Data-driven analytics is becoming increasingly important for companies as they seek to gain insights that can drive their decision-making processes in today’s dynamic landscape.
With more data being collected than ever, data analytics promises to help more organisations uncover patterns and trends that they can exploit to improve their business operations and profitability.
The article aims to explore the importance of data analytics for companies while citing examples from some leading companies in the world.
What is data-driven analytics?
Generally speaking, data on its own isn’t a source of competitive advantage since many organisations can collect hordes of data from various sources. Rather, data must be purposely analysed, disentangled and activated to create a competitive capability from its use.
Data-driven analytics is the process of examining and interpreting data to identify patterns and develop actionable insights to make strategic decisions. This data may be collated, stored, and analysed from a variety of sources like sales, website traffic, etc. This helps brands to identify areas for improvement in their operations, such as reducing costs, increasing revenues, and improving consumer satisfaction.
Also read: “What is data analytics: A complete guide”
- Photo by Lukas
What is a data-driven approach for companies?
A data-driven approach for companies revolves around systematically collecting, aggregating and analysing data to inform and guide decision-making processes.
Companies that use this approach employ various tools and technologies to analyse the data so as to track progress, identify trends, and measure the effectiveness of their strategies.
They typically have a culture that values analytics and hence prioritises data collection and interpretation in their decision-making processes. Data isn’t just seen as a byproduct of their operations, but as a critical resource that will help them stay competitive, improve customer satisfaction, and achieve their business goals.
Data-driven approaches can be applied to various areas of a company, including marketing, sales, operations, product development, and customer service, to identify areas for improvement, develop targeted marketing campaigns, optimise supply chains, and improve customer experiences.
Overall, a data-driven approach involves a shift in mindset towards using data to inform decision-making. It requires investments in technology, talent, and processes to ensure that data is collected, stored, and analysed effectively.
For the most part, companies that apply data-driven approaches employ data-driven business models (DDBMs) in a multi-layered and multi-dimensional way to survive and compete. Such companies include those who understand user-buying patterns in an in-depth manner, like online retailers, publishers, and financial and insurance service players.
What type of data can be used by companies for analytics?
Companies can gather data from various sources before they begin on the analysis aspect. These include:
Personal data
This includes information about a person, such as age, gender, and location, as well as other details like IP addresses, device IDs and web browser cookies.
Behavioural data
Behavioural data consists of data on how customers interact with a brand, such as their browsing history, search terms, shopping choices, favourites, etc.
Customer engagement data
It is information about how customers interact with a company’s marketing campaigns, such as email open rates and click-through rates.
Customer satisfaction and opinion data
Customer satisfaction and opinion data include customer feedback, which can come from surveys and reviews.
Importance of data-driven analytics to companies
1. Improved decision-making
Company operations built on collected data are often more efficient and profitable. The inner workings of the company can be iteratively tweaked based on the patterns and trends that show up after the data has been analysed.
For example, a company might identify which products are selling well and which ones are not and use this information to adjust its marketing and sales strategies.
2. Provides customer insights
Data-driven analytics allow companies to better understand their customers. Collected data gives insights into their customers’ preferences, behaviours, and needs. This information can then be used to develop better products.
3. Helps facilitate unbiased decision-making
Personal biases and subjective opinions are taken out, or at least greatly minimised when decisions are driven by the results based on facts and data. This helps companies make more objective and rational decisions.
4. Helps in cost savings
Data-driven analytics save companies a substantial amount in costs by identifying areas where they can cut expenses, such as marketing campaigns that are not generating a good return on investment.
5. Helps boost revenue
Companies can increase their revenue by identifying new opportunities for growth through identification of new markets, new products and tweaks of the current products/services.
For example, products that are high cost and yet offer low returns can be easily singled out for removal from the companies’ catalogue.
6. Gives them a competitive advantage
Companies that use data-driven analytics can stay ahead of their competitors by making informed and effective decisions. Since their strategies are not based on speculations but actual figures and facts, it helps them plan ahead and stay strong in their marketing game.
7. Helps formulate targeted marketing strategies
Data-driven analytics provide insight into customer behaviour and preferences which informs their marketing campaigns, messaging and promotions. Your customers may have a strong preference for a particular product, or may belong to a certain demography. This type of data helps companies segment their customers and create separate marketing plans for each category.
8. Improved customer service and retention
Since companies have a better understanding of their customer’s pain points, needs and behaviour, they are able to utilise this feedback based data to develop strategies to improve the customer experience.
9. Innovation and new product development
Acknowledging the feasibility of a business’s product or service is crucial in achieving profitability. Based on the insights garnered from data analysis, a business can create new products or modify existing ones to cater to the demands of its target audience.
10. Track workplace productivity
A business can adequately identify whether or not an individual is performing to their maximum potential by monitoring performance data over time. As such, data-driven analytics may assist a company in developing efficient standards that they can implement at both an organisational and case-by-case level, increasing the potential for development.
Leading data-driven companies in the world
In the digital era that we live in, data is the new gold.
The volume of available data continues to grow exponentially as more sophisticated algorithms are deployed and computational power and storage steadily improves. This is consequently fueling rapid technology advancements and business growth.
Therefore, as a valuable asset for businesses, leveraging data based decision-making undoubtedly gives companies a competitive advantage. Here are some of the world’s leading data-driven companies:
- Amazon: Amazon uses data to personalise product recommendations for individual customers and improve their overall shopping experience, optimise its logistics and supply chain operations, reduce delivery times, and manage inventory levels.
- Google: Google is one of the world’s largest data-driven companies, using data to improve its search algorithms and personalise search results for users by analysing user behaviour and tracking trends. New products and services are also born out of what they learn from the collected data.
- Uber: Uber uses data to optimise its ride-sharing service by analysing traffic patterns, predicting demand and thus reducing wait times and increasing customer satisfaction.
- Netflix: Netflix uses predictive analysis to personalise its content recommendations for individual users and improve their overall viewing experience. The company also uses statistical data analysis to track user behaviour, and trends, and develop new original content.
- Facebook: Facebook uses data to track user behaviour and analyse trends. This is then used to target advertisements, personalise its newsfeed for individual users and improve their overall user experience.
- McDonald’s: The world’s biggest fast food chain leverages data to inform menu changes, pricing, locations, and changes in operations.I n practice, the company exploits big data and custom algorithms to continuously optimise and tweak its menus to change based on real-time data and customer information.
As a result, McDonald’s menus intelligently change options for customers based on the weather, the time of the day or even big events happening in a local area. - Coca-cola: The multinational beverage corporation uses image recognition and data analytics to create ads to target the relevant audience increasing the ROI on their advertising spend.
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Photo by Pixabay
Conclusion
Data-driven analytics has become increasingly important for companies across industries.
Yet most brands are still capturing only a fraction of the potential value from data and analytics.
All things considered, data is now a corporate asset. By leveraging it, businesses can gain valuable insights into customer behaviour, preferences, and needs, which can help them make more informed decisions, improve customer experience, and gain a competitive edge. Additionally, it helps them identify new revenue streams, reduce costs and increase productivity, which can lead to better business outcomes.
Moreover, leading data-driven companies like Amazon, Google, Uber, Netflix, and Facebook have demonstrated the power of data-driven decision-making, and many other businesses are following suit.
As technology continues to evolve, we can expect to see more companies adopting data-driven approaches to drive innovation, enhance customer experience, and achieve success. Enroll in our Data Analytics course to ensure your organization is part of this evolution.
In the years to come, data-driven analytics will undoubtedly play a critical role in shaping the future of the business world, and companies that embrace it are more likely to thrive compared to those that don’t.
Reach out to us for more information on how to get started with your data analytics journey in Singapore.
Reviewed by
Areas of expertise: Training and consulting in technology, strategy, analytics, business management, and learning and development.
Awards: ‘Innovation for Impact Award’ 2016-17 | ‘Associate Excellence Award’ 2018-19 | ‘Innovation for Impact Award’ 2020-21 by CSC.
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