5 Ways Data Analytics Can Benefit Your Business
Businesses generate valuable data today that can offer profound insights and immense value. Data analytics allows you to delve into that data. Data analytics fuels growth and development strategies, marketing, customer identification efforts, and more. This post will explore five ways data analytics can benefit your business.
Improving Customer Acquisition and Retention
Customers are critical for growth and stability. And yet business owners and decision-makers often focus on acquiring new customers rather than on acquisition and retention. According to Harvard Business Review, acquiring a new customer can cost five to 25 times more than retaining an existing customer. Moreover, increasing customer retention rates by a mere 5% can boost profits by 25% to 95%.
The challenge is understanding why customers leave in the first place. All businesses deal with customer churn to some extent – there’s no way to keep 100% of your customers 100% of the time. However, data analytics identifies why customers are leaving and where they are going. You can do this in several ways, including:
- Competitor comparisons
- Customer segmentation and analysis
- Targeting customers most likely to leave with improved messaging/offers
Improved customer retention delivers dramatically improved stability and profitability, far more than what you’ll see by constantly seeking new customers. Identifying why customers are leaving is the first of several steps to reducing your churn rate and enhancing retention.
Business decisions affect profitability. They determine your business’s trajectory and ability to compete within your industry. Inaccurate, poorly informed decisions can also lead to financial losses.
Predictive analysis helps business owners and leaders make informed, accurate decisions based on suggested outcomes. Imagine if you could model the effects of various choices before making them. You could reduce risk, increase positive results, and accelerate growth. That’s precisely what data analytics provides.
With predictive analysis, you can accurately model the following:
- The short and long-term outcomes of raising prices on products or services
- The effect of introducing a new product or service to the market
- The demand for product or service variations within your current customer base and with prospective customers
Of course, there’s no crystal ball. Business owners and decision-makers must still put in the work, but data analytics delivers a platform that supports success. The process might look something like this:
- You develop potential product changes or variations.
- You A/B test those changes to validate your hypotheses.
- You collect data on the changed products or variations.
- You use data analytics tools to visualize the results of the changes/variations.
- You make an informed decision about the changes/variations you ultimately introduce and avoid risks and pitfalls.
Data analytics allows you to peer into the future and make informed decisions that guide your business toward positive outcomes and growth.
Efficiency dictates profitability and success. It doesn’t matter how much a marketing campaign delivers in terms of sales if it costs your business twice that amount to create. Of course, efficiency goes much deeper.
According to Zippia, the most successful companies are up to 40% more productive than their competitors. They also have 30 to 50% higher operating margins than less productive businesses.
Improving efficiency is no simple task, however. It requires answering wide-ranging questions, including:
- How productive are your employees?
- What about your business processes?
- Are those meetings benefiting your business or costing you time and money?
With data analytics, business owners and decision-makers can dive into processes and workflows and streamline them. It works like this:
- Assess the effectiveness of current workflows.
- Analyze the outcomes of your business processes.
- Identify areas that need to be streamlined or eliminated.
- Design new workflows that improve outcomes.
- Implement and automate those workflows.
- Monitor and measure results over time.
- Use that information to refine your workflows further to fine-tune efficiency.
You can increase cost efficiency, improve productivity, enhance communication, ensure better time management, and minimize risk. You can also identify cumbersome processes, employee skills gaps, and more.
Business owners strive for growth. However, “growth” may mean different things for different businesses. Are you looking to expand your customer base? Boost profitability? Outcompete others within your industry? Expand your product range?
Whatever your specific answer is, data analytics can help. Here’s what you need to know.
First, develop a data-driven culture. When your team encounters problems, they should look at the data to create solutions and validate hypotheses rather than “going with their gut” or applying a short-term “Band-Aid” solution.
Second, ensure that data is at the heart of your decision-making processes. Learn how your customers perceive your products or services and your brand itself. You can then identify friction points and see where customers find the most value. Based on that, your team can focus on the most critical problems and valuable opportunities.
Next, ensure that data is accessible across the organization. You must eliminate departmental or team silos. The idea that specific data “belong” to teams or departments is outdated. To drive growth, information must be allowed to flow across the entire organization. This requires not only a culture change but also access to the right skills and tools.
Use data analytics to surface deep insights. That requires more than just studying the raw information. When combined with data analytics, machine learning transforms data points and highlights the underlying relationships deep within that information. Then use these to inform business strategies, whether talking about marketing campaigns, changes to products or services, or something else entirely.
Enhancing the Customer Experience
Finally, data analytics can help you enhance the customer experience. Customer experience (CX) is a critical metric for business success. It speaks to everything from customer retention to lead conversion and brand success.
Not sure why customer experience is so important today? Consider the following statistics:
- Zendesk reports that 52% of customers would switch to a company’s competitor after just a single bad experience.
- When businesses focus on improving their customer experience, it results in an 80% increase in revenue, according to Zippia.
- PwC says that 73% of all customers rate CX as an essential factor in their purchasing decisions, ranking third after price and product quality.
Given how central customer experience is to your success and the satisfaction of your customer base, it’s critical to ensure you’re delivering a positive one with each interaction. Data analytics helps you do just that.
One way data analytics helps improve CX is through personalization. It allows you to treat every customer interaction with your business as a data point that feeds into the next interaction. Think about product and service suggestions based on previous purchases, marketing collateral delivered based on the individual’s position within the sales funnel, and customized email marketing based on metrics specific to that customer’s history and interactions with your brand. Personalization is all about ensuring your customers feel valued and important.
Another way data analytics can transform the customer experience is by reducing or eliminating friction points. What parts of your website confuse customers? Which parts move too slowly? Which aspects of your customer service dissatisfy your customers? Where do your customer service reps need additional training to close skills gaps?
You can also drive success by using data analytics to understand customer behavior. This includes customer retention, which we discussed previously, but other behaviors, including:
- Hesitation to purchase a product or service
- Failure to recommend your brand to others
- Holding a specific sentiment about your brand or products/services
With data analytics, you can understand customer behavior and then appeal to their emotions or address underlying problems.
Don’t leave business growth to chance. Data analytics helps you make informed decisions that drive success. From enhancing your customer experience and building loyalty to improving efficiency across all departments and ensuring accurate decision-making, the right tools, processes, and skills support positive outcomes and an enhanced ability to compete within your industry.
Data analytics platforms are just part of the equation. It’s also crucial to have an educated workforce imbued with the knowledge and skills necessary to harness data in their everyday tasks and customer interactions. Employee reskilling and upskilling are essential elements of your overall strategy. Not only do these steps ensure your teams work with data to deliver the benefits discussed here, but they also help you retain key talent and attract higher-caliber employees.