Should I invest in Data Analytics?
We’re often asked this question. People approach us because they’ve heard others, maybe a friend, business contacts, social media connection or even a competitor, talk about their use of data analytics and it spurs them on to explore this avenue.
But, we often find that the true scope of what data analytics can bring to a business is underestimated. So when the person asking “should I invest in data analytics software” asks, they’re very pleased they did. And once they know how much it can offer, in terms of understanding customers and opportunities to really steer and grow a business, the answer is a resounding yes.
What is Data Analytics?
Data analytics is a broad term covering business intelligence reporting, online analytics and advanced analytics. But in a nutshell, it’s the process of analysing data sets to draw accurate conclusions upon what the data relates to. In science, it’s often used in a rigid process to prove a theory or uncover patterns. In business terms, you evaluate areas of your business to see what’s working, where there’s opportunity and where there is risk as well as areas for improvement.
How Can Data Analytics Help My Business?
Many of the businesses we speak to approach us because there is a discrepancy between what they think they know about their business and the reality. They feel that they deeply understand their customers and the marketplace, and they do pull-off numerous business reports. But country to this, they’re surprised by churn levels, the monthly profit and loss report and when a new competitor starts taking market share. They don’t understand what’s happening.
Done well, data analytics will remove guess work and give clear, actionable and factual information upon which to make crucial business-shaping decisions, as well as information on what’s happening in the marketplace and global trends. So if you already think you’re doing business reporting, you may be surprised by what you learn when you start seeing the factual, cross-system reporting you’ll glean with the right data analytics software.
So, here are seven key ways in which data analytics can be applied to a business to such great effect that Forbes describes investment in data analytics as “essential.”
Deeper understanding of customers to improve your offering.
Understanding how customers use your product and/or service, what works and what doesn’t, is the backbone to your businesses.
In some consumer businesses, where relationships can be fickle and brand loyalty doesn’t always exist, having the right product at the right price with ease of use and user-focused service is crucial. Without it, you could see your customer base plummet overnight. Data analytics can help you understand how your customers feel about your business in these areas, so you can make the right moves to align your product and service offering with what customers want. Getting this right is about more than strengthening your brand, it’s about reducing churn and attracting new business. Businesses don’t exist without customers. So responding to customer desires in your product, services and marketing is everything, and data analytics is the key to understanding this.
As a poignant example, If Blockbuster were using data analytics to understand their market and customers, perhaps they wouldn’t have turned down an offer from Netflix, on the basis that they didn't believe people wanted to stream.
Attract new customers
As well as looking at the behaviour of current customers, data analytics allows business to see the behaviours of potential customers. What’s their digital footprint look like, where are they spending time, how do they engage with services, what are their expectations and how is behaviour different across target market segments?
The more you can understand about your prospects, and segment your channels to really speak to these groups on a personal level, the better your marketing and new business function will preform and the more return you’ll see.
Strengthen your market position
The stronger your approach with analytics, the stronger your competitive position. But it’s not just about using analytics, because your competitors may be doing so too, it’s about doing it well, asking the right questions and responding to your findings.
As mentioned above, if you use analytics to learn about your customers, you can then drive changes in the core areas that matter to them, and prospects, this will not only improve your offering but also your marketing and how you attract the right new business. All this will of course, strengthen your position in the market.
And the sooner you start with analytics the better, because the sooner you start driving changes based on fact and in response to customer desires, the more chance you have to become, or remain, a market leader.
Plus having access to historical data, as well as real-time data can give you even more insights and more factual proof to support and guide your decision-making.
Improve strategy with quicker and more-decisive action.
When you have clear, factual data sets in front of you, it becomes easier to take action and develop stronger, more decisive strategies. When you start basing your suggestions and decisions on fact, rather than assumption or gut feel, the right path becomes clearer and it’s easier to get buy-in from the wider company, including the board. This allows businesses to become more agile and more responsive to changing market trends. And new opportunities become more apparent, be these opportunities to streamline processes, new markets to delve into or new product or service offerings. It all becomes clearer and easier to respond to when it’s supported by data you can trust.
Over-time, your strategy can also be shaped by historical data so you do more of what’s worked, and less of what hasn’t.
The reason people say they “invest” in data analytics software and not that they “spend” is because an investment implies a return. Investing in analytics software will give you all the business-enhancing benefits mentioned above. It will support the growth and future proofing of your business, generate new business and open up new markets.
But it will also deliver actual, tangible, immediate money-saving. Data can highlight a great number of cost-saving opportunities, such as eliminating wasteful practises and reducing manual interpretation of data/figures, which can be especially laborious for financial roles.
Most companies are using humans to do some form of admin that a computer could do accurately, in seconds. Given a company’s biggest expense is people, the more time people can spend doing their core job the better for the bottom line.
Plug issues to limit risk.
We mentioned earlier, the importance of understanding customer desires, well what if you discover you’re not meeting them? Churn is increasing and the rate at which you attract new customers is declining. Many companies discover this too late. When the company has already suffered irreparable financial losses, or a competitor has seized the market and they're too far ahead, product or service-wise, to compete.
Investing in data analytics, and being able to report, immediately on key metrics as frequently as you like, can help you identify trends quickly. So businesses can pivot when they need to, or drop markets and products that aren’t providing a return.
It can often take companies a long time to discover emerging issues that are immediately evident, when the right reporting is in place.
How Do I Get Started With Data Analytics?
Above are seven very compelling reasons to get started with data analytics. But the key to all of this working, is making sure that the data you’re analysing is accurate, and that’s not always simple.
Data can be spread out across multiple systems and may need to be cleansed or re-modelled before it can be analysed against other data sets, otherwise results may be skewed. Which, as we touched upon earlier, is often the issue businesses suffer before they plunge into proper data analytics. They’re reporting on their business but what they’re seeing in reality is different. This is most likely down to inaccurate data.
This is where specialist software and implementation support can help. Using trusted software and having implementation support will simplify the process and ensure you gain meaningful, honest and actionable insights that you can trust, quickly. We offer Microsoft Power BI implementations to help companies harness the power of this impressive data analytics software. Our implementation involves gaining a deep understanding of what’s needed reporting-wise and the physical setting-up of visual dashboards and reports, as well as on-going support as needed.
So if you’re seriously considering data analytics, make sure you consider which software to use and make sure you’re clear on where data is being driven from, what the reporting means, and what you will do if you’re ever unsure on what you’re seeing. Once you have all this sorted, you’ll be so pleased you asked “should I invest in data analytics.”