Businesses generate all sorts of data according to their own nature of business, including sales information, customer contact, website traffic, and stock changes, among others. In the developed world, information flowing to use is no guarantee that the respective business will be one that will grow the fastest. Those that are more successful have always been the ones that are capable of processing that information into decisions.
From guesswork to informed decisions
Prior to the availability of analytics tools to companies, decisions were made primarily based on intuition, experience or the opinion of the most powerful person in the room. This approach does work sometimes, although it can be quite inconsistent and cannot be generalised.
Data analytics provides companies with solid data, leaving no place for guessing. Companies can measure which marketing tool is the best one for them, as opposed to guessing it. Also, they can make better decisions concerning the performance of the company without any guesses regarding sales and inventory.
Where analytics drives the most growth
Becoming more knowledgeable about customers. Analytics yields information that could not be gained from only a few discussions or reviews. Such as what items are usually purchased together, what step in marketing leads to a customer’s disloyalty, or how a particular phrase can trigger more successful sales.
Identifying the existence of inefficiencies beforehand. Operational statistics such as delivery times and production bottlenecks lead to the identification of problems before they become too expensive to solve. This approach is much cheaper than fixing problems later.
Becoming more efficient in spending money. Analytics helps businesses track sales of every item separately, thus making it possible to compare the effectiveness of different marketing channels. Budgets are shifted based on data of what works in sales.
Enhancing pricing and forecasting of profits. Historical data regarding sales, trends in seasons, and market movements result in efficient pricing decisions and precise forecasting of demand, thus minimising the risks of stock surplus and losses.
The shift from reporting to prediction
Business analytics used to only give out information about past events and occurrences. The transition has occurred only recently when businesses started to use predictive and prescriptive analytics to provide a more useful solution. This is the current situation where not only is information given regarding what has happened sometime in the past, but it is also indicated what is going to happen and what company will implement it with respect to the received information?
It is worth pointing out that instead of reporting just on the way the products have been sold during the previous quarter, retailers may switch to a more informative solution such as “the following products will sell well next quarter” or “how much of these products to have in stock”.
Why this matters more as a business scales
In small businesses, founders are usually able to rely on intuition for their business decisions, since the founders of those businesses have a lot of insight and feel about what is really happening with every customer interaction and transaction. However, as the business grows, such intuition is difficult to use, as there are more customers, more transactions and more things happening in the business at once, leading to the inability of any one person to keep track of the ongoing things.
Data analytics is the answer to this issue, as it will provide the means for a growing business to maintain the same level of understanding about its clients and operations as it was able to do when it was small.
Getting started without overcomplicating it
It is unnecessary to hire an entire data science team in order to implement data analytics in your company and will usually only involve the implementation of certain habits. The most important of these habits includes beginning with the question that needs to be answered and not with the data at your disposal.
It is also essential to keep all data organised in one single source of information. It is essential to focus on a limited number of metrics in the beginning, since if you try to measure a whole lot of things at once, you will most likely end up confusing yourself.
The bottom line
Analytics makes decision-making more accurate and efficient, rather than replacing it. Companies that achieve sustained growth are usually those that have left their reliance on instinct behind and started using their own data to make relevant and informed decisions. In the context of competition, good judgements and data lead to productive outcomes, and that ultimately leads to the generation of more data for analysis.
