In an earlier post, we explained what data-driven decision-making is and how important it is for the data to come from reliable and unbiased sources. But what are the benefits of data analysis to business management?
Data analytics decision-making is the process of collecting, analyzing, and verifying data to develop strategies and tactics that help companies achieve their business goals. Verification increases the probability that decisions are based on reliable sources.
But why is data analysis important in decision-making? Experience has shown that by applying data analysis in their decision-making processes, companies on average will generate higher revenues and find new business opportunities.
5 Benefits of Data-Driven Decision-Making
It improves the analysis of alternatives
Data analysis, within clear business objectives and done correctly by using “good” data, allows for a better analysis of alternatives, opens up a new range of possibilities and improves the understanding of each of them. It increases the probability that the choice of the best alternative will lead to a successful outcome. Data analysis increases the chances of success. Models are better at making predictions when they have the right variables, and when there is good data and lots of it.
It reduces costs
Implementing data analysis in decision-making helps identify possible tactics that reduce costs in different areas of the business. According to Bi-Survey, companies that use Big Data analytics lower their costs by 10%. It helps to detect big-budget strategies that are ineffective. It provides information and knowledge on why items are returned. And perhaps more importantly, it helps predict the probability that a customer will return a purchased item, allowing the seller to determine what intervention is needed to reduce that probability. All of this leads to costs being reduced.
It reduces risks
Random decision-making can trigger serious economic losses for an organization. Conversely, making decisions based on hard data improves cost-benefit analysis and scenario management, which reduces the probability of making mistakes when considering the possible consequences. This is extremely important when making large investments of time and/or resources on high risk development projects.
It generates income
The more effectively data is used in decision-making, the more agile and astute the company will become in generating higher profits, redefining its current pricing strategy, and uncovering opportunities to cross-sell. So much so that, according to Bi-Survey, the organizations that use data analytics in decision-making report an 8% increase in revenue. In addition, forward-thinking companies will use these profits to finance innovative projects and enter new markets, further increasing their profits and fueling their growth in the industry.
It is actionable
Data analysis makes it possible to predict future market trends and respond quickly to them, giving the company a greater competitive advantage in its target market. But for this to happen, the company must be agile. Data analysis provides the knowledge, but if the organization cannot react fast to it, this advantage may be lost.
Jump Data Driven, a business data management platform specifically designed for video service players, uses big data and artificial intelligence to provide you with a daily data report that you can use in decision-making and to present users of your video service personalized offers.