Data Analytics is the collection of any data related to business. It is a form of business intelligence that is used for gaining profits and making better use of resources.
It consists of years of data about sales, customers, market patterns, profit patterns, competitor prices and anything else related to the business.
Using this vast amount of data, the business is able to make informed decisions by identifying hidden patterns, unknown correlations, market trends, and customer preferences.
There are various ways in which this process can improve your business and help it achieve its growth objectives.
1. Facilitate in providing exceptional client service
By having a large amount of data on hand, you can have all the information you will ever need about your clients. For instance, you will have records of the client’s purchase history and rate of return which can then be used to determine their loyalty and analyze their purchasing behavior. You can find out their preferences and needs and offer a personalized experience as you have individual data about every client.
Automated alerts and notifications can be sent on their phones or emails to inform them about new offers on their preferred products. The business can also recommend new products that match their preferences, resulting in a boost in sales. You can basically improve your overall customer service, increasing brand loyalty and reducing the chances of customers turning to other businesses.
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2. Help identify the need for price adjustments
By being aware of the latest market trends, price patterns of competitors and your own market position, the business can determine how and when an adjustment in its prices should be made. For instance, if customers responded well to a competitive price and sales shrunk after you increased it, you will know where the problem lies and what measures need to be taken to fix it.
Business analytics also help keep a close watch on the competitor’s sales patterns and trends. If the competitors reduce prices, you can respond quickly by reducing your own prices to avoid customer turnover. The examples of businesses using such price adjustment tactics are countless e.g e-commerce stores that give a last-minute discount to avoid customers leaving the shopping cart, airlines that change ticket cost according to the destination’s popularity or hotels that lower their prices during a storm. All these pricing tactics help not only to maximize income, but also to discover certain buying patterns that the business can use to its advantage.
3. Prevent customer turnover
In a survey conducted by Bloomberg Businessweek Research Services, nearly 97% of respondents reported their companies have adopted business analytics due to the benefits it can bring for the business.
By implementing data analytics, business practice better customer relationship management. For instance, if there is a reduction in a certain customer’s buying frequency, it will be easily identifiable through efficient data analytics, informing the business of the possibility of losing its customer. If you are able to identify this at a critical time, you will be able to retain your customers by initiating remedial strategies or asking the customer for feedback directly.
Their feedback will help your business in the long run as it will identify the main reason for churn or turnover, which can be extremely hard to know otherwise. This will be a good opportunity to learn about the weaknesses or flaws of your business.
4. Predict future sales
In addition to identifying market patterns, data analytics can also determine expected future demand. As you have sales data about each of your products and how they changed in response to changes in the market, you can use it to predict future sales.
For example, a business might discover that demand for various flowers and bouquets rises from October all the way to March, due to the holiday season, Thanksgiving, Christmas, New Year’s Eve followed by Valentine’s Day and Spring. Using this data, it can easily predict precisely how much of each product should be stocked in inventory at different times during the year.
5. Ensure effective marketing
Through data analytics, you can easily identify which products are the stars of your business and which ones are dogs, question marks and cash cows. The stars of your business will help you accumulate profits for your business while the dogs should be dropped because they result in losses. The cash cows and question marks are the products that need the most marketing.
6. Identify business opportunities
Business analytics can be used to identify new opportunities for business. For instance, if your business has a product that is high in demand and is doing very well in its current market, analytical data can be used to find new markets where it has the possibility of performing well. This could be a new geographical location or a new target market. If the business succeeds in expanding into this new market, it can significantly increase its sales and profits.
7. Reduce Wastage
Having efficient and up to date data eliminates the chances of wastage. If a business has clear statistics of demand and expected sales, no extra stock is likely to be ordered, reducing any possibility of overstocking and cash getting tied up in slow-moving stock.
8. Improve operational efficiency
Data analytics help point out the possible problem areas of a business before they even arise. Measures can be taken accordingly to resolve the problems before they occur. By gathering data covering various aspects of the business, the business will have a clear idea about its strengths, weaknesses, opportunities, and threats. When the business is aware of these factors, it will perform better. The business will use its strengths to take advantage of opportunities and reduce threats, as well as find ways to work around its weaknesses.
To sum up, business analytics bring some commendable benefits to the business. It can help ensure that your business is headed in the right direction to achieve its goals.