When a company becomes a data-driven organization, it is no longer making decisions based on subjective opinions or views. Instead, it is utilizing data and insights gathered from data analytics.
Intuitive decisions might work for some organizations, but they can be risky. On the contrary, decisions made with real facts can be better guesses that could lead to better results – performance improvements, increasing sales, and higher ROIs.
Needless to say, a data-driven culture is not an overnight process, but it can be developed gradually and consistently until it reaches every part of the organization. Even a slowly but steady integration of data across a business can create a great positive impact.
Statistics show how data-driven organizations outperform their competition. Data-driven organizations are1:
- 23 times more likely to acquire new customers
- 6 times more likely to retain them
- 19 times more likely to be profitable
So, what is the value of becoming a data-driven organization? How can companies benefit from a data-driven culture? We will elaborate on some of the many advantages out there.
Cost Reduction and Operations Efficiency
A data-driven organization can focus in reducing costs by identifying the main cost sources. In a recent study, 49% of the organizations that were using data analytics to reduce costs, got positive results2.
For example, a manufacturing company might discover their raw material is the leading cost rather than production. The company can then make a decision if there is a way to reduce that cost. Regarding operations efficiency, said company might want to look into which processes could be decreased in time, effort or materials.
Continuous Improvement
Once stakeholders use data for performance monitoring, they are in the right path towards continuous improvement. When organizations are able to measure their performance, they can identify opportunities for improvement.
For example, a finance company might want to know and understand their customers to offer more suitable products and services.
Practical Strategic Planning
Historical data can be transformed into meaningful information and outcome predictions can be made and used for the company’s strategic planning. Once the organization knows what has not worked in the past, is not currently working or what needs to be changed, they can concentrate efforts into creating reasonable strategies and plan a course of action accordingly.
Better-Informed Decisions
Having data insights in hand could be useful for long-term decision making. Before investing in an idea or a project, an organization should be able to tell if it is more likely to be a succes or not based on what has happened in the past. If the market is shifting, they can be informed and act promptly.
For example, a marketing company could use market research analytics to target potential customers based off of data from current customers attributes and behaviours.
Competitive Advantage
In the modern world, companies that use data as an strategic asset have a competitive advantage over those who don’t. The ability to understand their processes, market, employees, and customers for the purpose to formulate significant strategies in every of these aspecta, is one of the biggest advantages a data-driven company can experience.
A healthcare company may want to dig into why employee attrition has been increasing over the last year. Consequently, they could compose a plan to address the issue.
Organizational Transparency
Transparency in an organization drives trust and accountability as the impact on decisions can be measured and monitored3. Stakeholders can evaluate the business performance and decide how to handle every situation.
In addition, transparency enables employees to get a bigger picture on how the business is doing and how their work affects the business processes overall.
And so many more…
There are countless of benefits from becoming data-driven! Depending on what your commpany needs and aspirations are.
At Xplr, we can help you in your goal to become a data-driven org! Contact us so we can talk about your next data project!