Knowing how to use data is an essential part of conducting a successful business. Data can be collected from multiple sources to then be analyzed to gain deeper insights about customer preferences and behavior, identify trends in the market, and measure performance against goals and objectives.
We're not the only ones who think so. 97.2% of businesses surveyed by Zippia indicated they were going to invest more in big data in the coming years.
And given the time we're living in, with continued cutbacks and the possibility of a recession on the horizon, it's essential for businesses to learn how to use data to make informed decisions.
That’s what we aim to do here today. By providing an overview of the different types of data analysis methods and tools available, businesses can make better use of their data to create competitive advantages that work for the long haul — even through passing storms.
But first, let's discuss some of the different types of data analysis.
Types of data analysis
Data analysis is a powerful tool for businesses to gain insights into customer preferences, trends in the market, and performance against goals. To maximize the potential of data analysis, it’s important to understand the different types available and how each can be used to inform decision-making.
What follows is a discussion of some of the various types of data analysis methods and associated tools currently available to help you along your way.
This type of data analysis is used to summarize data and describe the characteristics of a population. It can help businesses understand what has happened in the past and identify trends to guide future decision-making. Common tool types used for descriptive analytics include dashboards and reports.
For example, businesses can use dashboards to track key performance indicators (KPIs) such as revenue, expenses, and customer satisfaction over a set period of time then use reports to summarize the data.
Next up is diagnostic analytics, which is used to identify the causes of a particular outcome or event. It can help businesses understand why something happened and how they can improve in the future.
Businesses can use diagnostic analytics such as root cause analysis and data mining to identify the reasons for a decline in sales and take necessary steps. Through the use of root cause analysis, organizations are able to pinpoint the underlying issues that require timely action.
As you explore how to use data, you’ll quickly encounter predictive analytics, which as you might've guessed, is used to forecast future outcomes based on historical data. It can help businesses make informed decisions and plan for the future.
Predictive analytics can be an invaluable asset for any business. Through the use of machine learning and regression analysis, businesses are able to gain insight into potential trends in sales, allowing them to adjust their marketing and sales strategies accordingly. For instance, predictive analytics can provide a forecast of quarterly sales which could prove critical in maximizing profits.
The last type of analytics we'll discuss is prescriptive, which is used to determine the best course of action to take in a particular situation. It can help businesses optimize their decision-making processes and achieve their goals. In fact, according to a survey by the International Institute for Analytics, organizations that use prescriptive analytics are able to reduce costs by up to 20%, increase revenue by up to 15%, and improve customer satisfaction by up to 10%.
When it comes to prescriptive analytics, many businesses employ optimization algorithms and decision trees. For instance, they can leverage these tools to find the most suitable pricing strategy for a novel product while taking into account market demand and production costs.
So hopefully that gives you a good general sense of what types of data analytics are available to you. Next, we'll talk about the benefits of using these analytics methods across all aspects of your business.
Benefits of knowing how to use data
Establishing data-driven decision making offers a wide range of advantages for businesses.
Here are some key perks:
- Improved decision-making: Leveraging data analytics can empower any business to make smarter decisions. According to BI-Survey, 69% of companies surveyed indicated that the use of data analytics helped them to make much better decisions. And that makes a lot of sense. By efficiently analyzing trends and patterns, you'll be able to spot areas for improvement and take the necessary steps in order to optimize your bottom line — from higher profits to greater customer satisfaction.
- Cost savings: Data analysis is a powerful tool that businesses can use to identify savings opportunities. Through prescriptive analytics, companies are able to streamline their supply chain and reduce inventory costs – leading to improved financial performance and increased profitability. BI-Survey again reports that the use of data analytics helped companies save up to 25% in operating costs.
- Better customer experiences: Leveraging data insights can help companies gain a clearer understanding of client likes, dislikes and behavior. With this enhanced insight, businesses have the ability to customize their offerings to meet consumer needs - thus propelling customer experience and long-term loyalty.
- Competitive advantage: Harnessing the power of data analysis can provide businesses with a huge advantage over their competition. Through the analysis of relevant trends and patterns ahead of time, companies can make informed decisions that give them an upper hand in today's ever-evolving market.
- Agility: Through data analysis, businesses can effectively observe shifts in the market and make quick adjustments to their strategies and operations. Taking advantage of trends and patterns revealed by the data puts you one step ahead of your competition – allowing you to stay competitive in today's ever-evolving marketplace.
Overall, data analysis is a powerful tool that can help businesses make more informed decisions and achieve their goals. And it would appear this is more important than ever.
Using data to navigate economic turbulence
In times of economic uncertainty, businesses that know how to use data can leverage it to make educated decisions, i.e. they’re not flying in the dark. For example, they can use predictive analytics to forecast how different economic scenarios might impact their business and plan accordingly. They can also use prescriptive analytics to optimize their supply chain and reduce costs.
Many tech companies have laid off thousands of employees over the past few months. In fact, according to Crunchbase News, companies like Yahoo, Dell, IBM, and Alphabet have laid off 77,000 total workers this year so far alone in the United States.
Economic experts were sounding the alarm about a possible recession just months ago but more recently have indicated it may be avoided — even though inflation hit middle income people hard.
It's hard to know what will happen exactly, but preparing is never a bad idea. This sort of uncertainty makes it more important than ever for businesses to leverage data analysis in order to survive whatever ups or downs lie up ahead and remain competitive.
Data analysis is essential for success in the digital age
As technology continues to evolve, knowing how to use data will become increasingly important for businesses. Companies that leverage data to make informed decisions and optimize their operations will have a competitive advantage over those that don’t. That's just a plain and simple fact.
Data analysis enables businesses to make better decisions and gain insights that fuel growth. And that's why it's essential for those who want to stay competitive.
From cost savings to better customer experiences, data analysis can provide companies with the insights they need to succeed. And in times of economic uncertainty, data analysis can become even more essential — helping businesses navigate turbulent waters and come out ahead.
The bottom line is that data analysis is powerful and those who don't take advantage of it will be left behind.
Disclaimer: This content should not be construed as legal or financial advice. Always consult an attorney or financial advisor regarding your specific legal or financial situation.