More than ever, businesses and organizations have an astonishing amount of data at their fingertips. Sales and customer information, employee demographics, financial information, website and social media traffic—all of this information translates into data that a business can use to inform its operations and growth. In order for that data to become actionable, useful information, it needs to be analyzed. Data analytics are being heralded as the “next big thing” for businesses. But just what is data analytics? Simply put, it’s the science of drawing insights from sources of raw information—like those mentioned above. When applied within a business environment, it can help drive growth, improve the customer experience, and predict potential opportunities.
Promoting Business Growth and Operational Efficiency
The ultimate metric of data analytics’ impact is its effect on a business’s growth—whether in sales, company size, or market share. Data analytics allows a business to analyze all relevant data, rather than small sample sizes, which in turn can lead to the discovery of previously unknown correlations. A 2017 survey on big data showed that roughly one-third of Fortune 1000 companies have seen revenue growth as a result of data analytics. Data analytics can also help a business with cost-cutting and streamlining processes. The same 2017 survey showed that almost half of executives surveyed were able to decrease expenses as a result of their use of data analytics.
Enabling Informed Decision Making
Data analytics help leaders make decisions that will affect everything from a business’s goals to its strategy and operations. Data-driven decision making allows a business to choose a way forward based on facts and evidence, rather than opinion. An MIT study found that data-driven companies had 4% higher productivity and 6% higher profits than average. Another important element of data analytics is real-time analysis, which enables a company to be nimble in its decision making and pivot strategies when necessary. By decreasing decision-making time, a business can better serve its customers.
Predictive Analytics: Predicting Trends
Predictive analytics use current and historical data to forecast future trends, activities, opportunities, and potential problems. This analysis uses raw data, statistical algorithms, and machine learning techniques in order to best predict what may happen in the future. This type of data analytics can help businesses in a variety of ways, from marketing and inventory management to risk analysis and cyber security.
For example, by looking at what happened to sales for an outdoor clothing retailer the last time there was a cold snap, that retailer can then reasonably predict what may happen the next time freezing weather hits. A motor vehicle insurance company might analyze a driver’s historical driving record in conjunction with broader historical demographic data, such as age and gender, when determining the cost of an insurance policy. Those working in cyber security may use predictive analytics to spot abnormalities in a network that may indicate something suspicious.
Predictive analytics are a rapidly growing section of data analytics for businesses. One study suggests that by 2020, 40% of enterprises’ new investments in business intelligence and analytics will be in predictive analytics. It’s clear that many decision makers are no longer asking, “What is data analytics?” Rather, they’re asking, “How can I make data analytics work for my business?”
Improving Customer Experience
Companies can use data to improve customer experience across digital and brick-and-mortar interactions. The impact of data analytics can be seen in three main areas: improving customer engagement, maintaining customer loyalty, and optimizing marketing efforts.
By analyzing consumer data, a business can find out a lot about who their customers are, where they’re located, what they’re interested in, and the best ways to contact them. Retaining customers is made easier by analyzing the factors that impact loyalty. Marketers and advertisers can take advantage of big data to determine the best time to serve ads or the most effective channels for specific products. What’s more, these insights can remain consistently up-to-date as the data is analyzed in real-time.
Data analytics can also help a company with something called customer churn, which is when a customer ends their relationship with a business. A churn prediction model can help determine which customers are likely to cancel their services or stop doing business with the company, allowing the company to then work to correct any problems and increase customer satisfaction.
Allowing Personalized Customer Interactions
Data analytics can help a business personalize its interactions with a customer. A chatbot on a webpage is a good example of this personalization: chatbots are built based on historical website data to answer the most common and likely questions and concerns a visitor to the webpage might have. Amazon’s purchase recommendation engine is another great example of personalization based on data analytics. The online retailer analyzes similar purchases to determine the most likely products a customer may be interested in buying, enabling it to deliver personalized and relevant options to each individual customer. Whether across advertising or customer service, data analytics can help businesses adopt this trend.
So what is data analytics? As you can see, data analytics has a wide variety of applications across multiple industries. Jobs in the field are growing at a rapid pace, and the demand for great data analytics professionals will only grow as the amount of data we have at our fingertips grows too. Therefore, those who want to get into the field would benefit from completing a master’s degree in data analytics. This degree teaches students data analytics, warehousing, mining, and visualization and prepares them to sit for their Microsoft SQL and AZURE certification exams.
Maryville University’s online data analytics program can help you kickstart a career in the field. Learn more about Maryville University’s online master’s degree in data analytics here.
If a data analytics degree seems like it could be the right fit for you, find out more about what a master’s program in data analytics entails.