Using Data Analytics to Grow Your Business
Data analytics is a powerful business tool
As the world rapidly shifts toward digitalization, the manner in which businesses operate changes as well. In fact, the only way to thrive in this new era is for modern businesses and established enterprises to adapt to the changes technology brought. Data analytics, for instance, is one of the many vital aspects that entrepreneurs must take a closer look at to help them leverage their existing data and grow their businesses.
Data analytics is a very broad term. That said, if you are looking to learn more about why data analytics is essential for your business growth, continue reading as I will dive deep and discuss how it functions.
What is Data Analytics?
Data analytics is the science of collecting raw data and understanding it to formulate valuable insights out of it. In simple terms, data analytics is the process of going through raw data and drawing conclusions from it. With the use of proper data analytics techniques, you can uncover metrics or trends that would otherwise be buried under all the data you have on hand. These data metrics and trends are used to determine the meaningful key performance indicators (KPIs) which give you a snapshot view of your business performance and health. These KPIs can be tracked over time to optimize the overall operation and efficiency of your business.
As Michael Berry and Gordon Linoff wrote in their book Data Mining Techniques, “forward-looking companies are moving toward the goal of understanding each customer individually and using that understanding to make it easier for the customer to do business with them rather than with competitors.”
Different Types of Data Analytics
There are different ways that your business data can be analyzed and used.
• Descriptive analytics is a description of what happened over a certain period.
• Diagnostic analytics is focused on why something occurred.
• Prescriptive analytics offers suggestions for the right course of action.
• Predictive analytics is about predicting what will happen.
All four types of data analytics can be very useful for your business.
How to Use Data Analytics to GROW Your Business
Large companies use data analytics to drive up sales, identify bottlenecks in businesses processes, optimize marketing spend, reduce costs, increase customer retention and grow profits. Almost any type of business data can be subjected to data analytics processes in order to gain insight into your business performance and customer base. It is not only large companies that can utilize data analytics, but you can also use it to gain valuable, actionable insights into ways to grow your business.
Some of the ways that you can use data analytics:
Finding New Customers
Business data analytics can be used to come up with a detailed profile of those people who are likely to be your new customers. To achieve this, we need to use data analytics techniques to study your existing customers and then to identify the things that led them to become a customer of your business. Only when you have completed this analysis can you create an accurate profile of your potential customer. Using this profile, you can take action towards targeting and attracting those potential customers and convert them into new business. By using data analytics in this way, you are making data-driven decisions and will not be making uninformed guesses.
Planning for Expansion
Are you planning on expanding your business? If you are on that path, then you can use the data that you have about your business in order to plan for your expansion. By the time you are planning your expansion, you should have a lot of valuable information about your current business performance, your customers, and other factors surrounding your business. You can use data analytics to make predictions that will ensure that your expansion will go smoothly.
For example, you use data analytics to determine what it is that needs to be expanded and what bottlenecks exist that are standing in the way of your growth. Do you want to get more sales? If so, then is opening another branch or focusing on an e-commerce store the best path to that goal? Do you need in increase your marketing efforts to generate more sales? What is the best sales channel with which to drive your future growth? Should you reactivate existing customers to grow repeat sales revenue? Maybe there are other things that you need to do to achieve that goal. The way to determine the answers to these questions and to predict the best strategy to drive your business expansion is through the proper use of data analytics.
Developing Your Marketing
This is one of the best ways that you can use data analytics. A large part of marketing today is done through the internet, which gives you access to a lot of detailed data, which in the past would not have been available. Using the data that you can gather about your customers or even those who engage with your website and social media posts, you can decide on the types of marketing campaigns that would be most effective in increasing sales.
One of the best examples of a company that uses data analytics in marketing and advertising would be Netflix. If you are familiar with how the streaming giant sends suggestions of movies and shows to its subscribers, you would know that they base it on data about how subscribers used their platform in the past. They send targeted suggestions based on the movies and shows that subscribers have watched. Amazon is also using data analytics when they suggest products other customers purchased at checkout based on what is in your cart. This use of past sales data helps Amazon automatically increase the average order value(AOV) of each new customer order.
Predicting the Future
Predictive data insights is a branch of data science related to seeing into the future. This can be achieved with the use of:
• Historical data mining
• Machine learning
• Artificial intelligence
By combining those three, you can predict what will happen and base your business decisions from that. As a form of data analytics, predictive insights and data science is fast becoming a favorite and is increasingly being used by companies.
This process involves a model. Historical data is fed from the data warehouse into the statistical model to test if its predictions would match with has happened. Once tested, current data will then be fed into the model for it to come up with a prediction. You can also use predictive insight for your business. For example, a model may identify a certain customer as someone who has the potential to cancel your service. Once that customer has been identified, you can implement means in order to try to retain them and reduce customer churn.
Driving Down Costs
You can also use data analytics in order to drive down the costs of your business. For example, you can use the data that you have gathered about your business to identify the times when you are getting the greatest number of customers so you can have more staff during those periods and cut down on staff costs during times when there are fewer customers. You can use analytics to reduce most, if not all, of the costs related to running your business.
The Process of Data Analysis
To use data analytics correctly, you need to understand its process. Here is a simple explanation of that process:
1. The first step is to decide on the questions you want to answer and the data sets that will be used to solve this problem. This step includes determining how the data is going to be collected and grouped.
2. The next step is the actual process of data collection in a data warehouse. Ideally, the data can be collected online and through automated means, as it would be a repeatable, accurate and fast process.
3. The data should then be cleaned or scrubbed. That means removing obvious errors, duplicates, and incomplete entries.
4. Once collected, the data should be analyzed in the data warehouse and organized for easy viewing. The most common means of organizing the data is to place it on a spreadsheet in a report format.
5. Visualization of the business data in easy-to-use dashboards and graphical formats is the final step of the process. When you reach this step you now have the ability to put your finger on the pulse of your business at a glance.
It is Time for You to Use Data Analytics for Your Business
You do not want to be left behind if your competition is already leveraging their data. And if they are not, then using data analytics in your business would give you a definite advantage in the marketplace.
Basing your decisions on the analysis of your own data means that you are now a data-driven enterprise and are not relying on guesswork to run your business.
Collage Analytics consultants can help you with your enterprise data strategy and help you use your data to grow your business. Contact Collage Analytics for a FREE consultation today!