Owing to cut-throat competition and an increase in customer demand, it’s become imperative for businesses to personalise their strategies to match the ever-evolving requirements. Arguably, the best way to achieve this is through business analytics.
The process of gathering, analysing and deriving valuable insights from the vast amount of data available, business analytics is an effective way to solve problems and increase efficiency and revenue. Today, irrespective of their size and industry niche, businesses everywhere are making use of this process.
A recent study by MicroStrategy suggests that companies that use business analytics tools reap the following benefits:
- 60% increase in process and cost-efficiency
- 57% improvement in strategy
- 52% increase in monitoring and improving financial performance
In addition to this, the latest research also shows that over the next three years, businesses will increase their investment in analytics by 71%. Hence, business analytics field is growing leaps and bounds and shows no signs of slowing down, which opens up a lot of job opportunities for professionals who are well-versed in the niche.
In this blog, we’ve provided an in-depth understanding of how business analytics works, why it’s booming in the digital era and what benefits it provides.
What Is Business Analytics?
In a nutshell, business analytics is referred to as the process of using certain quantitative methods with the intention of deriving data to make informed and logical business decisions.
Primarily, there are three main methods to conduct business analysis:
- Descriptive: This method makes use of historic data to identify trends and patterns
- Predictive: This method makes use of statistics to forecast future outcomes
- Prescriptive: This method makes use of testing and similar techniques to determine which outcome will provide the best results in a particular scenario
Depending on the end goal and your business requirement, you can choose one or more methods to make the most of use of the data available.
Why Is Business Analytics Important?
Running a business is not easy in today’s competitive world, and business owners need to know everything about the industry to attain success. Having an in-depth understanding of data plays a huge role in this. Every business strategy, every branding change, right from the features of the product or service, to the colours in the logo, everything needs to have a logic behind it that is derived from data.
Hence, business analytics is crucial. With the right tools and expertise, businesses can understand what customers are looking for and identity relevant pain points. With this information, they can create the best product that caters to their needs.
Why Is Business Analytics Becoming More Popular Now?
Amidst the rise of the digital era, analytics has quickly become one of the most popular buzzwords of the decade. Almost every business is making use of data to derive insights that can help them make better and informed decisions.
But, why? Why are businesses on the constant lookout to hire business analytics professionals?
The reason is simple; need, availability and affordability.
Coming to the first factor, businesses are in the constant pressure to launch new and improved versions of their product and software to beat their competition. Moreover, customers are spoiled for choice and hence have become more demanding than ever. Hence, businesses need to make data-driven decisions to cater to the market efficiently.
On the other hand, when it comes to availability and affordability, owing to the advanced technology available to businesses through various online platforms and affordable tools, they have a huge collection of data. Hence, with all the data available to them at a very low cost, all they need is an expert to help them analyze the data and draw actionable insights.
Hence, to gain a competitive edge, while saving money and effort, business analytics has gained a lot of hype among businesses.
Top 10 Reasons: Why Business Analytics Is Important
Now that you have a proper understanding of what business analytics is and how it works, let’s move to why it is extremely beneficial for organizations.
1. Enhance Customer Experience
The cost of gaining a new customer is much higher than the cost of retaining an existing customer. Hence, to increase their customer retention rate, many businesses turn to analytics.
For example, using web analytics tools, companies can analyse the actions customers take on their website and their past buying habits. Based on this data, they can improve the customer’s experience by recommending products or services that match their preferences.
This results in an overall better customer experience, which in turn leads to higher customer loyalty.
2. Breaking Down Strategic Review
To create an efficient strategy and business plan that can help a company increase revenue and reduce costs, they make use of data.
For example, businesses often outsource a few of their processes to enhance efficiency. However, they need to be able to identify the right vendor that will ensure they’re able to bring more profits.
With the help of business analytics, businesses can evaluate the performance of a supplier based on various data pointers, like customer ratings, order fulfilment, etc. Hence, from a strategy point of view, being able to analyse data proves to be extremely beneficial.
3. Conducting a Competitor Analysis
One of the best ways to beat the competition is to gain a proper understanding of what they’re doing and do it better. Hence, conducting a competitor analysis is an extremely efficient way to get ahead of your competition by studying their strategies, USPs, and other factors.
Once you have gathered this data, you can conduct a SWOT analysis, which will then give you a preview of how your business is performing compared to your competitors and what you can do to improve your strategy.
4. Faster and Informed Decision Making
In the ever-evolving world of business, companies need to adapt to the latest trends and enhance their strategy that can better their business. However, to do so, companies need proper knowledge about the current happenings and which trends are here to stay and can benefit them.
By analyzing data through business analytics tools, companies get the ability to check the latest trends and their forecasts, which helps them decide if they should adopt the trends in their strategy.
5. Improve Business Efficiency
Productivity and efficiency are not just limited to the employees of a company. Businesses need to take into account other resources available to them to ensure their performance is always top-notch.
For example, a grocery store can considerably reduce the cost of refrigeration by analysing the temperatures of in-store coolers. If they’re kept at a lower temperature than necessary, it can result in a surge of power usage.
Hence, business owners can track and analyse data related to the various components around them to strategically determine the best ways to improve efficiency and reduce costs.
6. Reduce Employee Turnover
On a yearly basis, companies bear an extremely high cost due to employee onboarding and attrition. This happens because the company has hired employees who are not the right fit for the company and will leave the organization within a year. Instead, by using analytics tools, companies can examine an employee and determine if they will be able to align with the culture, track their performance, and review how stable they are.
Based on these factors, it becomes easier to recognise employees that are going to stay in the company for a long time, thereby negating or reducing onboarding and attrition costs.
7. Optimize Manufacturing Costs
A business in the manufacturing industry often needs to conduct multiple tests on their products to get optimal results. This results in high manufacturing costs. However, through predictive analysis, they can rely on past data to make informed decisions without having to perform multiple tests.
8. Better Product Management
Retail companies usually have over a thousand products to offer, but, how can they best determine when is the right time to release each product? Business analytics is the answer to that.
The data derived from these tools can help businesses analyse which product works best for which area, season, and other factors. Using this data, a company can target the right target audience for the right product at the right time, which eventually leads to a major boost in sales.
9. Identify Frauds
One of the newer uses and benefits of data analytics is to reduce fraud. Primarily used by multiple financial institutions, data is used to identify fraudulent purchases based on the analysis of a customer’s past transactions.
Moreover, predictive analysis is used to analyse a customer’s profile to gauge the level of risk involved in collaborating with them. This helps companies stop any real damage from happening, while preventing major losses, and even to build stronger customer relationships.
10. Tackle Problems
When a business faces any issue, the first course of action is to pause the current operations. Unfortunately, this leads to a huge loss of production capacity and funds. Hence, to prevent such situations from occurring, businesses are making use of data to identify any potential risks or foreseeable issues and avoid any decision or occurrence that may cause it.
A professional can make use of past issues and identify what causes them in the first place, moreover, when it comes to making any decisions, the data helps businesses steer clear of any troubles.
Accelerate Through Uncertainty
No matter how big or small a company is or which niche they are from, uncertainty is bound to hit every business. Hence, a company must have a plan b, when they are faced with an unexpected challenge.
Business analytics is that plan as it can be used to resolve any supply chain issues, introduce and develop crisis management solutions, optimize costs, and other.
Business Analytics: The Need of the Hour
There’s no doubt that business analytics is extremely beneficial and can help businesses make giant leaps in their growth and revenue. Needless to say, this niche is transforming the business world across the globe. Moreover, with various advancements in technology, there’s no doubt that this industry is going to keep growing.
Hence, if you’re looking to build a long and successful career in a thriving field, business analytics is the way to go.
Launch Your Career In Business Analytics with ISMR B-School Pune
At ISMR B-School Pune, we provide an advanced and extremely lucrative MBA/ PGDM in Business Analytics program, which will help you acquire the skills and knowledge required to be a proficient Business Analyst. So, launch your career with us and become part of this multi-billion dollar market!