Data analytics is one of the most talked-about buzzwords in business today. And with good reason: It’s a tool that can help you gain a competitive edge over your competitors. Companies increasingly use data analytics to understand customers, evaluate market trends, predict outcomes, and drive more efficient decision-making processes.
Over 2.5 quintillion bytes of data is generated everyday. However, this raw data is of no use to businesses. That’s where data analytics comes into the picture. Analytics enables companies to analyze a massive amount of data and use it for various purposes. That’s precisely why the global big data analytics market is projected to reach $105.08 billion by 2027 with a CAGR of 12.3%.
This article will look at data analytics and how businesses use it.
Defining Data Analytics
You may have heard of data analytics and wondered what it is. Data analytics is a general term for collecting, cleaning, analyzing, and interpreting data to make better business decisions. The goal is to gain valuable insights about your customers, employees, or business to improve efficiency and achieve goals.
Businesses can use various methods to extract information from their data sets. These methods include:
- Data mining: This involves creating algorithms that analyze large amounts of data to find patterns. These algorithms can be used by businesses who want to predict trends based on past behavior.
- Machine learning: Machine learning uses artificial intelligence (AI) technology, making decision-making possible without human intervention through self-learning processes that adapt to changing circumstances over time.
Data cleansing is the most crucial part of the preparation process. The cleaner your data, the more efficient your analytics results. In fact, if your data is not cleaned, it can even lead to substantial losses. According to data from IBM, data quality issues due to unclean data cost organizations $3.1 trillion annually. Once you get clean data, you can analyze it for the following use cases:
To Evaluate Market Trends
This is the most apparent use of analytics by companies of all sizes in many industries. For example, suppose you’re an e-commerce site or technology company that sells products on the web. In that case, you can use analytics to track customer behavior to determine the most effective marketing campaigns driving sales and conversions. You can also use analytical tools to see how people interact with your website’s pages to improve the user experience (UX).
Moreover, analyzing market trends help you understand which products and services are most popular in your industry, how different demographics prefer to use them, and what marketing strategies are most effective.
However, you need all previous and real-time data for evaluating market trends. If the data is siloed, the analytics results won’t be efficient. That means you need to integrate all your ERP and legacy systems. The question that arises here is how to integrate an ERP system. The best way to do that is to hire an ERP transformation consultant. Integrating multiple ERP systems is a complex process. Hence, hiring someone to help you along the journey is best to avoid any issues and make the transformation seamless.
To Generate Insights
Insights are the data that you uncover on your analytics journey. They are the fuel that energizes you to take action and improve performance in your business. Insights can be used in all areas of your organization, from improving customer experiences, employee productivity, and business processes.
- Customer insights – An online retailer has identified that customers who browse through its website have a higher chance of purchasing than those who do not. The retailer decides to increase its online marketing budget since it knows this will increase the likelihood of generating sales leads from browsing shoppers on their site before purchasing products elsewhere online or offline.
- Employee insights – A growing manufacturing company finds out its employees spend an average of 30 minutes each day searching for information about upcoming projects or tasks assigned by project managers or team leaders across different departments within their organization because the information isn’t easily accessible. In response, top management decided there needed to be better communication tools put into place, so all employees know what’s going on at any given time without having to dig through emails or documents manually looking for updates about changes made within each department’s workflow process.
As you can see, generating insights from data helps with faster decision-making. According to Harvard Business Review research, 87% of business executives feel that insights can help frontline staff make better decisions. Another report of over 1,300 business executives conducted by Splunk concludes that 93% of businesses using big data analytics feel that helping with quick-decision making is the most crucial benefit of analytics. Also, a report by McKinsey says that companies that use analytics for generating consumer behavior insights can leverage 85% more sales growth than those who don’t use it.
To Personalize Communication
Personalization is a powerful tool that can help you stand out from the competition, but only if it’s done right. If you personalize a message and send it to the wrong person, you could waste time and money on someone who won’t buy from your business anyway.
Personalization is crucial when it comes to generating more sales. Data shows that 80% of consumers are likelier to purchase from a brand that delivers tailored experiences. Additionally, a Salesforce report shows that 66% of customers expect businesses to know and understand their individual needs.
To Get Competitive Pricing
One of the most common uses for data analytics is to find out what your competitors are charging for similar products and services. You can use this information to get a sense of the market price and then determine whether or not you should charge more, less, or the same as your competitors to generate a profit.
For example, if you own an upscale restaurant that sells $100 entrees, but your competitor down the street charges only $80 per person for a similar experience at dinner time, it’s likely that customers will choose their establishment over yours because there doesn’t seem to be any significant difference between what you’re offering and what they’re offering.
They’ll also save money while dining out! If we look at this from another angle, on average, people don’t want to spend more than necessary on anything else. So, suppose one company offers something similar at lower prices than another company does without sacrificing quality or service level. In that case, consumers will still go with the lower-priced option regardless of its perceived lack of value because saving money makes them happy too!
With data analytics, you can get all such data and use it to offer competitive pricing. This can also broadly impact your profit margins. According to a recent survey, even small pricing variations can lead to around 20-25% of lower or higher profit margins.
The possibilities of big data analytics are endless. As long as there is data and people who can extract meaning from it, there will be opportunities for businesses to use this tool and get an edge over their competition.