improve the employee experience. For instance, rather than jumping into hybrid work, business leaders first analyzed location insights to see where people performed their best. When the data revealed employees who work from home are more productive, the company decided to expand its pilot program to 500 corporate employees.
3 Key Steps for Implementing Data-Driven Decision Making
Now that we’ve explored the principles behind data-driven decision making, let’s examine the steps involved in implementing it in your business.
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The good news is, you don’t need a full-time data analyst to achieve results like those above. Today’s executive dashboards make it easy for any decision maker to quickly identify trends and uncover opportunities. Here’s how to start using them today.
1. Identify your business goals
Clearly define your business goals before diving into your dashboards. This will help you focus on relevant data rather than becoming lost in an endless sea of numbers. By setting specific, measurable, achievable, relevant and time-bound (SMART) goals, you can align your data with your strategic objectives. For example, if your goal is to increase customer satisfaction, you’ll know to focus on metrics like customer satisfaction scores and churn rates.
2. Collect relevant data
Once you define your goals, it's time to collect the data that will support your decision-making process. This information can come from various sources, such as customer surveys, sales records, social media platforms and external market research. Find a platform to do the heavy lifting.
3. Analyze and address
The next step is to analyze and interpret the data. The key is to set a schedule to regularly review it. While it doesn’t have to be daily, it should be consistent. And don’t just review your dashboards — act on them. For instance, if the data shows a team is at high risk of burnout and disengagement, explore strategies to motivate them immediately.
Make Data-Driven Decisions With ActivTrak
Ready to make more informed, evidence-based decisions? Following this step-by-step guide is a great place to start. It’ll help you develop a data culture where harnessing the power of data is second-nature — and you won’t have to hire an army of analysts to do so.
Schedule a demo with ActivTrak to learn how our platform can help you assess employee productivity and optimize important operations.
