Business analytics is the process of extracting information and insights through statistical analysis of market trends, customer reactions, and past performance to drive better decision-making practices and help businesses achieve goals.
In any industry, data analytics, intelligence and insights play a key role in driving a business’s success. There are tools and technologies to conduct iterative research and extract valuable information that can result in strategic planning and actionable decision-making. This doesn’t just influence the financial aspects of a business and streamline customer experience but also brings management professionals to effectively contribute to an organization’s success.
In this article, we will explore the role of business analytics in business decision-making to gain an advantage in the competitive market.
How Does Business Analytics Impact Business Success?
Business analytics and insights aren’t just limited to implementing initiatives that maximize the efficiency of external factors impacting a business. It is also targeted at enhancing internal performance and quality by gaining a comprehensive understanding of the management system. This ensures timely availability of resources, better coordination, risk assessment and management, and improved customer experience.
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Here is how business analytics helps businesses become more strategic and achieve goals:
1. Visualize Long-Term Business Goals
Statistical facts based on the evaluation of a company’s past performance, industry trends and future projections can help a business visualize long-term goals for the company. This is essential to ensure growth and retain a competitive edge in the market.
When company CFOs, managers, executives and sales teams have direct access to business intelligence and “one view of the truth”, it accelerates the process of decision-making.
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2. Enhance Business Performance
With streamlined data analytics in place, businesses have a comprehensive view of the human side of the equation that deals with how people process information and use it to implement a given task. Through this, companies can allocate their resources in a better fashion as per the skills, strengths and weaknesses of employees, and work on aspects that require improvement, so as to maximize internal performance.
By staying on top of employee operations, companies can recognize inconsistencies in management, and work to streamline them and enhance productivity. It would also impact recruitments and reduce the cost of hiring.
3. Improve Risk Management
Business analytics in business decision making help forecast aspects of management that can go awry in time. This allows businesses to implement practices to prepare for potential structured and unstructured issues by streamlining communication between departments and configuring improved risk management models. Based on this, businesses can then forecast risks with even more accuracy in future and eradicate potential crises by deploying necessary tools.
4. Identify Sales Opportunities
Through data analytics, companies can conduct iterative studies on customer behaviour, their purchasing habits and favourable reactions, to identify sales opportunities. They can discover the most effective cross-sell and up-sell opportunities and use them to improve their sales decisions.
Data analytics also provide comprehensive insight into the type of customers a business should be targeting. This can help sales teams recalibrate their sales strategies and tailor their acquisition and conversion plans accordingly.
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5. Identify New Business Opportunities
Business professionals may recognize short-term trends, but the sustainability of a business depends on identifying new business opportunities and strategizing accordingly to ensure longevity. Business analytics gives a clear insight into the shifts in markets and allow businesses to determine which products must be updated.
Such intelligence-based decisions result in profitable outcomes and enhance the growth potential of a company. They also help predict risks down the road, so key areas of concern can be improved to increase a business’s chance of success.
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6. Improve Marketing Strategies
By monitoring customer’s reactions towards promotions and marketing campaigns, a business can determine which campaigns to prioritize and devise strategies to capitalize on the most successful products and services.
As per a study by McKinsey & Company, data insights and analytics positively impact marketing decisions and help drive productivity by 15-20%. Take Target’s “pregnancy prediction score” for instance, that analyzes the purchasing habits of a customer to ascertain how likely they are to be pregnant. Based on this, retailers decide the promotional coupons and discounts that will be sent to the customer.
Predictive analytics is a common practice by companies to drive customer experience and foster reliability and loyalty with respect to their brands in a customer’s mind. This requires conducting investigative research in real-time, monitoring purchase habits, internet searches, and deducing fact-based conclusions to fine-tune marketing decisions. Based on these insights, sales teams can also collaborate with marketing departments to make quick and effective decisions.
7. Streamline Customer Service
Data insights have a key role to play in decisions that directly impact the customer experience. By identifying patterns in customer reactions and studying the interactions between your employees and customers, a business can align their marketing strategies to drive profitable outcomes. These data simulations can help both marketing teams and the IT department to restructure budgets and devise campaigns that improve customer interaction as well as drive business goals.
8. Improve Financial Status
When companies have a thorough insight into their profit margins and losses, incoming and outgoing transactions and finance sheets, they are well-positioned to evaluate the potential of their products and services. This helps eliminate cost concerns and identify revenue streams to improve the financial status of the company.
Inconsistencies in inventory management also affect the profit margins of a company. An exhaustive view of ordering patterns, quantities, and prices can help reduce inventory costs and gain a stronghold on the finances of the company.
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Business Analytics in Business Decisions
Business analytics puts companies in a position to streamline internal processes, be it HR, marketing/sales or supply chain, and help improve the relevance of their product offerings. It allows them to employ strategic decision-making at all levels to influence business operations.
Businesses all around the world rely on data analytics and intelligence to retain a competitive advantage in the market. It is the need of the hour for companies to invest in data mining practices to stay relevant and in-demand.
The good news is there are online courses on business analytics that anyone can take up and upgrade their skill set in a way that they become indispensable to an organization.
upGrad’s Global Master Certificate in Business Analytics from Michigan State University with separate courses on “Data Mining and Management Strategies” and “Applying Business Analytics” can help you enhance your business performance and drive growth. Since the course is conducted 100% online, it doesn’t require you to compromise focus on business operations. So, book your seat now and avail the benefit of learning from world-class faculty and industry experts for the next six months!
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What is a supply chain?
A network that exists between a company that produces a certain product and its suppliers to distribute the product to the final buyer is a supply chain. This network comprises resources, information, entities, people, and other activities.
The various stages that a product or service goes through from its moment of inception or conception till it reaches the end consumer also falls within the gamut of the supply chain.
Supply chains are developed by companies to remain competitive and reduce their costs in the business landscape.
An optimised supply chain results in a faster production cycle.
What are cross-sell opportunities?
The offering of complementary or related products to a customer is known as cross-selling. As a form of marketing, it is highly effective.
One example of cross-selling is to offer various types of products or investments to investors in the financial services industry. Similarly, selling tax preparation services to clients who are planning their retirement is another instance of cross-selling.
A bank sales team may try to cross-sell a savings product such as a Certificate of Deposit (CD) or a personal line of credit to a client who has a mortgage.
What is inventory management?
The process of using, storing, ordering, and selling a company’s inventory is known as Inventory management. This includes the management of components, raw materials, and finished products. It also includes the processing and warehousing of items.
The entire process of managing the steps that convert raw material into a finished product is known as inventory management. Its objective is to streamline inventories efficiently to avoid both shortages and gluts.
Materials Requirement Planning (MRP) and just-in-time (JIT) are two major models of inventory management.