According to IDC, global data volumes will reach 175 zettabytes by 2025, up from 45 zettabytes in 2019. The main factors driving this exponential data growth include increasing internet users, broadband access, mobile phones, and social media users.
For businesses, however, it is not the volume of data that matters most but rather the knowledge of how to use it.
Due to the disruptive impact of data trends on entire markets, businesses are adopting data-driven cultures to keep up with their competitors. From personalizing marketing pitches for individuals to identifying and mitigating business risks, data analytics can be helpful to organizations in many ways.
How Can Businesses Effectively Use Data Analysis?
Using data effectively will allow your business to overcome obstacles quickly and succeed. Analyzing data successfully requires access to relevant data and tools that support insight discovery. Employees can address specific business challenges more effectively when these elements are in place.
By starting small and demonstrating immediate value through data and analytics, teams will feel motivated to adopt it as a business strategy. As a result, a data-driven culture emerges within the organization in which data is valued, practiced, and promoted to generate positive outcomes.
Furthermore, every employee of your organization should know how to use data to generate valuable insights. While some may already have that understanding, others can learn everything they need to know about data through a data analytics bootcamp online program.
Besides contributing to establishing a data-driven culture, this will help employees understand how and where data can be helpful in the business. Here are five ways data analysis adds value to a company:
1. Making Informed Decisions
Analyzing data can help enterprises make better financial decisions and reduce errors. Predictive analytics can provide insight into the potential outcomes of organizational changes, while prescriptive analytics can provide recommendations for how the organization can best respond to such changes.
Businesses can use data analytics tools after collecting new product sales data to assess the effectiveness of the changes. For example, a company can use a model to determine how price changes or new product offerings might influence customer demand. The models’ hypotheses can be tested through A/B testing.
Visualizing the results can assist decision-makers in determining whether the changes should be implemented across the organization.
2. Provide a Personalized Customer Experience
You will begin to recognize recurring patterns and themes as you gather data from various platforms and demographics. Your company’s product persona can be constructed based on these repeating themes.
Considering these personas, marketers and customer service representatives can modify game plans to meet customers’ expectations.
A McKinsey study suggests that personalizing the customer experience boosts revenues by 5-10 percent. Let’s suppose that most customers do not like the company’s updated checkout feature on its website; this indicates a negative opinion of the feature, which makes it an inconvenience.
Using this information, you can redesign the checkout page to address the concerns of the virtual customer. As a result of addressing this issue, customers may feel more connected to the organization.
3. Enhance Operational Efficiency
By using data analytics, organizations can improve their operational efficiency. For instance, the collection and analysis of supply chain data can provide insight into the underlying causes of production delays and bottlenecks and help predict potential problems in the future.
A demand forecast can help companies determine if a specific vendor will not meet the volume requirements around the holidays. The enterprise may then need to replace or supplement the vendor to avoid production slowdowns or halts.
Additionally, many businesses, particularly those in the retail sector, have difficulty maximizing their inventory levels. Companies can use data analytics to determine the optimal product supply based on holidays, seasonality, and societal trends.
4. Improve Data Security
The security of data is a concern for all businesses. Organizations can identify the factors contributing to past data breaches by analyzing and visualizing relevant data. For example, IT departments can analyze and visualize audit logs using data analytics applications to determine how and where an attack originated. By using this information, IT can identify and resolve vulnerabilities.
Most attacks are caused by abnormal access behavior, notably distributed denial-of-service (DDoS) attacks. The IT department can also prevent future attacks by using statistical models. An organization can set up these models to run constantly, with surveillance and notification layers applied to detect anomalies and flag them so that security professionals can take immediate action.
5. Managing Risks and Overcoming Failures
The world of business is full of risks. These include customer thefts, outstanding receivables, employee safety, and liability issues. Analyzing data can help a company identify risks and take preventative measures.
Propensity models are statistical models that are capable of predicting future events. For example, a retail chain may run a propensity model to determine which stores are most likely to be robbed in the future. By analyzing this data, the company could determine how much security is required at store locations.
Furthermore, data analytics can be used to minimize losses in the event of a failure. When a company overestimates the demand for a product, data analytics can assist in determining the right price for a clearance sale that will help decrease inventory levels.
A company may develop statistical models that automatically recommend solutions to recurring problems.
To Sum it Up
Any successful company must conduct data analysis as part of its daily operations. Business owners may have initially found data analysis challenging to understand and therefore had difficulty valuing its benefits, but now they realize how vital this methodology is.
Using data analysis, businesses can collect, analyze, and report useful information that can help them improve their performance. Analyzing this data can also assist them in making strategic decisions, achieving significant objectives, and solving complex issues.
By applying the right tools and techniques, raw numbers can be converted into meaningful insights that empower managers to make intelligent decisions. By doing so, a business can increase productivity, become more innovative, and expand into new markets.