If you’ve read the Peanuts cartoon strip, you probably know that Snoopy is a pro at gathering and using data. This peppy pup shared his methodical approach to life, which is most evident in his battles with the Red Baron. If he didn’t have all the data he did, he wouldn’t have been able to make good decisions and survive his encounters, right?
Your stakes as a business leader may not be quite as high as surviving a dog fight, but you, too, can use analytics to get through the business fight. Let’s explore what you should know about analytics and put it to good use.
Why Is Analytics Essential to Business?
When an organization relies on data analytics, it can track patterns in multiple areas of operations. These patterns provide deep and meaningful insights into cause-and-effect relationships within the organization. They more clearly recognize, “When this happens, we get that.” The patterns support that this scenario is a reliable, consistent reaction.
An analytics process that can handle massive volumes of data can drill deep down to pick apart what is happening within a business. Then, by taking in its metrics, a company has a concrete foundation upon which to optimize growth or when it may need to cut back in some areas.
For this process to work, the company’s data must have an agile, reliable, and replicable data plan in place. Once that goal is met, a business can become more dextrous. It can react effortlessly, anticipating changes in the market because it has a complete picture overview of every aspect of its operations. As a result, intensely data-driven organizations say they make better decisions at three times a higher rate than non-data-driven companies.
Using Data Analytics to Have Better Business Insights
Analytics translates to business insights. By taking the company metrics and statistics and converting them into a report or other visual tool, people who need that information can easily understand it and use it in their jobs. These tools can be interactive or static, but they are beneficial and informative when well done.
The insights gained through analytics are far-reaching and drive business in multiple areas. Analytics is like Russian nesting dolls because just when you think you’ve exhausted your options, you find another area you can apply it.
Risk is inherent in the business world. A company can’t grow without taking risks, but one false step can be catastrophic. It’s almost enough to paralyze anyone!
But employing analytics removes some level of risk because now, rather than making a blind guess, you’re at least making an educated guess, a very educated guess. This is because analytics usefully extrapolates insights that allow you to plug in numbers and play with scenarios to indicate a probable outcome. The stronger your data analytics game, the fiercer your risk management.
With an analytics system in place, threats are somewhat controlled. They can be spotted and assessed early. You’ll see them coming when your usual metrics begin to change.
Companies can use their data to increase overall productivity. Tracking operations shows management where roles can be made more efficient and streamlined. These detailed overviews of critical roles within your organization can indicate a more fair reorganization of tasks and responsibilities.
The key performance indicators your company sets for your organization’s performance give you measurable goals for both employee output and results and overall business performance.
Your insights can also show you where to cut costs without cutting value. Businesses that rely on analytics for cutting spending see an average of 10% decline in costs. Trimming the fat and simplifying your operations will make your business more competitive and able to grow at a faster rate.
Spotting Consumer Patterns
You’ve heard the old adage that the customer is always right. Unfortunately, that can be a difficult concept to embrace; when businesses and customers miscommunicate, it can be incredibly frustrating.
But when your business automatically gives them what they want, there’s little need to worry about who’s right or wrong. You can be so successful at anticipating their needs that there’s no conflict.
Your business can move to the head of the pack with customer insights informing many of your choices. You’ll peg their marketing and buying experience and can even use their insights to determine what products you offer. Customers are an immensely valuable resource in finding answers to your business decisions.
And that further expands your business. Companies that rely on consumer metrics outpace other companies by 85% in growth margins. Those companies aren’t just trying approaches they hope will work; they have stats to support all customer-facing decisions, earning loyalty in exchange.
Answer Critical Questions
We’ve talked a lot about how analytics can help you answer what your company should do. But it can also answer other burning questions, such as why something happened. Analytics can make sense of how your business got to where it currently is. Knowing that allows you to recreate that magic or avoid certain pitfalls you’ve identified.
That’s why analytics is invaluable for business growth and competition. It helps you learn what went right (and wrong), and allows you to predict what’s to come so you can better understand your customers.
Data-Driven Decision-Making Errors to Avoid
Of course, turning toward a data-driven approach to business isn’t as simple as flipping a switch. It’s a process, and you must ensure everything is done correctly. Do it right, or it doesn’t count. So it’s essential you avoid some of these common mistakes.
- Poor quality data – ensure your metrics are reliable and well managed. Remember that not all data is helpful, and more isn’t necessarily better. In addition, your sources and process must be well-vetted and secure.
- Trust the metrics, not your phenomenal business instinct – we can all be guilty of letting our bias get in the way of seeing the truth. Don’t twist the data to mean what you want it to mean; you have to let it speak for itself. McKinsey found that when businesses consciously tried to cut bias from their decision-making, they saw a 7% increase in returns.
- Look to the future – Yes, understanding past patterns is critical in directing your business, but don’t put all your eggs in that basket. Looking forward helps you keep an eye on the forces of change. The world is constantly changing, so you can’t rely only on the past to direct your actions. You may need to pivot to keep up with new, emerging market trends.
Incorporating analytics into your decision-making process is the smartest and most straightforward way to thrive. Data-driven insights give you a solid understanding of how your company can manage risk, drive performance, recognize consumer patterns, and answer a myriad of critical questions. Put a solid analytics framework in place, and you might be amazed at what you learn.