How to Use Business Analytics for Decision Making
In a fast-changing business environment, companies must make important decisions quickly. Business analytics provides a competitive advantage. Analysis supports decisions that are fact-based, real-time, and rooted in a single source of truth.
Analytics underpins good business choices at critical junctures during decision-making. It provides context, proves or disproves hypotheses, and charts intelligent courses of action. Data analysis is often worth its weight in gold.
Artificial intelligence has expanded what business analytics can do. AI tools can scan large datasets, detect patterns, forecast outcomes and summarise findings quickly. Decision-makers still need to check the source data, assumptions and commercial logic behind each recommendation.
Data analytics is a fast-rising priority globally, and there’s a greater focus on the value of big data and the experts who can extract that value. Here’s a granular look at how to use analytics for decision making.
1. Set Realistic Goals Using Data Analytics
There’s a wealth of information available to any business that’s ready to embrace it. Data is probably the most important resource a business can possess. With data, you can drive change with positive outcomes and support your business’s growth.
Setting goals for your business will involve guesswork without the right information. You don’t want your business goals to be a moving target, shifting from time to time. This is where data science, data analysis and predictive analytics come into play.
With analytics, you can assemble data from historical trends and previous activities. You’ll have a clear idea of what your goals should and can be right from the start. This ensures that you don’t miss opportunities to help your business grow.
By analyzing historical data and industry trends, you can model potential future outcomes for your company. Data analytics also makes it very clear when certain goals aren’t possible. Data analysis shows both weaknesses and strengths that you can improve on to grow your business.
Analytical exploration clarifies the view
Business analytics is often able to present “the big picture”. It lets you consider more factors, relationships, and entities before reaching a conclusion. At the same time, analytics sharpens the viewpoint of managers and CEOs, allowing them to better appreciate problems and potential solutions.
Business intelligence is critical in business because great information enables excellent decisions. Business problems are rarely isolated incidents – they typically have several contributory factors. However, the process becomes compromised when conclusions are drawn from incomplete facts or a sample that is too small.
Data analytics allows everyone to step back and see what scenarios feed into the problem, then come back with a better understanding. This expanded view helps companies identify root causes more accurately and plot a suitable path forward.
2. Use Data to Build a Foundation for Decision Making
It’s important for every business decision to be grounded in solid data. Data analytics can provide you with key insights that help you make the best choices to serve your business and customers.
A decision-maker’s intuition and experience are valuable, but decisions that affect a business ought to rely on data. You can’t make good decisions about inventory management, pricing strategies and other business factors without data. Even when it comes to hiring people, actionable data can help you assess how many people to hire and how best to deploy them.
A 2016 report found that highly data-driven organisations were three times as likely to report significant improvements in decision-making. By incorporating data analytics into your business decisions, you’ll reduce risks and gain a competitive advantage. You’ll also feel more confident that you’re improving your efficiency and business profits.
Business data provide solid evidence
Data can provide solid evidence when it is relevant, reliable and properly analysed. It can back up assumptions or disprove predictions, providing the backbone for accurate decisions. Data-driven decision-making (DDM) offers a systematic approach.
Making hypotheses is one of the primary stages of problem-solving and decision making. For instance, when confronted with a crisis, good business leaders will theorise about what could be wrong from the nature of the situation. But going on to act using untested hypotheses will create bad decisions and poor outcomes for the company.
Instead, organisations can employ business analytics to assess the underlying data and test assumptions. Accordingly, a hypothesis may be confirmed or refuted by data, or the results may point to a more relevant line of inquiry. In either case, the company can move forward with greater confidence.
3. Know Your Target Customers Using Analytics
Every marketer will tell you that one of the keys to success is to identify and understand your potential customers. If you don’t know who they are exactly, you’ll have trouble finding them and pitching the right message. Analytics provides customer insights that help businesses consistently make sound marketing decisions.
Monitor social media
Analytics tools can also provide in-depth information on what people are saying about your brand online. You can track your brand mentions and hashtags on social media. Social media websites provide analytics to measure the effectiveness of ad campaigns on their platforms.
You can get data on where your audience is from and what their interests are. These platforms also let you know what devices your audience is using and provide important demographic information. You can use this information to optimize your website and manage content.
If your brand is trending online, you can gather and analyze information that will help you leverage this in the future. With billions of people active on social media, analytics can help you reach out to the right audience. This will help you boost traffic and drive conversions to help your business grow.
Find your ideal demographic
There are many ways to identify your ideal demographic with analytics. Data from your existing customer base and social media are valuable sources of information. You can study your competitors’ audience as well. There’s also publicly available data that can be helpful. By using marketing analytics to study your audience, you’ll get rich and insightful information.
Tools make it easy to gather data about your audience. You can add Google Analytics to your website. Facebook and other social media platforms also offer solutions for businesses. You can also add analytics plugins to your site to understand user behavior. You’ll know how people interact with your products and the type of content that creates the most engagement.
Once you’ve determined your ideal demographic, you can provide tailored content and solutions. In this way, leveraging data analytics can lead to more conversions.
Segment your audience
You can also divide your audience into distinct groups with marketing analytics. This provides great value for your business, helping you avoid forcing irrelevant content on your audience.
You’ll be able to create better products and make your communications more personalized. Tools like Google Analytics will help you learn more about your audience. When linked to Search Console, Google Analytics can show the search queries that lead to your site. This helps uncover your users’ intent. Once you know what your audience is looking for, you’ll be in a better position to meet those needs.
Create mass personalization
When you’ve segmented your audience with the help of analytics tools, you can create mass personalization. You can set up tools to automatically and effectively personalize email marketing content. You can automate and personalize ad content to target large groups of people and create personalization at the same time. This boosts your business’s reach and impact, driving up conversions.
Personalization is powerful. By using data to drive your marketing efforts, you can set up relevant experiences across your customer’s purchase journey.
Once you know who you want to reach, data can also help you decide what message is most likely to resonate with them. In B2B marketing, an interface such as GTM AI helps uncover relevant companies, contacts and buying signals that marketers use for targeted outreach. Email content then better matches different audiences while keeping your campaigns efficient and scalable.
4. Business Analytics Delivers Piercing Insights
Business analytics not only provides better information; it can also deliver game-changing insights. Using data science to correctly clean and visualize data can help organisations uncover hidden connections, forming the basis for intelligent action.
For example, a 2019 KPMG report on trends in infrastructure discussed how companies use predictive analysis to anticipate and resolve operational issues. One of the surveyed companies, a mobile network operator, noted that it leveraged big data to foresee outages seven days before occurrence. Predictive analytics saved costs and boosted operational efficiency.
Another way that companies employ business analytics is to analyse and predict customer behaviour. For example, an e-commerce company can implement analytical models to understand what products customers buy and why.
Artificial intelligence and machine learning also help the company predict what other products would sell or even answer more profound questions about the viability of a business line.
According to research cited by McKinsey, organisations that leverage customer behavioural insights outperform peers by 85% in sales growth and more than 25% in gross margin. Having insights at this level provides such refinement and accuracy to business decisions; it almost feels like cheating.
Related: Business Analytics vs Data Science
5. Use A/B Testing for Major Calls
Business analytics is key when faced with critical strategic decisions. Sometimes there’s great information that helps characterise the problem and enough data to formulate viable strategies. But it might not be clear what plan works best.
When the option is between A or B, analytics can reliably tell businesses where to go. Here’s an example of such data-driven decision making.
Uber upgraded its Customer Obsession Ticket Assistant (COTA) in 2018. The company used analytics to determine whether COTA v2 – which uses natural language processing and machine learning to improve agent speed and accuracy in responding to support tickets – would be more effective than the previous version.
Through A/B testing, which compares two choices and their outcomes, Uber found that COTA v2 produced a 6.6% relative reduction in average ticket handling time and more accurate recommendations, along with a slight improvement in customer satisfaction.
Without business analytics, the company would have been reduced to educated guesswork, which might have had negative revenue and brand impacts. Insights gained from data allowed Uber to improve customer support and save millions of dollars annually.
6. Apply Business Metrics to Learn from the Past
Data analytics tell you about the health of your business. You’ll have a clear idea of whether you’re on the road to achieving your business goals, what’s happening in your business, and what you should do to make it thrive.
Business analytics enables forward momentum for companies and is also great for ongoing monitoring and measurement. Business decisions take time to prove themselves, so there’s a need to assess impact and key takeaways, particularly for major judgment calls.
Companies can select, monitor, and measure the right metrics to determine if the effort was a hit or miss with their analytics capabilities. So, they not only gain the support to make intelligent decisions but can also accurately reflect and come away wiser.
It’s easier than ever to get pertinent data that affects your business. There are tools developed by data scientists that you can easily embed on your website. You can automate data collection and analysis, and get sophisticated reports on your own dashboard.
Lift revenue and shrink costs
A 2017 Boston Consulting Group study found that leading data-driven marketers achieved up to 20% more revenue and 30% greater cost savings.
A 2018 MicroStrategy survey found that process and cost efficiencies, strategy and change, and monitoring financial performance were among the leading uses of enterprise analytics. Companies can act quickly, safely, and profitably using descriptive, diagnostic, predictive, and prescriptive analysis.
Analytics is useful to monitor e-commerce activities, ad campaigns and multi-funnel channels. It allows you to measure their performance and effectiveness, making it easy to see what works and what doesn’t. You can stop campaigns that aren’t bringing in results, figure out which keywords are driving traffic, and put resources into better keywords and campaigns.
Related: Business Analyst: Job Description, Role and Skills
7. Embrace Analytics to Drive Business Growth
Embracing data throughout your organization has clear benefits. You create actionable insights by adding analytics tools to your websites and business processes. You can track different activities and create measurements that produce actionable data.
The saying “what isn’t measured can’t be managed” is truer than ever these days. Without analytics in place, you’ll be feeling around in the dark. Data analysis helps you understand what works for your business and what doesn’t.
But these insights don’t extract or interpret themselves. Companies rely on data science and skilled business analytics experts who can crunch numbers and distil contextual value. If you’re interested in helping businesses work smarter and faster, take a business analytics course to broaden your skillset.
Make data analytics a strong part of your business by implementing it at every stage. You can do this by getting the right tools and hiring qualified people. Encourage your entire organization to make decisions based on data as well. When you introduce analytics to your organization at every level, you’ll pave the way to business growth.
