What is data-driven decision making?
Data-driven decision-making is the practice of collecting, analysing, and interpreting data to gain insights that you feed into business decisions. By using data to guide your decisions, you can reduce the risks associated with making choices based on opinion, rather than fact and increase the chances of your marketplace success.
As a brand owner on Amazon, eBay, or Wayfair, you constantly make choices that impact the success of your global marketplace. Launching a new product, hiring new employees, or investing in new technologies, these decisions have a lasting impact on your business. That’s why it’s critical you use data from reliable sets of information to make your decisions.
Why is data critical?
ANTICIPATE TRENDS AND PATTERNS – one of the key benefits of data-driven decision-making is that it allows you to be more proactive in your approach to business. By analysing historical data to identify trends and patterns, you can anticipate future trends and act before your competitors. You position your business for success in the long term and give yourself an advantage in competitive marketplaces. For example, a natural personal care brand could analyse customer search and purchase data to identify a growing interest in organic personal care products. This information can be used to develop new product lines and marketing campaigns.
IDENTIFY HOLES IN YOUR BUSINESS – data helps you identify areas for improvement within your business. You will spot inefficiencies, bottlenecks, and other areas where you can make changes to improve your processes and increase productivity. This can lead to significant cost-savings and increased profitability over time. Analysing your inventory and order data, for instance, is a great way to identify areas where you can streamline your fulfillment process and reduce costs.
CUSTOMER ACQUISITION – data analysis helps you identify the most relevant customer segments for your products or services and tailor your marketing efforts accordingly. By focusing your marketing efforts on the customers who will be interested in your offerings, you can improve your chances of converting them into paying customers.
Amazon’s advertising platform allows you to target potential customers based on their search and purchase history. You can also increase customer acquisition using data on customers who are searching for similar products to yours on Amazon. A good example of this is a well-known brand selling pillows and bedding products that analysed the most relevant keywords to target in their ad campaigns. Compelling copy packed with keywords enticed potential customers to visit product pages, increasing the brand’s visibility to new audiences and driving sales up.
ENHANCED CUSTOMER RETENTION – Customer data also allows you to identify the factors that contribute to customer churn and take proactive steps to reduce it. This can include improving product features, enhancing customer service, or offering targeted promotions to retain customers. Leveraging customer reviews and feedback allows you to respond to negative reviews and demonstrate that your brand is committed to its customers. Customer feedback data can also be useful in suggesting product improvements and launching new products based on customer demand.
To hear examples of how Optimizon Ltd has supported clients on all of these data points, contact our team today.
The top 10 marketplace metrics to track?
Here are the key marketplace data metrics that a brand should track to monitor performance and optimize operations.
- Sales: The key indicator of a brand’s overall performance on the platform.
- Units Sold: Provides insight into customer demand for a brand’s products.
- Conversion Rate: An indicator of a brand’s product page effectiveness and customer appeal.
- Advertising Spend: An important factor in optimizing advertising ROI.
- Buy Box Percentage: Measures the effectiveness of the primary purchasing interface on Amazon.
- Customer Reviews: This can have a significant impact on sales and customer perception.
- Inventory Levels: Critical for managing inventory levels to meet customer demand.
- FBA Inventory Performance: Measures the efficiency and accuracy of a brand’s fulfillment operations
- Order Defect Rate: Measures the percentage of orders that result in negative customer feedback or other defects, such as late shipments or order cancellations.
- Average Order Value (AOV). By tracking AOV, a brand can optimize its pricing, promotions, and product recommendations to increase revenue per order. For example, a brand may choose to offer bundle deals or free shipping incentives to encourage customers to purchase multiple items and increase their AOV.
If you would like to speak to our specialist data team for further guidance on how we gather this type of data for our clients, contact our team today.
How to collect data and implement it
There are many ways that you can dive into your business insights and implement a data-driven approach in your business. For example, you can use data analytics software to collect and analyse data from various sources. By using advanced analytics tools, you can gain insights that would be impossible to obtain manually.
Another approach is to implement a data-driven culture within your organization. This means encouraging all employees to use data to inform their decisions rather than relying on opinion, especially the HIPPO! By creating a culture of data-driven decision-making, you can ensure that everyone in your organization is working towards the same goals and making informed choices based on reliable information.
Data-driven decision-making is critical to the success of your business. Whether you are using data analytics software or implementing a data-driven culture within your organization, it’s important to make data a central part of your decision-making process.
How can we help?
As Amazon experts, we’re more than happy to help you stay on top of your data and advise you on how to factor this into your business strategy.
If you would like to speak to our specialist global Amazon agency for further guidance, contact our team today. Discover how we can help you take your business overseas and enhance your brand and sales