A lot of small to medium sized businesses ask me, why should I care about analytics and how can it help me? My answer is usually pretty simple.
"It takes the guesswork out of marketing, helps you focus on what is working and eliminates what isn't."
Even at the corporate level, a large majority of that data is falling through the cracks, losing valuable information with it. A well known analytics reporting company notes that only 4% of companies make good use of data analytics — leveraging the right combination of people, tools, and data with the intent to drive improvements.
All that is fine, but one question remains: Why is it smart to have a big data strategy?
One highly publicized workforce report analyzed seven years’ worth of research on business performance in the U.S. and sums it up this way:
“Fortune 500 companies are investing tens of billions of dollars in Big Data initiatives for a simple reason: to save money and gain market share by accurately predicting future behavior rather than guessing at it.
So, let’s dive into 3 categories where data analytics drive business improvements.
1. Data encourages well-informed decision-making
Data can back up decisions with hard evidence and provide balance in situations where opinions vary widely or emotions run high.
Plus, the more data businesses analyze, the more helpful an aid it becomes. As the workforce performance report cited earlier points out, analytics engines get “smarter” as they absorb a company’s actual outcomes and connect them to the data being collected — and this happens “without the biases and other limitations that individual decision-makers experience.”
2. Data delivers a competitive advantage
Data and analytics are undeniably a part of the modern workplace, made more accessible by the technology and tools available to put them to good use. Corporations that don’t mine their value risk falling behind their more forward-thinking, data-driven competitors.
A Bain & Company survey of more than 400 large businesses found that organizations that have the most advanced analytics capabilities tend to pull ahead of industry peers. Not only are such companies twice as likely to be in their industry’s top quartile of financial performance, but they’re also five times more likely to make decisions faster than market peers.
3. Data drives revenue gains
Many business initiatives boil down to one goal: increasing profits. How can data help in that department? Let’s take a look at what the research says.
One University of Texas study dug into data sets from Fortune 1000 companies in every major industry to analyze the impact data has on key business performance metrics. The results revealed that making even very small improvements to existing data can reap big benefits.
Some of the study’s notable findings revealed that the average Fortune 1000 company could:
Increase its revenue by more than $2 billion a year by increasing data usability by just 10%Increase return on equity by 16% by increasing both the quality of data and the ability of salespeople to access it by just 10%Increase return on investment by 0.7% (which equates to $2.87 million of additional income) by increasing both the intelligence and accessibility of data by just 10%
Most significantly, the areas for data improvement highlighted here (such as quality, usability, and accessibility) required only very small upgrades to produce financial gains.
The key with this article is that you don't need to be in the corporate space to be able to implement analytics, there are plenty of free tools out there to help you get started.