Today's digital machinations have allowed businesses to get a clearer perspective of the landscape. Customers Googling something, visiting a brand's social channels, or spending time on a product page – they all leave a digital footprint. This data is akin to a window into customers' actions and thoughts. And it makes analysing data a critical part of how businesses operate today.
Access to a wealth of data allows you to take the guesswork out of the equation. Businesses no longer have to guess which ad drove a customer to the store or which types of content get the most engagement. But data analysis isn't exclusive to marketing. Standard business processes can also benefit from making data-driven decisions.
Read on to learn more about data analytics in business and how it helps management make informed and, ultimately, better decisions.
Data analytics defined
Data analytics involves studying raw data and deriving actionable insights from the available information. The practice can help develop strategies and make informed decisions. For example, a bottling company records its operations' runtime, downtime, and production rate. It can then analyse that data to find out how to improve workloads and reduce queueing for different machines.
Types of analytics
Before you dive right in, you need to know the different types of analytics. Which one you use depends on the data available and the kind of information you need.
- Descriptive – It analyses something that has already occurred.
- Diagnostic – This aims to identify why that something happened, making it a more in-depth analysis than the former.
- Predictive – It uses historical data and trends to make assumptions about the future.
- Prescriptive – This type provides actionable items an organisation should perform to achieve its goals.
How to use data to make better decisions
The wealth of available data means you need to have a concrete plan for conducting data analysis. This helps guide you throughout the process, ensuring that the steps you take are aligned.
1. Define the goal
Defining your goals enables you to know what success looks like. It also helps choose key performance indicators (KPI) that will ultimately influence decisions later. Remember that the more specific your goals are, the easier it will be to quantify success.
2. Identify reliable data
The main challenge here is drawing data that are relevant to your goals. With data available from multiple sources (such ads on different platforms), it's easy to spend time analysing low-impact, high-complexity data. A good rule of thumb is prioritising data with the largest sample sizes. Additionally, keep in mind that objective data is always better than subjective ones.
3. Process and analyse data using the right tools
The tools you use to process and analyse data sets largely depend on your objectives. For example, if your goals include improving your sales funnel, customer relationship management (CRM) systems would be beneficial. This lets you trace customer actions and behaviour, like when they first land on your pages, when they contact you, and when they make an order.
Fortunately, most platforms, like email providers and web services, provide in-house analytics. You can then use simple tools like Excel for data processing. Alternatively, it's best to employ data analytics services if you're unsure how to go about data analysis. This lets you focus on core business processes while professionals do what they do best.
4. Learn from your conclusions
Coming up with actionable items to implement is part of the process of continually improving. You won't always come up with the best solutions despite how well your data analysis is performed. As such, adding your performance and results to your data pool is vital. This will be invaluable as you go along.
Benefits of data-driven decision making
Using data to make business decisions also offers distinct advantages to your organisation. These include:
1. Increased transparency and accountability
When decisions are backed by data, everyone in the organisation knows exactly why they're being made and what it aims to do. While not everyone will always agree with the actions taken, it at least promotes transparency and accountability.
2. Consistent improvement
Moreover, when things don't go as planned, you put yourself in a better position to make amends. The metrics you choose can show you where the shortcomings were and where you could further improve. This room for improvement benefits everyone involved.
3. Versatility
Being adept at analysing data enables an organisation to predict market trends and quickly adapt to changing circumstances like unforeseen hyperinflation. This allows it to quickly pivot strategies and adjust campaigns and operations. This can be crucial to gaining an edge over your competitors.
Takeaway
In an age with an abundance of data, the ability to assess, understand, and even challenge data has become vital to business success. Using data to base decisions on minimises the guesswork and allows you to monitor the impact of those decisions quickly. This puts the organisation in a great position to optimise operations and continually improve.
