Data Driven Decisions How To Turn Data Into Real Insights
Management Summary
This 4-step approach will take you from data to real insights:
Step 1: Define goals – but please do it SMART
Everything starts with a clear goal. It sounds simple, but in practice it often fails due to vague wording. Statements like “more sales” or “better performance” don’t help. Instead, you need SMART goals:
- Specific
- Medible
- Achievable (realistically achievable)
- Relevant
- Terminated
Example of goals:
“Increase average product margin by 10% within the next six months.”
Necessary for this: a well-founded profitability analysis, measures such as bundling or price optimization – and clear measurement points.
Step 2: Formulate hypotheses – What could happen?
Before measures are implemented, possible impacts should be considered. Hypotheses help to formulate scenarios that can then be checked based on data.
Examples of hypotheses:
“Low-margin products generate relevant traffic.”
“Low margin products are critical to completing the checkout process.”
“Buyers of cheap items return more often and later purchase high-margin products.”
Step 3: Test hypotheses – with the right data sources and tools
In order to validate the hypotheses, it is often not enough to just look at one data source. Often it is only through the interaction of different systems that a complete picture emerges.
Typical sources that are combined to generate insights for the company include data from web & App analytics, advertising data, CRM data and ERP or product databases.
Step 4: Make decisions – based on real insights
Testing the hypotheses is just the beginning. What is crucial is to translate the knowledge gained into concrete options for action:
- Which products indirectly contribute to conversion?
- What role do products play, for example, in reaching shipping cost limits?
Conclusion: From analysis to strategic decision
Only if goals are clearly formulated, hypotheses are consciously developed and tested across data can a company be truly data-driven. Then decisions are made that are not reactive – but are strategically sound, effective and sustainable.
