Business analytics (BA) is a mixture of skills, technologies, and statistical practices used to examine a company's data and performance in a way to gain insights and make data-driven decisions for the future. The goal of a BA is to narrow down which datasets are useful and which can increase revenue, productivity, and efficiency.
When used correctly, BA can accurately predict future events that are related to the actions of consumers, market trends, and also assist in creating more efficient processes that could lead to an increase in revenue and efficiency.
Essentials of business analytics: BA has many use cases, but when it comes to commercial organizations, BA is typically containing the following steps.
Collect data from various sources, this could be anything from cloud applications to marketing automation tools, CRM software & in some cases on ground surveys will be conducted.
We call this Step as ‘Mining’, further can be classified into Data Mining and Text Mining.
Data mining is the strategy of visualising through massive datasets to uncover patterns, trends, and other truths about data that aren’t initially visible using machine learning, statistics, and database systems. There are several data mining techniques that business analytics can pull from, including regression, correlation, clustering, and outlier detection.
This is a useful element of business analytics as it leads to faster and more efficient decision making.
For example, through data mining, a business may be able to see which customers are buying specific products at certain times of the year. This data can be used to understand the customers and shopping trends, further can be used to predict the type of stocks need to available for the customers.
2. Text mining is the process of extracting high-quality information from the text on apps and throughout the World Wide Web.
Companies use text mining to collect textual information from social media sites, blog comments, and even call centre scripts. Then, this data is used to improve customer service and experience, develop new products, and review the performance of their competitors through different types of analysis, sentiment analysis is highly used with textual data, other techniques are discussed further.
Use advanced analytics and statistics to find patterns within datasets. These patterns can help you predict trends in the future and access new insights about consumer behaviour.
Sentiment Analysis can be performed in the reviews, to understand what sentiment the consumers have over the product/service.
Monitor KPIs and trends as they change in real-time. This makes it easy for businesses to not only have their data in one place but to also come to conclusions quickly and accurately.
Support decisions based on the most current information. With BA providing such a vast amount of data that you can use to back up your decisions, you can be sure that you are fully informed for not one, but several different scenarios.
While these are the most common use cases, there are four primary methods of business analysis. They’re implemented in stages, starting with the simplest. One method isn’t more important than another, it all depends on what your end-goal is when using BA.
When you use these four types of analytics, your data can be cleansed, bifurcated, and absorbed in a way that makes it possible to create solutions for all the challenges your company may face.
Some of the Analytical skills are briefly described below;
Descriptive analytics: Interpretation of historical data. This allows for a big picture look of what happened in the past and what is happening currently using data aggregation and data mining techniques.
Diagnostic analytics: Focuses on past performance to determine which elements influence specific trends. This is done using drill-down, data discovering, data mining, and correlation to reveal the cause of specific events. Once an understanding is reached regarding the likelihood of the event, and why an event may occur, algorithms are used for classification and regression.
Predictive analytics: Uses statistics to forecast and assess future outcomes using statistical models and machine learning techniques. This often takes the results of descriptive analytics to create models that determine the likelihood of specific outcomes. This type is often used by sales and marketing teams to forecast opinions of specific customers based on social media data.
Prescriptive analytics: Uses past performance data to recommend how to handle similar situations in the future. Not only does this type of business analytics determine outcomes, but it can also recommend the specific actions that need to occur to have the best possible result. This is often achieved using deep learning and complex neural networks. This type of business analytics is often used to match various options to real-time needs of a consumer.
Deciding which method to go with will depend on the business situation at hand.
Elements of business analytics:
Now that we’ve narrowed down how it works, let’s now break down all of the components that go into business analytics and which methods it uses to find its valuable conclusions. The method you decide to go with when taking a deep dive into BA is going to depend on the end-goal you set before starting the process. Whichever method you choose, you are sure to find actionable insights waiting for you at the finish line.
Data aggregation:
The process of data aggregation consists of gathering and collecting the data, which is then presented in a summarized format. Essentially, before it can be analyzed, it needs to be collected, centralized, cleaned, and then filtered to remove any inaccuracies or redundancies.
This is a crucial step for business analytics because the accuracy in which you can gather insights from data is directly related to the kind of relevant and actionable results you’ll have at the conclusion of the process.
An example of data aggregation would be how a marketing team uses data like customer demographics and metrics (age, location, number of transactions, etc.) to personalize their messaging and offers.
Forecasting:
When business analytics are used to analyse processes that occurred during a specific period or season, businesses are provided with a forecast of future events or behaviours, with the help of historical data.
Forecasting can be used for several different things, such as retail sales around specific holidays and spikes in specific internet searches around certain events - like an award show or the Super Bowl.
"Forecasting based on historical data is useful for setting yearly goals and predicting online user behavior, such as traffic and conversions. Customer journey analytics allow you to identify first-touch interactions with a potential lead, all the way to the conversion step. Having visibility to all touch-points in the nurture process lets you optimize the steps in between and improve the user journey."
Not only does business analytics help build your lead funnel, but it impacts your bottom line in other ways. Forecasting call volume, for example, can help optimize staffing resources in a call center. Having the ability to gather and analyze data is not only beneficial but critical to making data-driven and informed decisions."
Data visualisation:
Data visualisation is an absolute must-have part of business analytics. It seamlessly takes the information and insights drawn from your data and presents it in an interactive graph or chart.
The right data visualization software is crucial to this process to help track business metrics and KPIs in real-time so you can better understand performance and goals. If you’re unsure which software option is right for your company, consult a Data Scientist or analyst from WRC, there are more than 67 types of Data Visualisation skills.
Why is business analytics important?
There are a lot of moving parts that go into business analytics, but it may be unclear why BA is important to your organization in the first place. For starters, business analytics is the tool your company needs to make accurate decisions. These decisions are likely to impact your entire organisation as they help you to improve profitability, increase market share, and provide a greater return to potential shareholders.
There’s no denying that so many businesses are impacted by technology, but when used correctly, BA has the chance to impact your company for the better as it provides a competitive advantage to a variety of companies.
While some companies are unsure what to do with large amounts of data, business analytics works to combine this data with actionable insights to improve the decisions you make as a company.
Plus, since this data can be presented using any format, the decision-maker at your organisation will feel informed in a way that works for them and the goals you set at the beginning of the process.
Essentially, the four main ways business analytics is important, no matter the industry, are:
Improves performance by giving your business a clear picture of what is and isn’t working.
Provides faster and more accurate decisions.
Minimises risks as it helps a business make the right choices regarding consumer behaviour, trends, and performance.
Inspires change and innovation by answering questions about the consumer.
Business analytics examples:
There are many different businesses and organisations that can benefit from using business analytics. As technology advances, more and more businesses are coming up with innovative methods to use big data to their advantage in order to increase revenues and enhance consumer satisfaction.
Let's imagine, for illustration, that you manage a fast-food business. By leveraging business analytics, you may expedite the drive-thru ordering procedure for your clients. You will be able to determine your peak hours and when to boost efficiency if you use BA to monitor the traffic that passes through the drive-thru. When you anticipate a lengthy line, you can rearrange your crew to add additional workers to the drive-thru lane, or even ask them to suggest items that can be finished fast. Employees can recommend more profitable things that are more expensive and require more time to produce when lines are shorter.
Blue Apron, a well-known meal kit delivery service, utilises business analytics to foresee demand for both their orders and menus. They provided a variety of meals to their members each week, and with the use of predictive analytics, they were able to use different data insights to prevent food spoiling and complete orders. In order to do this, Blue Apron examined client-related insights, which included previous information on the frequency with which a customer placed particular purchases. Additionally, there was information on recipes that was concerned with a customer's previous preferences for recipes. Finally, they examined seasonal variations to determine whether there were any patterns of greater or lower order rates for a particular season. Blue Apron was able to better understand their clients, enhance the user experience, forecast shifting preferences, and even pinpoint how meal choices change over time thanks to predictive analytics.
Jonathan Aufray, the CEO of The Growth Hackers, took the time to discuss their usage of business analytics. "At Growth Hackers, we track our traffic sources and the quantity of leads we produce using business analytics. We can then optimise the least effective methods, discard others, and focus even more on the marketing channels that produce the best results after learning which marketing strategies work and which ones don't."
Youtube plays their adds when they know you can't skip the add after 5 seconds, they predict and play these kind of adds when you are far away from the device.
For the clients we assist, we additionally use business analytics. To continuously refining your strategy, you must be able to monitor your actions and collect data. You cannot know what is working and how to optimise your plan without data. I think analytics should be used by all firms for marketing, lead creation, sales, and customer experience.
Benefits of business analytics:
Regardless of the size of your company or the sector it serves, business analytics offers a number of advantages. One of the key advantages is that it enables your company to prepare for unforeseen circumstances. When projecting future sales, earnings, and other important metrics for a firm, BA can model current trends. This gives firms the chance to anticipate changes that could happen annually, seasonally, or on any other scale.
To get ready for a sluggish season, you could need to cut back on spending or start up new marketing initiatives. Larger businesses may find it simple to estimate order volume and cut waste with BA. Your business can test out new marketing initiatives thanks to business analytics. You may better analyse the impact of your advertising campaigns on various audiences and demographics since BA gives you data on customer behaviour. Additionally, if you can determine that a customer is less likely to buy from you again, you might think about providing them with targeted specials to win their business back. No of your industry, you'll have a competitive edge over the competition when you use BA to your benefit.
Challenges of business analytics:
You'll need to avoid certain potential hazards with business analytics.
To begin with, it will be most effective when adopted and carried out with the full backing of all stakeholders inside your firm. Senior leadership support and a defined business strategy are always required.
It might be challenging to convince higher management of the need for a BA strategy, so be sure to position business analytics as an aid to existing plans. To assist people who take a while to understand the advantages of BA, this should also include definite, quantifiable targets.
Business analytics require not only executive ownership but also IT involvement, i.e., the appropriate technological infrastructure and data handling tools. For business analytics to be genuinely successful, business and IT teams must collaborate. While you're at it, check to see if you have the appropriate project management tools in place to use predictive models and an agile methodology.
In the early stages of an analytics project, it's critical to be dedicated to the outcome. Stay committed even if analytics software may be expensive and have a slow return on investment. Over time, the analytic models will advance, and forecasts will only get better. A company that cannot survive the investment phase is likely to give up on the idea entirely.
You'll also need end-user buy-in when your statistics have been given.
Business analytics must be adopted by end users who also have a stake in the created predictive model. That necessitates excellent change management, as your organisation must be ready for the adjustments that these revelations will necessitate in terms of how it now conducts business and uses technology.
Kind Regards,
Ashwin (Data Scientist),
Win Research Centre
+91 8123784727