white-IIMSKILLS-logo

Join the World’s Most Respected

Data Analytics Master Course by IIM SKILLS

Table of Contents

Data Analytics For Business: An In-Depth Analysis

In this digital world, the ability to create data-driven decisions and create strategy informed by analysis is central to successful leadership in any industry. Data analytics for business is an integral part because it allows leadership to make evidence-based strategies and goals, understand customers to better target marketing initiatives, and increase overall productivity and revenue enhancement. This listicle article is a complete guide on data analytics and how it is important, for usage in today’s businesses.

data analytics for business

In today’s scenario, Industries all over the globe are mostly looking at leveraging Data Analytics (DA) to strengthen business performance. As per the report from Forbes, data drive companies are 23 times more inclined to acquire the right customers and almost 20 times more likely to be profitable.

A number of advanced data techniques are used to extract data and analyze patterns and trends that bough up practical views, inform further research, or decide on the best business goals and strategies. Huge data techniques handle complex systems or software that can increase automation processes with machine learning and algorithms and various other modes.

Here is a guide to Data Analytics and Data Science

What Are The Types Of Data Analytics

In today’s scenario diversity of industries is attaining competitive advantages from data analysis and science, and data analytics for business processes is more accessible than ever before. Organization can know their customer profiles, interests, and habits better.

The pivotal data is used to inform business decisions that enhance profits and customize user or individual experiences to gain efficiency and loyalty. So the need for data analytics has also arisen.

The types of data analytics are huge, but they fall under four major categories: descriptive, diagnostic, predictive, and prescriptive.

  1. Descriptive Analytics

Descriptive analytics aims at what happened in the past. It doesn’t look forward, it provides a comprehensive picture of how particular events unfolded. The main motive of Descriptive analytics is to understand what happened and why.

Some common examples include:

  • Sales performance: If managers want to know how daily sales exceed a certain amount or how many units each employee has sold this month. Data analytics will help them to understand.
  • Dashboard reporting: Nowadays e-commerce companies use dashboards for present updates on page views, unique visitors, and user sessions across their different properties worldwide.
  • Fraud detection: Credit card companies regularly monitor transactions for suspicious activity that may hint at credit card fraud.
  • Product demand forecasts: Retailers use historical sales data to predict how much inventory will be required in the future.

 

  1. Diagnostic analytics

Diagnostic analytics look for answers to why an issue occurred by viewing the factors that led to an event. This type of analysis help companies understand not only what occurred but also why it took place and how they can prevent it from happening again.

Familiar examples of diagnostic analytics are:

  • Root cause analysis. Root cause analysis is a process used analytically to identify the underlying causes of negative events, such as defects in manufacturing/production. So various methods are in big data that are made to tackle such situations in the workplace.
  • Retrospective analysis: Retrospective analysis involves inspecting historical data to determine why certain incidents happened. Like root cause analysis, it can identify potential risks and prevent future events.
  • Drill-down: Drill-down refers to operating through layers of findings to determine the underlying reasons for an event or situation.
  • Regression analysis: Regression involves using binary methods to identify trends and relationships between variables to make predictions about future outcomes.

Also Read:

 

 

  1. Predictive Analytics

Predictive analytics take charge of existing data to check future outcomes or trends. Organizations often use these analytics when developing new products or services because they give an idea of what consumers will want in the future based on their past behavior.

Examples of Predictive analytics:

  • Direct Marketing: Predictive Analytics determine which prospective customers are likely to respond to a marketing campaign and this will help companies to determine its likable customers who will buy their products, services, or any information.
  • Customer Pricing: To analyze the optimal price for a product or service based on primary demand. Big data helps companies to know the right prices and what costs are involved in it to make that product.
  • Retail Sales Forecasting – Precisely forecasting demand for products at the SKU-store level multiple times for ordering inventory, managing out-of-stocks, determining markdown targets, and managing the supply chain.

 

  1. Prescriptive analytics

The prescriptive analysis takes past trends and data to recommend future actions. This type of data analysis is most helpful in maximizing resources and identifying new opportunities, such as expansion. Prescriptive analytics is used to make decisions or provide recommendations that allow others to make better and quick decisions.

For instance, a prescriptive model could recommend whether companies should:

  • Start a new product segment, or end an existing one.
  • Setting up a new manufacturing setup, or closing an existing one.
  • Place a bid on a Fortune future project, and if bid, then at what price?
  • Hire more people in the sales department if predicts the supply will increase in the future or if any new product development.
  • Send a targeted ad to a particular customer, to drive sales high

You may also want to read:

 

How Does Data Analytics Work? 

Data analytics is the process of making data presentable to key persons. It starts with data collection, finding patterns, and using those patterns to make predictions. These predictions can be used to set goals or make any decision.

For instance, in sales, you may use data analytics to predict how many particular products are to be sold in the next month. Knowing that number will help you to mark goals for your team and plan stocks and inventory levels. To start with, we collect data and put it into a database.

We then organize the data by finding patterns within it (this is called cleaning and organizing). Furthermore, we look for connections between patterns and develop and introduce a model that explains these relationships (this is called modeling).

 

Once get the model that works well enough for the business, we can now use it to make predictions (this is called testing). These predictions are communicated to decision-makers in the form of reports and findings.

You should know the most important Data Analyst Interview Questions

The Data Analytics Process Takes Place in 4 Stages:

  1. Data collection

Data can be collected from customer surveys, sales receipts, social media comments, and company websites. Data collection is fetched mostly from customer surveys, sales receipts, social media comments, and company websites.

Data integration platforms can merge and centralize business data with the help of a data pipeline to ease access, management, and business intelligence.

  1. Data organization and analysis

Once all information has been gathered from various modes, now it must be arranged to make it simpler to interpret and evaluate. These Data can be arranged manually or through various software programs that store the information in databases.

  1. Model development, testing, and deployment

The next stage is to build a model that fits the data set using various methods. These models are then tested and deployed if they meet the accurate criteria (e.g., accuracy over 95%).

  1. Communicating results to decision-makers

This step involves bestowing the findings to company key persons or other leaders to use insights to make better choices related to products, services, sales-marketing strategies, and other business areas.

Learn more about:

 

Why Data Analytics for Business

Data analytics of business aims to help industries in every aspect from concentrating a marketing tone for an individual customer to prospecting and easing risks to its business. We have brought 5 amazing benefits of using data analytics.

1. Personalize the Customer Experience by Having Data Analytics for Business

Organizations source customer data from different sources like offline retail, e-commerce, and social media. By using data analytics to create personalized customer profiles from this data, business houses receive customer insight and behavior so can provide more personalized experiences to their customers.

For instance- A retail clothing store that has both offline and online presence. This Company can analyze its sales data together with the data received from its social media pages and create targeted online campaigns through its social media to promote its online sales for those products that customers are already interested in.

For personalized experiences, the organization uses behavioral analytics models on these data. For example, a business runs a predictive model on e-commerce transaction data to examine products and services to suggest at checkout to increase sales.

 

2. Inform Business Decision-making in Data Analytics for Business

Industries use DA to guide organizational decisions and reduce financial losses. Predictive analytics suggest what could happen in response to any changes to the business and prescriptive analytics highlight how the business should overcome these changes.

Suppose, a business model changes as per the pricing or product offering to analyze how those changes will affect customer demand. Any change in product or service offerings can be A/B tested to rectify the hypothesis produced by those models.

Collecting sales data on the new changes products or services the enterprises can use data analytics tools to examine the success of the changes and visualize the result to help decision makers to choose and roll. on the changes across the business.

 Check here the top-ranked:

 

3. Streamline Operations

Business houses can improve production efficiency with data analytics. Collecting and analyzing data about the supply chain shows where production slows down or bottlenecks come from and can predict where future issues or problems may arise.

For Instance, if a demand forecast shows that a particular vendor won’t be able to handle the mass volume required for the holiday and festival season, an enterprise could supplement or replace the particular vendor to avoid production delays. However, many businesses — dominating in retail — struggle to manage their inventory levels.

 

4. Mitigate Risk and Handle Setbacks Through the Help of Data Analytics for Business.

Risks are part of the business. Whether it’s employee theft or customer-related, uncollected receivables, employee safety, and legal liability. Data analytics can support an organization to understand risks and take corrective measures.

Let’s take an example, a retail chain could use the propensity model — a statistical model that helps in predicting further actions or event prediction — to understand which stores are at the highest risk for theft.

The business can use this data to identify the amount of security needed at the stores, or even whether it should divest from any locations to avoid any future losses.

 

5. Enhance Security

All businesses can have data security threats. Data analytics is used to diagnose the actual cause of past data errors by processing and evaluating accurate data. For instance, the IT team can take the help of DA applications to parse, process, and present their audit logs to determine the course and actual origin of an attack. This information can help the IT department to locate vulnerabilities and patch them.

You should check here the best:

 

Data Analytics Use Cases

The use of data analytics for business is becoming a need. Here is a look at some major data analytics use cases adopted in various functions.

1. Data Analytics Use Cases In The Sales And Marketing Department

Sales & Marketing are the most popular domains where companies have implemented data analytic use cases. Both domains benefit from the use of data in different ways:

With the help of data analytics, marketing specialists can now able to make more apt decisions. They collect data from different modes like social media, email communication, and other online platforms or offline receipts to communicate with their customers to know their needs and choices better. The marketing manager then refines the collected data to improve the marketing strategy to improve sales.

Data analytics for business can help sales specialists also to sell more effectively. For instance, with the help of DA, salespeople can understand which products or offerings are most demanded by particular target groups and focus on selling them to increase their performance level.

 

2. Data Analytics Use Cases In Supply Change Management And Operations Domain

Organizations with supply change or operations can benefit from data analytics. Let us suppose, a company manufactures gadgets, and those gadgets require parts made by suppliers, then the company wants to anticipate when inventory is getting low so that they don’t run out of parts before they deliver. Data analytics helps to optimize production schedules.

Data analytics for business use cases in operations and supply chain management:

  • Supplier selection and performance evaluation: Using machine learning algorithms, supplier selection processes can be highly improved.
  • Predictive maintenance: Predictive maintenance predicts failures before they occur the techniques enable companies to collect and analyze data from sensors to understand the state of equipment better.
  • Location enhancement: Companies use location-based analytics solutions such as GIS (geographic information systems) to determine optimal locations for warehouses and factories.

 

3. Data Analytics Use Cases In Human Resources

The use cases for business are many, but HR analytics have ample opportunities to work in human resources.

  • To analyze employee performance, attrition patterns, and retention risks
  • Assess the effectiveness of training programs
  • Determine the influence of internal promotions on employee morale
  • Assess training and development needs
  • Detect trends that point to possible problems with staff retention
  • Make better hiring determination by analyzing past performance and recruitment campaigns to identify the best methods for hiring top talent

 

4. Data Analytics Use Cases In Customer Service

Most companies use data analytics in customer service in many forms. Like as basic as tracking metrics like number of calls or wait time on hold. Organizations use data analytics to understand various forms such as customers’ needs, preferences, satisfaction levels, and more.

The advantages of these types of data use cases in customer services are listed below:

  • Identification of common complaints and problems that consumers have about services or any products
  • Solves issues faster and more efficiently through a sound understanding of customer history and needs
  • Prediction about products or services a customer is likely to buy next
  • Avail users with personalized best content and recommendations
  • Automate processes like payment processing and fraud detection
  • Reduce the cost of delivering support, such as by providing self-service options

 

5. Data Analytics Use Cases In Finance

Finance is one of the crucial departments that seem to have been made for data and artificial intelligence, Today also most of the major work is manual in finance departments so with data analytics all sorts of efficiency and innovation can be done in this department.

 

Usage of data analytics in finance departments:

  • Calculate and predict financial performance, such as futuristic sales trends and profit margin ratio
  • Considering the efficiency of sales and marketing campaigns and making informed decisions on where to put more capital into and which one to cut back.
  • Likable pricing strategies based on market conditions and customer demand
  • Minimize the fraudulent work by identifying unusual patterns, which could be a sign of a fraud
  • Forecast spending and revenue
  • Predict & analyze cash flow, manage budgets, and determine cash requirements

 

FAQs

Q1. Why is data analytics for business important?

Data analytics is important to know trends and patterns from the large amount of data that is being collected. It helps optimize business performance, forecast future results, understand audiences, and reduce costs. Following trends can be seen in the business in this 21st century:

  • To choose and apply numerous analytical methods to identify tools appropriate to the data, context, and/or conditions.
  • Adding analytical methods to find solutions and results to solve business problems.
  • Translate the results of business analytics into effective courses of action, so as to present with key holders and experts.

Q2. Who is using data analytics for business?

Data analytics is being used by every company to understand their operations and sales, the major four top sectors that are using data analytics are Retail, Agriculture, Banking, and Government. Now need for data analytics is in huge demand and every organization wants to benefit from it and automate their working process so it will be fast, effective, and reliable.

Q3. How to differentiate data analytics and data science?

Data science is an umbrella term for various fields that are used to segregate large datasets and aim to derive meaningful correlations between large datasets. DA focuses on uncovering particular trends and realizing actionable insights into the business.

Q4. What are various data analytics techniques used?

Data analytics for business is the ability to detect patterns in a dataset that may signal trends, hazards, or opportunities. Data analytics allows organizations to make better decisions by changing their operations based on their learnings.  The majority of data analysis procedures have been automated to speed up the analytical process. Because analytics tools are widely available, data analysts/ or decision scientists can go through massive amounts of data in minutes or hours rather than days or weeks using techniques like AI predictions, text mining, etc.

Q5. How Do Businesses Use Data Analytics?

Data analytics for business is often needed for crucial decisions and handling functions through various tools like data warehousing, data visualization, predictive analytics and much more can be covered through the DA process. In our listicle article on data analytics for business we have covered the major aspects and benefits of big data in organizations.

DA covers all fields that help business leaders see the organization’s goals and make decisions about major operational decisions that increase efficiency and high revenues. Businesses will succeed in making decisions, by recognizing problems or opportunities, properly and safely collecting data, and exploring that data to draw conclusions and enact solutions for the organization’s benefit.

Join Free Data Analytics Demo Class with IIM SKILLS

Name(Required)
This field is for validation purposes and should be left unchanged.