The term “Data Analytics” is not unknown to any business owner. Every organization very well understands the importance of data analytics. Data analysis benefits businesses by gaining insights & an enormous amount of data that they can utilize for the growth of their business. However, many business people from all over the world have a wrong understanding of data analysis that it is quite complex & associated only with online businesses. In fact, few people think that it is a new-fangled technology that is restricted only to eCommerce businesses. But, all these assumptions are incorrect because data analysis is essential for the success of every business for centuries.
If I talk about in layman’s terms, data analysis is nothing but just the monitoring of your business records with the help of which you can make the changes in the techniques for the growth purpose of your business.
Three primary methods of business analysis are:
Descriptive: Analysis of historical data to determine the patterns.
Predictive: Forecast future results by using stats.
Prescriptive: Testing the application to identify which result will give the best result in a particular scenario.
With the given stats, you can easily estimate how data analytics is essential for improving customer experience:
- Audience management platforms utilised to gather customer data between online and offline channels is of utmost preference for 81% of companies (Merkle)
- After examining 100 million subscribers, Netflix influenced 80% of the content viewed thanks to precise data insights (Forbes)
- Data stories can communicate what your customers want and how they think. In fact, it’s foretold that data stories will be the most prevalent method of communicating data insights by 2025 (Gartner via Analytics Insight)
- 88% of firms in the US and UK are concentrated on accumulating first-party data because of the deceased third-party cookies as a path to deliver real-time & appropriate customer experiences ( Merkle)
Significance of Data Analysis
Peter F. Drucker, an American entrepreneur & the founder of Berkshire-Hathaway stated that “All industries have two functionalities: marketing & innovation.”
In these lines of Peter F. Drucker, the significance of data analytics for each business is summed up very well.
Let’s have a look at a few pointers through which you will have some understanding of the importance of data analysis in business:
As a label name, everyone desires to catch the right people. And data analysis can’t do anything better than monitoring your brand & product performance through several data analysis tools like tableau, rapidminer, etc.
Once you have an idea about which of your products & services are suitable for which demographic, then it will be easier for you to segment your audience for effective marketing. It will also be helpful for you to determine the type of advertising that you need to pick for your business & what will be the budget of the advertising campaign.
By analyzing the purchasing pattern of the buyer, companies can easily figure out what kind of product people like the most from your product line, how frequently they are coming to your website for purchasing the product, and which advertising method creates a major impact on the shoppers, etc. According to Forbes, “A large majority of officials who have been managing predictive marketing works for at least two years (86%) report improved ROI (return on investment) as a final outcome of their predictive marketing.”
Through data analysis, you will obtain invaluable opportunities to innovate only If you will exactly know what to do with it because data analysis provides you with a piece of rough information about the coming trends in the behaviour of the customers.
By doing these innovations in your products & services, you will get a sharp edge lead among your competitors. Moreover, you can patent your innovations the best outcomes from these changes that will ultimately help your business to stand out from the competitor’s queue.
Helps in Cutting Cost
Run your business smoothly & effectively by using the data analysis tools available in the market like tableau, Microsoft excel, rapid miner, etc.
By using these tools for your business, you can easily identify which segment of your business consumes unnecessary funds & which needs more funding to produce better results for you in the coming future. Data analysis gives you an accurate idea that benefits you in avoiding filler activities that are not adding any value to the business.
Problem Solving & Decision Making Functionality
Every problem that occurs in any business badly hampers the performance & financial aspect of the business. We can also see many instances where the business loss occurs, sometimes the reason behind that is the person handling these things is altogether new to the nitty-gritty of the business. Therefore, data analysis supports the organization by detecting any malfunction in the system that hinders the production quality & quantity.
Data analysis is incredible when it comes to decision-making in any organization. They provide insights about everything that is happening in your business whether in the right direction or in the wrong that needs to steer on the right track. After having all this information, you can effortlessly make the right decision for your business.
As you can check, these are a few of the top reasons why data analysis is important in business. Businesspersons have been performing data analysis in several ways since the very start of business on the earth.