Research shows that increasing data accessibility by a mere 10% can significantly result in an increase of net income for some businesses. Retailers who use data extensively during their business operations can improve their profit margins by as much as 60%.
Highly-optimistic numbers like this are extremely exciting. To achieve these numbers, organizations need to make use of data to better understand the market they operate in, the customers they serve and the competitors they compete with.
All these objectives can be achieved if organizations leverage the power of business analytics.
What is business analytics?
Business analytics is a branch of management that uses raw customer and industry data to understand how well the organisation is performing in the market. The data collected is processed and analysed using statistical models, operational analysis and optimisation procedures. The objective is to derive actionable insights that can be used to make positive changes to the business in as needed or in real-time.
Let’s take the example of banking giant American Express. The company uses business analytics insights to understand the likelihood of customer churn. By collecting important real-time customer transaction data (such as frequency of transactions, nature of transactions, etc.) and using predictive statistical models, the company analyses what their customer database might look like in the future. Using this information, the company puts in place better customer service strategies that are custom-designed to retain customers and reduce churn.
It was through business analytics insights that the company was able to predict in mid-2016 that 24% of its Australian customer base would close accounts and switch banks in less than four months. This insight helped them take measures to prevent account closures. Utilising the information the data analytics had given them, American Express introduced multiple changes in their processes, product/service offerings and customer support. This move helped them retain a percentage of their attrition-prone customers and helped them increase their ROI by almost 10% over the course of the year.
Business analytics and big data
The fundamental element of any business analytics program is data. Organizations can mine the data they need through various online and offline platforms. When this data becomes very large in volume, growing exponentially in a very limited period of time, it becomes what is known as ‘Big Data’.
Essentially, big data is just data that is found in very large quantities. Multiple data streams are combined and used in conjunction with each other, to derive real-time inputs and insights about the customer and the market.
To qualify as big data, data sets need to:
- Exceed 1 Terabyte (TB) in volume (ex: petabytes, exabytes etc.)
- Must grow in size and scope extremely quickly (in days)
- Must include all types of data – numbers, alphabets, videos, audios and more
Big data is used in business analytics to derive sensible and actionable information that can help organizations improve their top and bottom lines. This big data also helps organizations understand if any new trends or fads are being formed in the market. Timely analysis of big data will help brands actively engage customers, evade operational and market challenges and comply with dynamic industry requirements with ease.
The role of business intelligence in business analytics
Business Intelligence is a process where organizations analyse their own data to understand their performance.
In business intelligence, organizations are more concerned with understanding how something happened and what they can do to improve their performance and avoid costly mistakes. The focus here is internal analysis. Business analytics, on the other hand, focuses on why something happened. Here, organizations focus on the external factors that impact the organisation’s internal performance.
It could be said that business intelligence is one of the many facets of business analytics, in addition to external environmental data, technological tools, predictive models and statistical analytical processes. Combining internal organisational analysis with external organisational analysis, brands can derive valuable and actionable insights that can help them.
5 ways business analytics can benefit your brand
Business analytics offers umpteen benefits to brands. Here are 5 ways you can leverage business analytics to create a highly-successful brand:
- Persona creation and audience targetingInsights derived from social media engagement, website visits and store footfalls are immensely helpful in identifying the type of people who interact with the organisation’s touch points. Business analytics will help brands create customer persona, which will enable them to design websites, create content and build products that customers will enjoy. These insights will also help organizations know where to find the ideal customers.
For example, if you use Google Analytics as part of your business analytics toolkit, you can use the insights that Google offers to understand who you are currently focusing on, if they’re bringing in business for you, who your target markets should be and how best to segment them for marketing. Google Analytics contains built-in tools which help you create client personas.
- Creation of content strategyBusiness analytics in the form of content analytics can be used to understand what type of content customers like to consume, over the various channels your business uses. This data can help plan content marketing campaigns and content strategy.
Data analytics is a great way to understand which long-tailed keywords prospects often use to find a service. It is also very helpful in knowing the type/sources of links readers click-through when reading content online. If you use an analytics tool like WordPress or Google Analytics, you can also find out the number of page views and engagement you received over time.
- Business expansion and growth planningOrganizations planning to expand to other markets can use business analytics insights to understand if the option of expansion is viable or not. Brands can also check if they will be well-received in the new market prior to the expansion.
One of the best examples of this is Amazon. Using data analytics, Amazon was able to identify the varied small-scale Australian industries would be extremely profitable to them. Armed with data, they launched over 5000 sellers in a span of 42 days after their launch. Now, 14 million visitors later, Amazon Australia is the fastest growing Amazon marketplace, crossing even India. The company has already seen a rise in traffic by 90% just a month after its launch.
- Resource management and order fulfilmentBig data analysis will help brands identify the best suppliers to get stock from and track resource usage and re-order levels. Business analytics will also help organizations identify a number of product returns and reasons for customer complaints, helping them improve operations.
Woolworths is an example of a retail brand that uses data analytics extensively. The company purchased shares worth $20 million in analytics company Quantium to analyse shopper buying behaviour. They feed the data they mine into their resource management system and ensure that their most popular products are available at the right place, at the right time and in right quantity. Not only are they satisfying customer, they are also reducing resource wastage across their stores.
- Improved customer value additionBusiness analytics helps organizations understand what makes customers tick. Using real-time data, brands can now work towards recognising and implementing the latest trends and creating products that customers are sure to love.
Companies like Amazon, Woolworths and American Express not only improve their operations, but also change the entire end-to-end experience that customers face. When customers are given better access to products and services, and are provided better data-driven support, value is added to their interaction with the brands.
Liquid Digital can setup and manage your digital business analytics, helping ensure you get the data reports and metrics you care about for success. We can help you form insights by automating your reporting process and by formatting easy to understand dashboards and statistics that can help you monitor the pulse of your business’ success.
References:
whatusersdo.com/blog/create-personas-using-google-analytics/
theaustralian.com.au/business/business-spectator/woolworths-invests-20m-in-data-analytics/
thenewdaily.com.au/money/finance-news/2018/01/16/amazon-australia-marketplace-ebay/