Thanks to advances in digitization and new technologies, more and more organizations are collecting data on a massive scale in order to better understand their customers and the market.
This data is processed and transformed into useful information so that it can be subsequently analyzed to obtain value from it. In this way, a new trend or philosophy arises in which companies use the analysis of the data they collect to improve their operations, guide their strategies, make more accurate decisions for their business and offer a better experience to their customers.
This is how the Data Driven concept arises. At Damavis, we work side by side with our clients to help them become Data Driven companies and we guide them on the way to achieve it.
How to be a Data Driven company
As we have already explained, the Data Driven concept in Big Data refers to an approach or methodology that bases business decision making on the analysis and interpretation of data.
Adopting this approach provides significant benefits to organizations that decide to implement it in their operations, compared to other companies that are only guided by experience or by doing things as they have done in the past.
Advantages of a Data Driven company
The Data Driven concept is not new. Although currently this approach is becoming increasingly relevant in the business world, a few years ago, MIT published a study where its benefits were highlighted. It reveals that organizations that follow a data-driven approach have a productivity between 5% and 6% higher than others of similar characteristics.
On the other hand, companies that have a culture based on the use of data acquire a privileged position in the market with respect to their competitors.
They are able to react faster to changes, know their customers better and can develop more accurate strategies thanks to the automation of analysis and reporting processes. In this way, they are more likely to create a competitive advantage that differentiates them powerfully from the others.
Another benefit of following a Data Driven approach is that the decisions made in the company are supported and backed by data, which show the unequivocal truth of what is happening in the market. The dynamic of basing strategies on previous experiences, personal opinions, fashions or other subjective arguments is left behind in favor of objectivity.
How to become a Data Driven Company
Before reaching the Data Driven Stage, there are several previous steps depending on the use of data within the company:
- Stage 1: Data-Resistant. In this phase, the company does not make any use of the data, it operates ‘doing things as usual‘, without considering any other way of operating. The reason why the company is stuck is a certain reluctance to innovate or that the data may reveal possible erroneous strategic decisions that have been made previously.
- Stage 2: Data-Awareness. Once the data resistance stage has been overcome, the company starts to become aware of the value and potential of the data, so it begins to collect subsets of data and perform basic descriptive analysis but does not lead it to take any specific action.
- Stage 3: Data-Guided. The company now performs a thorough analysis of its data, drawing solid conclusions about the impact of past made decisions. At this stage, the company is only able to derive tactical value from the data, which means knowing whether to continue doing what they have done so far or to change their strategy.
- Stage 4: Data-Expert. Here, in addition to the tactical value obtained from the previous stage, a strategic value is harnessed, which means that the company focuses not only on the what (what went wrong?), but also on the why (why did it go wrong?).
- Stage 5: Data-Driven. In this last phase, once the company has figured out what went wrong and why, the immediate question to ask is, “Given that the data confirms this fact, what do we do about it? Decision-making is based entirely on what the data says, which reveals the unequivocal truth of what is happening in the company and in the marketplace.
Data Driven Marketing
One of the main departments within the company that can benefit the most from following a Data Driven strategy is Marketing. This discipline is based on the premise that the customer is the center of the organization, in other words, it is necessary to know the user in detail and give him exactly what he wants in order to achieve success.
For this reason, it is vital to segment customers and develop profiles that allow, on the one hand, to develop differentiated strategies for each type of user; and, on the other hand, a greater precision in messages and communication.
By adopting a Data Driven approach it is possible to achieve an easier and faster customer segmentation, thanks to the automation of processes through Big Data, and also more reliable due to the veracity and objectivity provided by the data.
Sectors that have adopted a Data Driven approach
Although the implementation of Big Data techniques and tools in companies is not an easy task, more and more organizations are opting to adopt a Data Driven strategy in their operations.
The sectors most likely to use this methodology are ICT, tourism and retail. However, thanks to the wide range of existing possibilities, it is also being used in other types of business such as logistics, transport or even agriculture and ranching.
Many organizations are still not aware of the enormous value of their data and how they can take advantage of this potential to obtain useful information that will have a positive impact on their business.
In this post we have learned why it is important to adopt a Data Driven approach and what are the benefits it has to improve business operations.
At Damavis, we guide companies on their way to the Data Driven Stage, helping them to generate added value to stand out and differentiate themselves from their competitors.