Data-Driven Vs Data-Informed: Which is More Strategic?

Over the years, we’ve encouraged businesses to use data to help make decisions. For example, customer data might help with advertising or website development. Over time, we gain access to more and more data; naturally, we should give the data attention when it comes to making key business decisions. However, the degree to which we consider data in making business decisions has been a topic of debate. Should you follow data blindly? Should you allow it to loosely guide the business? How much attention should you give it?

While some will allow data to drive the business forward and influence all decisions, they might forget the bigger picture. The risk is that you start to cherry-pick the data depending on what you believe and understand. Suddenly, the data isn’t really helping at all because higher-value data is being ignored.

In this guide, we want to discuss the different approaches and the common pitfalls that businesses encounter each year when using data.

Definitions

Data-Driven Firstly, we have the idea that data is the end-all, be-all of everything including media ad planner. You look at the numbers, you run tests for data, and all decisions come down to what these cold facts suggest. As an example, lots of businesses use A/B testing when optimizing their ads online. With two different advertisements going against each other, A/B testing allows you to compare which offers the lower CAC (customer acquisition cost).

Data-Informed On the other hand, a data-informed approach is where decisions are made after considering data as well as user research, experience, and personal insights. Rather than allowing data to control everything, there’s still a human element to decision-making. Using the same example for advertising, you wouldn’t necessarily switch one ad off because of the lower CAC. Instead, you’d consider other components and maybe adjust the ad accordingly.

Data-Inspired We’re focusing on data-driven and data-informed approaches today, but it’s important to note that some businesses use a data-inspired approach. What does this mean? Well, data-inspired businesses tend to enjoy the exploration of data. For example, they might bring different sources together and attempt to find common ground between them. Ultimately, data-inspired businesses look for trends amongst the data but do not solely rely on those trends.

Benefits and Drawbacks of the Data-Driven Approach

Benefits

Many businesses love the fact that they don’t need to make decisions; data makes the decisions for them. With this, gut instincts are ignored and there’s no emotional role. Also, it’s possible to overcome the agendas of certain stakeholders. If the approach of the business is to listen to the numbers, no stakeholder can argue otherwise.

According to many sources, including the Harvard Business School, this approach is also considered proactive. Rather than reacting to a change in the market, you can follow the data and identify something that could be problematic in the future.

Drawbacks

As discovered already, the main problem with a data-driven approach is that the bigger picture is largely ignored. Also, the approach is difficult to implement when a business isn’t generating enough data. When decisions are based on small amounts of data, there’s a chance that this data isn’t representative of true market conditions.

What’s more, we can’t ignore the fact that it’s actually very difficult to become a data-driven business.

Benefits and Drawbacks of the Data-Informed Approach

Benefits

This time, we’re considering the so-called ‘bigger picture’ in our decisions (quality, not just quantity). We can look up from the numbers and get an accurate idea of what is really taking place in the market, the business, with consumers, and more. With extra creativity and experience, a data-informed approach helps a business to discover unique solutions. Through data alone, we’re almost restricted by the obvious. With a more human touch, solutions are original, and data only provides input.

Data-informed approaches can help you to identify trends. In the past, we’ve seen companies focus so much on the data that they lose sight of the competition or industry. Suddenly, consumers don’t know the value of the service and you’ve lost. This problem doesn’t exist with a data-informed approach.

Drawbacks

When following a data-informed strategy, one problem that you might encounter is the attempted influence of certain stakeholders. When used incorrectly, decisions can come down to which stakeholders the business wants to keep happy.

Additionally, a data-informed approach often leads to conflicting information. The opinions of team members will suggest one thing, and the data will suggest another. Sometimes, we’re pulled in several different directions and the business is pulled apart at the core.

Choosing the Right Strategy — Is a Blend the Right Answer?

Even the data-inspired approach has benefits and drawbacks. On the one hand, we can look for trends and use the data to explore the position of the business in relation to the market and ai marketing tool. On the other, it’s impossible to draw absolute conclusions from the data, making it unreliable. With all of this in mind, what is the right strategy to use?

For most businesses, the answer is to learn when to use each approach depending on the situation. There’s no reason why any business needs to choose one strategy and stick with this strategy for life; instead, we need to recognize the type of decision we’re making. From there, we can consider the three approaches and choose the best one. Some situations will call for data-driven strategies while others will require a data-informed approach.

The Data-Driven Approach — Generally speaking, this is perfect for choosing between data sets. For example, we could go back to the A/B testing scenario and choose one ad design over another, disregarding our personal experiences and opinions.

In this case, we recommend pre-determining the definition of success. What does success mean in this experiment? When A/B testing two ads, success is the one with the highest conversion rate. When testing a new feature on a website, the click-through rate could be the metric. When the deciding factors are determined beforehand, you won’t introduce emotions, experience, and other determinants later.

The Data-Informed Approach — This approach is the stronger option for more complex decisions where it’s appropriate to consider user feedback, competitive data, your own experience, the opinions of stakeholders, and more. For instance, an example would be product development or a new feature for a product. When designing a new product, creativity is important, but data cannot be forgotten entirely.

Alternatively, when building a website, we use a blend of data and other inputs. Data what consumers like and how people respond to various website features. After this, experience and creativity are important to make the website unique and cohesive with the brand. If everybody were to follow data alone when building a website, they would all look exactly the same.

Top Tips for a Successful Strategy

Data-driven approach vs data-informed approach — which is more strategic? You could debate this for hours on end, but there’s a more strategic approach than both of these options: deciding based on the scenario. Wherever necessary, you should also take advantage of the data-inspired approach. When implementing the approaches, follow these tips:

• Use Qualitative Data — Data isn’t all numbers and graphs. We recommend including surveys, focus groups, and other subjective data to help decision-making.
• Aggregate All Data — In our experience, positive results come about when everybody in the business has access to important data. Elsewhere, make sure it’s up to date and relevant (there’s no point in trying to make decisions based on outdated data!).
• Test, Test, Test — Lastly, be willing to test something new. A/B testing is a great way to compare outcomes rather than feeling pressured to either jump to a new idea or forget it completely.