In today’s technology-obsessed world, there are more than 4.3 billion internet users each day, and each of them is generating data. According to a study by Domo, more than 2.5 quintillion (or 2.5 billion times a billion) bytes of data are created every single day—and that number is only going to grow. It’s estimated that by 2020, 1.7 megabytes of data will be created every second by every person on earth. So what do we do with all of that data? This is where data analytics gets to shine.
Data analytics is the science of analyzing large amounts of raw structured and unstructured data to discover patterns and correlations and gather actionable insights. The process of data analysis has previously been highly manual and time-consuming, making it inefficient and not very cost-effective. However, with today’s technological advancements, data analysis has become an automated process that provides nearly instantaneous results, allowing those who use it to optimize their performance, make better decisions, and improve customer satisfaction—all of which results in lower costs and higher operational efficiency.
Benefits of Data Analytics
According to a study by Bain and Co., companies with the most developed data analytics capabilities held a larger market share, were 2X as likely to be in their market’s top 25% for profitability, and were 5X more likely to make faster decisions. Why is that? Data analytics offers major benefits to those who choose to employ it.
Data analytics offers companies the ability to analyze data quickly, leading to the discovery of previously unknown patterns and correlations that could be preventing the organization from moving forward or reaching a goal. Conversely, data analytics could help pinpoint processes that are working well and should be applied to other areas of the business. In fact, a study conducted at MIT found data-driven companies had 4% higher productivity and 6% higher profits than average.
Informed Decision Making
Data analytics provides companies with real-time analysis, allowing for the most pertinent decisions to be made quickly with data to back them up. Organizations with data analytics strategies in place can be more nimble in their decision-making processes and can pivot their methods to work in the most efficient manner according to the data.
Trend Analysis and Prediction
Through statistical algorithms and machine learning, data analytics can help businesses use historical and current data trends to better predict what the future will bring. Data analytics can forecast future trends, activities, opportunities, and, most importantly, any roadblocks to business success.
Improved Customer Satisfaction
Through the use of data analytics, businesses can learn everything about their customers, from their buying habits to their demographics and interests. By learning more about the customer, businesses have the ability to cater to their preferences and target their specific needs with advertisements, products, and marketing materials.
Higher Customer Retention
Additionally, data analytics plays a major role in customer churn and retention. A churn prediction model can determine which customers are likely to end their relationship with the company, allowing the organization to correct problems before they occur, which can result in higher retention rates. For example, Netflix saves $1 billion per year on customer retention thanks to data analytics.
With the growing amount of data being generated each day, data analytics is becoming more important than ever. Data analytics helps businesses optimize their performance through reduced costs, higher productivity and profits, better decision-making, and improved customer experience.