“Half the money I spend on advertising is wasted, and the trouble is I don’t know which half.” – Unilever founder Lord William Leverhulme.
This famous quote accurately described the plague of marketers for decades. When options were limited to billboards, magazine ads and TV spots, there were literally no ways to capture visits, let alone engagement. Neilson ratings, which came out once per year, magazine subscribers, and daily drive bys were all your best bets in understanding audience size, but that was about where the data ended.
Then, marketing changed. A new day arrived with the advent of digital marketing, marketing automation tools and email marketing. Suddenly marketers were swimming with data and measurable ways to prove their effectiveness. The impact on the marketing profession cannot be overstated. Suddenly, creative leaders were expected to be data-driven leaders.
Data is objective, unbiased information. Data-driven decision making is the process of studying large amounts of data, analyzing it to identify patterns, obtaining actionable insights, and using that insight to make business decisions. When marketers make data-based decisions, they can see what’s not working and double-down on what is.
Intuition is subjective, and business decisions should be made based on objective information. There are times when intuition is all you have. The famous example of this is the iPhone – no one knew they wanted one since they didn’t know what it was back in 2007. Intuition is effective when you don’t have data or the time to think logically before making a decision. And even though you can develop intuition based on knowledge and experience (a type of data), it’s still risky to use it in business decision making – Steve Jobs being the exception.
Experts suggest relying on data, not intuition
Experts almost unanimously agree that data-driven decision making is more reliable than intuition-based decision making. Cold, hard numbers are simply more dependable.
Nobel Prize laureate Daniel Kahneman, says humans formed intuition as a tool to alert us to potential risks. It aids in our survival when we’re faced with fight or flight situations. However, Kahneman claims that using data to make decisions is critically important because it decreases our propensity to make poor ones. There are times when intuition is the right call, and other times when it is not.
Nevertheless, reliance on intuition is still widespread in business today. Let’s dig deeper to understand why.
Challenges in data-driven decision making
Businesses have the data at their fingertips, but how do they organize it in a logical, useful way without overloading their teams? Many still struggle to understand how data is used to make decisions. Perhaps they focus on too many data points without the proper context, or zero in on too few and miss the larger picture. Today, there are plenty of data services, think tanks, and even SaaS tools that can aggregate data to make it much easier for companies to interpret and act on. Even big data sets, previously thought to be too complex, can be analyzed using AI and machine learning tools. But there is much to be discovered and learned in this area and to determine how it can be most useful and accessible to marketing teams of all types, sizes and budgets.
The volume of data
There is so much data in the world today that it would take over 180 million years to download it. That poses a challenge for businesses because the human mind can’t analyze terabytes of data on its own. While organizations have access to unprecedented amounts of data, the volume can be overwhelming. AI and machine learning tools can assist in data processing and interpretation, but a data analyst or team of analysts may still be needed to ascertain meaning and plan action.
A 2019 survey asked CEOs which factors impeded their ability to leverage data to make more informed decisions. Surprisingly, 54% cited a lack of data-driven skills and analytical talent. Additionally, 51% blamed data silos, and 50% pointed to unreliable data. The 2023 version of that same survey shows 62% of CEOs deploying advanced technology in AI to assist in areas such as data analysis.
Rampant skepticism around data accessibility & reliability
We’ve established that humans can’t process and analyze so much data manually, but technology can.
You must begin with accurate data collection, though. Regrettably, many leaders either don’t trust their data or haven’t adopted the technology to analyze it.
A recent 2022 HFS Research survey shows that 75% of business executives do not have a high-level of trust in their data and 70 percent do not consider their data architecture to be “world class.”
Considering the statistics above, how can businesses successfully transition to leveraging a data-driven approach to decision making?
How to become a data-driven company
Given the importance of data-based decision making, businesses must first understand the benefits involved. Then they must learn how data is used to make decisions and implement measures to begin a company-wide transformation.
Leaders must lead the way
When CEOs champion data-driven business cultures, performance results and revenue increase. The HFS study illustrates that when CEOs lean into metrics businesses are more likely to significantly exceed business goals. The survey shows that 12 percent of executives think that good data could improve an organization’s valuation by more than 10 percent, while 34 percent think it could improve revenue by 5 to 10 percent.
Create a company culture that supports data-driven analytics
According to the Harvard Business Review, data can accelerate many — even most — business strategies by improving the processes and empowering the people needed to execute them.
Leaders can identify “data champions” who can lead change across your entire organization. You can also hire a chief data officer to work closely with the C-suite on designing and implementing initiatives that foster a data-driven culture.
Gaining buy-in from your sales director is crucial. This will also create a trickle-down effect across the entire sales organization. The majority of data that decision makers want to see comes from sales. If the sales director enforces consistent data management, her team will be more likely to fall in line.
Use the right technology
Many (perhaps most) companies today use CRM software to capture and analyze decision data. This software is the single source of truth for a business and is most likely to be kept up to date CRM technology has evolved and businesses can now leverage unified CRMs that include tools to measure sales, marketing and customer service performance. Furthermore, simple integration options can allow your CRM to connect with accounting software, an ERP, and more.
This delivers three key benefits. First, when all your data is stored in the same system, decision makers find it much easier to rely on the data and analysis these systems produce. Second, when you have all those functions in one system, you reduce software costs while giving everyone in your company access to decision-making data. Third, all your teams are better aligned with one centralized source of truth on customer data. Without the right technology, creating a data-driven business culture is exponentially more difficult.
A key feature of your CRM is around reporting – both periodic reports and real-time dashboards. The amount of data you can pull around your sales processes is staggering. You can look at sales cycles, sales stages, where deals stall, lead sources, win rates and more. These data points can lead to data-driven decisions on where you can accelerate your pipeline and win more deals faster.
Look to younger generations for support
Your Millenial and GenZ employees are a native data generation as compared with the Baby Boomer “analog” generation. It makes complete sense—they grew up in the digital era. This means that businesses can turn to younger decision makers for support in championing the transition to a data-driven business culture.
Plus, younger generations typically find comfort in data. According to a study by Omega Z Advisors, “Younger workers will have more faith in data. They don’t have the experience to distrust it, especially in new situations. “ Since they see data as historical, it provides reinforcement to them in that they are engaged with decision making tools built on a solid foundation.
In the coming years, we can expect to see more Millennials and GenZ team members in decision-making roles. They will employ more technology—like CRMs—to capture and analyze data for decision making. Why? Because they more clearly recognize the vast array of benefits gained from CRMs and data analysis technology.
What does the future hold?
The balance of data-driven decisions vs. intuition will always exist in some capacity. However, as we collect inordinate amounts of data and use AI to process it, being data-driven will become more common. As with all innovations, we’ll see early adopters go first, and year later, we’ll still see laggards across industries – despite the data that indicates businesses grow faster and outperform their peers when they leverage data to drive decision-making. As competition increases in the digital economy, using data insights won’t be a matter of preference, but rather of necessity.
