Have you recently been bamboozled by the rising trends of "big data" or "data analytics"? Keep reading to learn more about what the “data analytics” phenomenon can do for your business.
What is data analytics?
According to Master's in Data Science, data analytics is "the process of analyzing raw data to find trends and answer questions." But, what does this actually mean for businesses? Simply speaking, data analytics is the process of analysing data sets to solve all kinds of problems and to answer questions about different aspects of business from finance to marketing.
But why is this actually necessary? Let’s delve into the reasons why your business needs data analytics.
Reason # 1: Increase efficiency
At a time with high uncertainty, it is very important for companies to remain nimble and quick to stay competitive. A study conducted by McKinsey found that "high-performing organizations are three times more likely than others to say their data and analytics initiatives have contributed at least 20% to EBIT (from 2016–19)."
Data analytics is the best solution to increase efficiency as it allows businesses to identify the processes that consume the most time and resources. Based on a KPMG report from Harvard Business Review, organisations use data to anticipate maintenance and operational issues before they become larger problems. By preventing the issue from happening in the first place, organisations can greatly reduce prospective costs.
A business that can implement a data-driven strategy within a short period of time wins the game.
Reason #2: Design better products & services
Trying to be competitive without innovation is difficult, but what makes innovative companies stand out? It's their utilisation of data analytics.
Businesses have access to consumer data such as email marketing reports, sales receipts, social media analytics, website analytics and publicly available data. All of these can be used to identify the gaps between a customer’s wants and what products are currently available on the market.
By understanding consumer behaviour, figuring out the best product for customers is no longer a difficult feat, thanks to data analytics.
Reason #3: Make smarter business decisions
It’s not only in designing new products where data analytics is helpful: it can also be used to help uncover underlying problems that may not have been diagnosed earlier. According to a report by the Service Corps of Retired Executives covered by Business.com, "73% of small business owners said that finding new customers is a top priority, while 63% rank retaining existing customers as a top issue."
Small business owners struggle to find the right solution to their problem because of a lack of understanding of the underlying issue. Data analytics can help to pinpoint the exact issue, leading to better-designed solutions.
According to McKinsey, Carrefour decided to quickly build a 54K square foot (5K square metre) online fulfilment centre in five weeks, after finding that data showed the need for more capacity. By figuring out the problem through listening to the data, your business can make smarter decisions.
Summary
As the post-pandemic era emerges, businesses that have made smart decisions through the process of analysing data will outshine others due to increased efficiency, better products and better services.
Kate Smaje, senior partner at McKinsey & Company, mentioned that "the crisis has forced every company into a massive experiment in how to be more nimble, flexible, and fast." Businesses will no longer be able to survive without optimising data analytics and utilising the insights generated from it. Now is the time for your business to walk hand-in-hand with data.