Small and large-scale businesses all want to boost profit by increasing efficiency, and one of the best ways to do this is through data analytics. Technological innovation has led to the creation of several modern data analytic tools and techniques that can be optimized to ensure business continuity.
This article includes a thorough definition of data analytics and its role in business. It covers why data analytics is important for businesses and how data analytics helps business growth. You will also find some examples of how data analytics helps business owners stay ahead of the competition.
What Is Data Analytics?
Data analytics is simply the discovery and analysis of raw data to drive valuable insights so businesses can make data-driven decisions. Data analytics combines statistics with computational analysis to answer critical business questions. There are primarily three types of data analytics, including descriptive analytics, diagnostic data analysis, and predictive analytics.
Descriptive analytics involves summarizing and modeling raw data so that everyone can understand what it entails. Diagnostic analysis has to do with finding the cause and effect based on the data that has been described. Predictive analytics projects possible future outcomes.
The Role of Data Analytics in Business
When data analytics is geared toward improving business performance, it is often called business analytics. Business analysts are top earners in the United States, with an annual average salary of $82,343 per year, according to ZipRecruiter. Their high salaries are attributed to the fact that they help businesses make important decisions. Some specific benefits of data analytics to businesses are listed below.
Why Is Data Analytics Important for Business?
- Trendspotting. Data analytics provides the perfect opportunity for businesses to identify emerging trends in their respective niches. Using data analytic tools, businesses can determine which aspects of the industry are growing, stagnant, or declining.
- Actionable insights. Data models are often accompanied by insights. After diagnostic data analysis identifies a problem, the business analyst suggests solutions that can help the organization move beyond those issues.
- Customer satisfaction. Data analytics helps businesses determine what customers want. The more a business knows about customer needs, the easier it is to meet them and leave clients satisfied.
- Decision-making. All the data gathered and analyzed using data analytic tools play crucial roles during major decision-making processes within an organization. Stakeholders rely on data analytics insights to decide which venture to pursue and which product to kill.
- Business projections. With the right data sets and predictive models, a data analyst can make projections for a business’s short and long-term progress. Short-term estimates can range from quarterly to yearly, while long-term projections can range from five to ten years.
How Data Analytics Helps Small Businesses
- Reduces operating costs. Data analytics gives small business owners a clearer picture of how the business is doing so they can channel their resources accordingly. In the long run, this can help the business save costs.
- Boosts revenue. Data analytics helps small businesses generate revenue. Something as simple as a customer survey can tell the business owner how to get clients’ attention and generate conversions.
- Enhances marketing efforts. The insights gained from marketing data analysis methods can enhance a small business’s marketing performance because they can help it better understand customer behavior. Therefore, data analysis can assist in creating a more effective marketing campaign.
What Can Data Analytics Do for Your Business?
Data analytics has a wide range of real-world applications in both small and large businesses. The list below will help you see how data analytics might benefit your company so you can evaluate if the investment is worthwhile.
10 Things Data Analytics Can Do for Your Business
1. Help in Risk Management
There is always a risk attached to every business, but these risks can be mitigated with the right data analytics strategy. Data analytics tools can be used to predict the possible outcomes of certain events and help business decision-makers determine if specific risks are worth it. With a statistical model that is designed to meet your business needs, you can get automatic risk mitigation reports.
2. Fix Bottlenecks
A bottleneck can stall an entire project even if it is often difficult to identify. With a clear and descriptive picture of the entire production and supply process in your company, you can identify and fix bottlenecks. This will speed up the entire development process, save resources, overcome challenges, and eventually maximize profit.
3. Promote Data Security
Data analysts often work closely with other network security experts to promote data security within an organization. They must be familiar with various information security processes to prevent potential security breaches in a company. If the security of an organization is compromised, a data analytics tool can be used to run diagnostics and create a report about possible loopholes that may have caused the breach.
4. Improve Research and Development
The research and development team can work faster and more efficiently with prescriptive analytics. Raw and undefined data can be cleaned, refined, and used to speed up all types of product research. Each finding during the analysis will have a mountain of data to support it.
5. Help You Stay Ahead of the Competition
You can use data analytics to keep ahead of the competition when it comes to businesses that provide similar goods and services. Data analysis also helps you determine what your successful competitors are doing well, so you can implement similar methods in your own company.
6. Build Customer Loyalty
Getting customers alone is not enough to ensure business continuity. You also need to work on retention and referrals. The only way customers will come back to you or tell others about your products and services is if they are satisfied with what they get. Data analytics can help you streamline your business efforts to meet your customers’ needs.
7. Assist with Estimating Budgets
The actionable insights acquired from data analysts can help businesses develop accurate budget sheets for the year. Preparing your company’s budget with the right data set may allow you to save on operational costs without compromising on the quality of the product.
8. Support Business Growth
As your business grows, you will need to keep up with the new demands of handling a bigger business. Data analytics may provide you with vital information that can help you scale your organization quickly, profitably, and sustainably.
9. Keep Track of Your Online Reputation
Companies have to go the extra mile to ensure that their reputation remains unscathed online and offline in this social media era. A data analytics system can help brands monitor their online reputation, so they will always know when people are talking about them and what they are saying.
10. Assist in Inventory Management
Keeping an inventory of all the products that go in and out of your business is vital in determining profit and loss. Data analytics processes help you understand the supply chain and determine the best way to optimize inventory management.
Examples of How Data Analytics Helps Business
The application of data analytics in business is broad, so several examples can help you understand its impact on organizations. For example, a company like Facebook uses advanced machine learning to analyze consumer behavior and show users only the most relevant information each time they visit the social media site.
A hospital can use data analytics techniques to improve patient care, and an ecommerce business can use insights from data analytics to create perfect promotional content for the right audience.
Conclusion: Why Use Data Analytics for Business?
Whether you are a small or large-scale business owner, you can benefit from data analytics in several ways. All you have to do is learn exactly how it works. There are several data analytics bootcamps that can provide you with the knowledge you need to get started.
How Data Analytics Helps Business FAQ
Data analysts can work as business intelligence analysts, data engineers, data scientists, marketing analysts, and operations analysts. Data analysts can be independent contractors or paid employees, depending on their preferences.
Machine learning, data visualization, and programming in SQL, R, and Python are the top three skills every data analyst should have. It is also important to be proficient in Microsoft Excel and data modeling and be familiar with artificial intelligence.
Yes, data analysts earn an average salary of $67,294. However, salaries can be as high as $113,000, according to ZipRecruiter. The highest-paying cities for data analysts in the United States are San Jose, Oakland, and Tanana.
No, entry-level data analytics jobs do not require advanced coding skills. However, you will need to learn Python or R for statistical programming. For more advanced careers like data engineering, full stack software development knowledge might be a prerequisite.
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