What is Data Analytics?
Data analytics deals with analyzing raw data to draw inferences, identify trends, optimize business performance, maximize profit, and make more strategic decisions. In other words, data analytics helps you see the “whole” of your business rather than analyzing individual parts in isolation.
Business decision-making involves identifying opportunities or problems, implementing solutions, and measuring the results. Using data analytics to inform your business decisions can help you respond to changing market conditions, reduce costs, improve efficiency, and increase profitability.
Nowadays, businesses can collect data at every point of the customer journey. This data includes mobile app usage, digital clicks, interactions on social media, and much more, creating a unique data fingerprint for each customer. According to a report by NewVantage Partners, 98.6% of executives say that their company aspires to be a data-driven organization, but only 34.1% succeed. Furthermore, a 2018 study by the International Data Corporation found that while companies spend trillions of dollars on building technology, 70% of those projects fail because they lack the requisite data culture.
Most Compelling Benefits of Data Analytics in Business
1. Eliminating Guess-Work from the Decision Wheel
If you’ve ever tried to decide what to order at a restaurant, you’ll know that the options can sometimes be overwhelming. To make any decision, you use a combination of knowledge and instinct. Back in the day, business decisions were based on personal experience, intuition, or other manual/non-integrated procedures. Businesses today are much more complex. Customer buying behaviors have changed drastically (especially after COVID-19).
Data analytics allows you to make decisions that are informed by insights from the numbers. Data analytics eliminates guess-work from the decision-making process, bringing together data from different sources to provide valuable insights. Whether you’re making strategic decisions that affect your long-term business direction, or tactical decisions that have short-term implications, data analytics can help. Data intelligence eliminates the risks of a gut-based decision and creates a palette of possibilities for businesses to enhance their growth and profitability. Your analytics should integrate with your decision-making process. Make sure your analytics software supports the decision-making process with features like business intelligence dashboards, visualizations, and alerts.
2. Customer Acquisition and Retention
A key goal of any business should be to acquire and retain the right customers. Poor operations management can lead to several costly issues, including a significant risk of ruining the customer experience and, in turn, your brand loyalty. Customers now use multiple channels in their interactions and business engagement, meaning both traditional and digital data sources must be integrated to understand their behaviors. Research conducted by Markets and Markets found that social media advertising, email campaigns, and behavioral analyses are crucial to increasing sales and brand loyalty. Social media marketing, website analytics, behavioral data, and market research help brands understand what customers want from them. Data analytics can help you identify the needs of your customers and offer the right products and services to meet their desires. For example, brands like Amazon offer the ultimate personalized shopping experience, wherein suggestions pop up based on previous orders, items that are “frequently bought together,” browsing patterns, and other factors.
3. Driving Process Mapping and Process Improvement
Every organization has processes for managing their business. Whether you’re in a B2B or B2C industry, you probably have supply chain, sales cycles, and customer service processes. Data analytics can help you identify inefficiencies and opportunities for process improvement. Using data intelligence, you can identify patterns and refine procedures in various functions to improve the overall effectiveness of operations within your company. Using data analytics, you can evaluate which process steps are falling short and make tweaks accordingly to ensure your operations run efficiently. Analyzing supply chain data can reveal where production delays or bottlenecks originate from and may help predict where future problems may arise. Identifying, recouping, and preventing revenue leaks is possible by harnessing the power of data analytics. This not only helps in optimizing processes and reducing costs but can also result in a great customer experience.
4. Mitigate Risk and Handle Setbacks
The business world is full of risks. These risks include legal liability, uncollected receivables, customer or employee theft, etc. Organizations can use data analytics to understand risks better and implement preventative actions. For example, data analytics can be used to determine the optimal price for a clearance sale to reduce inventory if a company overestimates demand for a product. To identify which outlets are most vulnerable to theft, a retail chain may use a propensity model, a statistical tool that predicts future actions or occurrences. The company might use this information to decide how much surveillance is required at the stores or even whether it should withdraw from any particular location. Additionally, businesses can employ data analytics to minimize the losses following a setback.
Data is of prime importance in a rapidly-evolving business landscape. Adopting data analysis and associated techniques helps you become future-ready. Data Analytics helps businesses maintain their competitive edge and stay ahead of the curve by giving them a clear picture of all their data. As a result, you can improve business processes and develop strategies to strengthen your customer relationship. You can measure top-line performance to deploy systems that increase sales. Analytics even help you understand target segments to create better ad campaigns. The traditions of manual evaluation, instinct decision-making, and excel reporting are in the past. A robust business intelligence tool like INSIA can help you with your data analytics challenges and help your business grow to its full potential. Click Here to try it for free!