Knowing how to use data is an important part of running a successful business. Data can be collected from multiple sources and then analyzed to gain deeper insights into customer preferences and behaviors, 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 said they plan to invest more in big data in the coming years.
And given the times we live in, with continued layoffs and the possibility of a recession on the horizon, it’s important 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 analytics and the tools available, businesses can better use their data to create a competitive advantage that will work over the long term, even through temporary storms.
But first, let’s discuss a few different types of data analysis.
Types of data analysis
Data analytics is a powerful tool for businesses to gain insights into customer preferences, market trends, and performance against goals. To maximize the potential of data analytics, it’s important to understand the different types available and how they can be used to make decisions.
What follows is a discussion of the different types of data analysis methods and related tools that are now available to help you on your way.
Descriptive analysis
This type of data analysis is used to summarize data and describe population characteristics. It can help businesses understand what has happened in the past and identify trends that guide future decision-making. Common types of tools used for descriptive analysis include dashboards and reports.
For example, businesses can use dashboards to track key performance indicators (KPIs) such as revenue, costs, and customer satisfaction over a period of time, and then use reports to summarize the data.
Tools like Tableau, Oracle Analytics, and Power Bl can help businesses quickly create descriptive analytics reports and dashboards.
Diagnostic analysis
Next is diagnostic analysis, which is used to identify the causes of a particular result 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 causes of sales declines and take appropriate action. By using root cause analysis, organizations are able to pinpoint underlying problems that require timely action.
Tools like SAP Analytics Cloud, RapidMiner Studio, and Alteryx can help businesses use diagnostic analytics to identify the causes of events.
Predictive analytics
As you explore how to use data, you’ll quickly come across predictive analytics, which, as you might have guessed, are used to predict 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 to any business. Through the use of machine learning and regression analysis, businesses are able to gain insight into potential sales trends, allowing them to adjust their marketing and sales strategies accordingly. For example, predictive analytics can provide a quarterly sales forecast that can be critical to maximizing profits.
Tools like Databricks, Domino Data Lab, and IBM SPSS, which offer comprehensive predictive analytics solutions, are most useful for getting started with this type of analysis.
Design analysis
The last type of analysis we will discuss is constitutional, 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 research from the International Analytics Institute, organizations that use prescriptive analytics can 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 use optimization algorithms and decision trees. For example, they can use these tools to find the most appropriate pricing strategy for a new product, given market demand and production costs.
And you’ll likely get the most mileage out of tools like Birst, Talend, and IBM Prescriptive Analytics that are specifically designed for this type of data analysis.
So hopefully that gives you a good overview of what types of data analytics are available to you. Next, we’ll talk about the benefits of using these analytical methods in all aspects of your business.
Benefits of knowing how to use data
Data-driven decision making offers a wide range of benefits for businesses.
Here are some main advantages:
- Improved decision makingUsing data analytics can make smarter decisions for any business. According to BI-Survey, 69% of companies surveyed said that using data analytics has helped them make much better decisions. And it makes a lot of sense. By effectively analyzing trends and patterns, you’ll be able to spot areas for improvement and take the necessary steps to optimize your bottom line, from higher profits to greater customer satisfaction.
- Cost savingsData analytics 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 using data analytics has helped companies save up to 25% in operating costs.
- Better customer experiencesUsing data insights can help companies gain a clearer understanding of customer likes, dislikes, and behaviors. With this enhanced insight, businesses can tailor their offerings to meet consumer needs, thus boosting customer experience and long-term loyalty.
- Competitive advantageHarnessing the power of data analytics can give a business a huge advantage over the competition. By analyzing relevant trends and patterns ahead of time, companies can make informed decisions that give them an edge in today’s ever-evolving marketplace.
- AgilityThrough data analysis, businesses can effectively observe changes in the market and make quick adjustments to their strategies and operations. Taking advantage of trends and patterns revealed by data puts you one step ahead of your competitors, allowing you to stay competitive in today’s ever-evolving marketplace.
Overall, data analytics is a powerful tool that can help businesses make more informed decisions and achieve their goals. And it seems 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 use it to make educated decisions, meaning they’re not flying in the dark. For example, they can use predictive analytics to predict how different economic scenarios might affect 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 workers in the United States alone this year.
Economic experts were warning of a possible recession just months ago, but recently said it could be avoided, even though inflation has hit middle-income earners hard.
It’s hard to know exactly what will happen, but it’s never a bad idea to be prepared. This type of uncertainty makes it more important than ever for businesses to leverage data analytics to survive the ups and downs ahead and remain competitive.
Data analytics is essential to success in the digital age
As technology continues to evolve, it will become increasingly important for businesses to know how to use data. Companies that use data to make informed decisions and optimize their operations will have a competitive advantage over those that do not. It’s just a plain and simple fact.
Data analytics enables businesses to make better decisions and gain insights that drive growth. And that’s why it’s important for those who want to stay competitive.
From cost savings to better customer experiences, data analytics can provide companies with the insights they need to succeed. And in times of economic uncertainty, data analytics can become even more important in helping businesses navigate troubled waters and stay ahead.
The bottom line is that data analytics is powerful, and those who don’t take advantage of it will be left behind.