Why is Data-Driven Analytics Of Importance To Companies? Top 6 ReasonsSeptember 9, 2022 2022-10-30 12:32
Why is Data-Driven Analytics Of Importance To Companies? Top 6 Reasons
The viability of a business is highly dependent on the decisions made. And business owners are cognizant of this fact. That is why more and more businesses are moving from making intuition-based decisions to using data to make accurate business decisions.
Business owners must make well-informed decisions. Data-driven analytics help businesses do just that: make accurate and informed business decisions.
But how exactly can data analytics help businesses and why is data-driven analytics of importance to companies? This article discusses what data-driven analytics is and why every company needs it. Let’s dive in.
What is data-driven analytics?
Also known as data analysis, data-driven analytics is the process through which businesses collect and analyze raw data to derive insights to improve business processes. Basically, businesses get to use data to answer key business questions.
Rather than being speculative or using intuition and a hunch to make business decisions, businesses now rely on data to make key business decisions. Businesses get to use past and current data to predict the future and make accurate decisions.
Data analytics is a robust process. It involves different steps: data mining and exploration, predictive analytics, prescriptive analytics, text analytics, and finally business intelligence.
This is the process by which companies collect and gather business data. This is the most important process in data analytics as it avails the data itself. There are several ways to collect business data. These include the use of surveys, feedback prompt, and data scrapping.
The collected data is then cleaned and readied for analysis. Abnormalities are identified and cleaned from the data. Finally, correlation tests are done to identify the relationship between variables. More and more models are then deployed on the data to make it make sense.
This is the use of available data to make predictions regarding the future. Patterns in the data are extrapolated to identify future patterns. Normally, this form of analysis is used to determine future prices, inform product research and development and finally minimize risks.
This is the process of using historic data to draw insights and recommend actions that will achieve the desired outcome. This method uses optimization techniques to find the best and most feasible course of action.
Though not very popular, text analytics is an important part of data-driven analytics. Text analysis is the process of extracting meaning from textual conversations.
Text Analytics helps to identify customer sentiment and feelings and measure customer satisfaction. The business can then act on the information to improve customer satisfaction.
Business Intelligence involves turning raw business data into relevant business insights. The information drawn from the data is used to come up with strategies and give the business a competitive edge. This makes the business more viable and adds to its sustainability.
Why is data-driven analytics of importance to companies?
Data-driven analytics is an important aspect of business today. A McKinsey research found that data-driven companies are over 20 times better in customer acquisition and satisfaction, 6 times better in retaining customers, and 19 times more profitable.
Here is why data-driven analytics is important to companies:
1. Improves Decision Making
Businesses have a lot of data at their disposal than ever before. Every customer engagement and interaction generates. Businesses therefore ought to leverage this data to improve business processes and gain a competitive advantage.
In a world where business managers have a lot of decisions to make, and with every decision having huge repercussions on the business, data-driven analytics aids with the decision-making process.
Real-time analytics helps the business to identify patterns and trends that are then extrapolated to make accurate predictions. This then informs marketing strategies, customer acquisition, and retention techniques and optimizes business processes.
Data-driven analytics also helps businesses to come up with realistic strategic goals. Other than setting up wishful targets, data-driven analytics help you to realize what is achievable and how to achieve it.
2. Helps to improve customer satisfaction and retention
Among the greatest challenges for businesses is customer satisfaction and retention. Great customer experience is the desire of every business.
Data-driven analytics helps businesses deliver a great customer experience (CX). Data-driven analytics techniques such as text analysis help to measure customer sentiments and feeling concerning your brand.
Businesses get to understand what their clients think and feel about the brand and how to improve on it.
Additionally, data-driven techniques provide companies with the ability to track customer engagements and customer retention. By understanding the most engaged customers, businesses can tailor the services they offer to their clients and devise effective marketing strategies to reach them.
3. Helps to identify opportunities for growth
Data-driven analytics helps businesses identify market gaps and untapped growth opportunities.
Analyzing customer-generated data helps companies to identify their customers’ like and dislike. Businesses, therefore, use this information for product development and to launch new products based on customers’ likes and needs.
Companies also get to discover the products that are not excelling and having sufficient uptake by the customers and determine whether to withdraw them from the market or improve them.
4. Helps to improve productivity
This is the greatest use of data-driven analytics. Businesses that use data-driven analytics are more productive and effective in their operations.
Data-driven analytics helps to identify the most effective and ineffective business processes. Businesses can then adjust and optimize their workflows accordingly. This then makes them more productive and effective in their work output.
Data-driven analytics also help companies track employee performance and productivity. The management team gets a clear picture of who’s meeting their targets and who’s lagging. This information can then be used to make decisions regarding promotions and bonuses.
5. Helps save you time and money
Data-driven analytics helps businesses to measure product performance. Businesses identify products that are doing well in the market and the ones failing. This then helps companies to appropriately allocate resources towards production and marketing.
Data-driven analytics also saves you money. Instead of allocating resources blindly, data-driven analytics guide companies on how to allocate precious resources for optimum returns on investment.
Businesses identify the areas in which they are wasting resources and make changes. Ultimately, data-driven analytics is a valuable tool that helps businesses to improve their efficiency and bottom line.
6. Helps to track the market
Markets are dynamic. You need to be on top of things and adjust accordingly. Relying on data-driven analytics gives businesses a major advantage in the marketplace.
A data-driven approach helps companies track consumer trends and identify new and untapped opportunities. It helps them to make accurate predictions regarding the future and informs their next steps.
Data-driven analytics is essential for any business that wants to stay ahead and maintain a competitive advantage.
Data-driven analytics is a major boost for businesses. Data has revolutionized business. Decisions are no longer based on intuition or a hunch. Instead, a thorough data analytics process is carried out resulting in accurate and realistic decisions.
The need for data scientists and specialists to handle large business data has tremendously grown over the past decade. Data professionals are continually sought after by all businesses. A career in data science and analytics is definitely worthwhile and the right step going forward.
We hope that we have answered the question why is data-driven analytics of importance to companies.
Are you considering a career in data science? There are big opportunities in the industry and we can help you take advantage of this hugely untapped goldmine.