Kathy, a renowned fast food chain owner, knows it’s difficult to track sales and customer data with her current system. She dives into the software market and discovers that analytics could be the silver bullet for her problems, but why business analytics software? It lets her centralize data, create robust reports and ensure collaboration. She can also make accurate sales forecasts with reliable data access.

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This Article Covers:

• What Is Business Analytics?
• Benefits
• Types
• Organizations Leveraging Business Analytics

What Is Business Analytics?

Business analytics are the set of processes and techniques, including statistical tools, data analysis and other quantitative methods, used to solve business problems.

Business analytics:

• Accumulates and processes business data.
• Identifies trends, patterns, outliers, characteristics and points of interest.
• Makes accurate predictions.
• Formulates data-driven decisions based on insights.

Process

Business analytics processes involve:

• Gather Information: Collect data from different sources, including spreadsheets, websites, IoT devices and sensors, databases, apps and social media in a centralized location.
• Extract Insights: Once data is stored in a data lake or a warehouse, it needs processing. Use data mining to unearth insights, trends and anomalies. Data mining involves various statistical techniques like classification, regression and clustering to find patterns that lead to robust inferences and predictions.
• Describe Data: Interpret historical data to understand business performance. It’s important to analyze the past to make accurate forecasts. For example, descriptive analytics sheds light on different business metrics like year-over-year sales growth, revenue per subscriber from OTT platforms, average time customers spend on websites and more.
• Make Accurate Forecasts: After gauging historical data patterns, it’s possible to predict future outcomes accurately through predictive models. For example, a good model can predict within minutes if a loan that needs approval is high-risk or not.
• Create Robust Visualizations and Reports: Convert unintelligible information into actionable insights via reports and dashboards. For instance, finance professionals analyze candlestick charts to determine stock, bond and commodity price movements over time.

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Primary Benefits

Let’s look at how and why business analytics is beneficial:

Make Data-driven Decisions

Identify and analyze trends in HR budgets, manufacturing and supply chain operations, sales outreach programs and marketing campaigns while making smarter decisions backed by powerful data insights.

Create Intuitive Visuals

Business analytics solutions can turn unstructured data into robust visualizations to convey meaningful information. Creating intuitive visuals makes complex information digestible and facilitates collaboration to derive actionable insights collectively.

Create intuitive data visuals in Power BI.

Provide Seamless Customer Experience

Business analytics leverage web analytics tools to help you analyze customers’ buying behavior. You can also track metrics such as average session duration, bounce rate, average time on page and more.

Based on this data, you can change website content and layout, modify marketing and sales strategies, provide recommendations and more to offer a seamless customer experience.

Streamline Business Processes

An efficient, data-backed business strategy can help you sail through the winds of change. Business analytics tools evaluate team performance, gauge customer journeys, streamline inventory and more.

BA gives you a strategic look at your processes so you can make modifications to enhance business performance.

Mitigate Employee Attrition

Examine hiring trends and patterns to analyze attrition rates. Based on this information, hire people with the values, behavior and attitude to fit into the company culture.

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Types

The four types of business analytics are:

Descriptive Analytics

Analyze historical data to unearth trends and patterns. Descriptive analytics parses information to understand changes. Obtain a holistic view of business performance to identify pros and cons while formulating robust strategies. Present information in the form of different KPIs, including revenue per customer, year-over-year sales growth and more.

Amazon uses descriptive analytics to track customer purchases and offer recommendations based on purchase history. Netflix uses it to gauge which genres and series influence specific customer groups. In turn, it leads to new content production based on consumer preferences.

Predictive Analytics

Predictive analytics leverages statistical modeling and machine learning algorithms to predict future outcomes based on historical information.

Financial industries use predictive analytics to prevent fraud by analyzing criminal behavior patterns and forecasting which customers are likely to default on credit card payments. HR managers use it to identify and hire employees, gauge labor markets and forecast employee performance levels.

Prescriptive Analytics

Prescriptive analytics determine the best course of action among different possibilities. Organizations need to analyze the impact of decisions on different business aspects and then take action to achieve objectives.

Marketers use email automation to sort leads and send emails based on mindset, motivation and preferences.

Diagnostic Analytics

Diagnostic analytics determine the root cause of events, trends and anomalies. It helps you dive deeper into the data to analyze unexpected revenue drops, changes in customer behavior, increases in expenses, escalating customer complaints, bottlenecks in production processes and more. It employs various techniques to investigate problems and issues, including data drilling, mining and correlation analysis.

For instance, an eCommerce store selling eco-friendly products sees a revenue surge from a specific region. After thorough analysis, it discovers that sales of canvas tote bags jumped after the government banned plastic bags in that region.

Organizations Leveraging Business Analytics

Let’s look at businesses that use business analytics to boost their performance:

Netflix

Netflix leverages data and business analytics to increase the average time users spend on the platform. It provides personalized recommendations and suggestions based on user watch histories. It leverages visual artwork to depict movie clips and capture the audience’s attention.

Its post-play options continually play the next episode of a series unless the user opts out. Automatic suggestions push users to spend more time on the platform.

Uber

Uber uses advanced algorithms to identify rides at pickup and drop-off points. This car-pooling service serves many customers at once, ensuring its drivers are occupied.

McDonald’s

McDonald’s uses digital screens instead of regular menus for complete control over what, when and how they display content to customers. They display meals that are relevant, timely and appealing. Analytics customizes on-screen content based on trending offers.

Bank of America

Bank of America identified that customers had to visit their branch daily to check transaction histories and upcoming payments. The bank set up a virtual assistant to guide customers with pending bill details, thus saving time.

Amazon

Amazon analyzes your transaction and search history, product reviews and ratings to make product recommendations. For instance, if you add a piece of clothing to your cart, it will suggest accessories to complement it based on other customers’ purchases. It entices you to buy more to boost sales.

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Conclusion

Business analytics helps organizations curtail short and long-term risks by making data-driven decisions about customers, revenue, operations and processes. It boosts performance while inspiring change and innovation.

Why is business analytics crucial for your organization? Let us know in the comments below!