Many SMB owners and managers find themselves wearing multiple hats throughout the day. Oftentimes, they act as the marketer, salesman, and accountant, all at once. So dynamic and overwhelming are their daily tasks, that it’s easy for them to fall back on hunches and guesses, rather than do the legwork necessary for decision-making. The majority of their decisions are often the products of past performance, current market trends, and sometimes just plain ol’ intuition.
But what if managers could tell exactly which ad is getting the best results, what times of the week and day have the best email open rates, which products sell best during certain times of the year? Powerful Business Analytics (BA) tools that were, until recently, the sole domain of well-heeled enterprises are now helping SMBs gain insights into trends thanks to cloud computing and SaaS delivery model. This article outlines the different types of analytics and how they can help SMBs, and offers a few suggestions on how to get started.
What are Business Analytics?
BA has been around for a long time, but until recently was only accessible to people with extensive training in data mining, statistical analysis, and business intelligence. As companies of all sizes generate new data at an unprecedented rate, they are finding ways to make it useful. With a plethora of information and an increasingly competitive economy, businesses use data to drive the decision-making process. BA consist of software tools that help isolate, retrieve, and analyze data, turning it into actionable insights. It is broken down into four categories:
- Descriptive Analytics: Breaks up existing data sets into easily understandable pieces, revealing hidden patterns within.
- Predictive Analytics: Uses statistical models and machine learning to predict possible outcomes. The “What-If Analysis” tool in Excel is a very basic example.
- Prescriptive Analytics: Recommends courses of action to achieve goals using data analysis and statistical models. (Here is a review for the top 50 prescriptive and predictive analytics software.)
- Diagnostics: Analyzes past performance to understand why existing trends came about, and weighs data to determine what is relevant to a company’s KPIs.
How Can Business Analytics Help SMBs
In an economy operating on the adage, “survival of the fittest,” small and large companies alike need to find ways to optimize their decisions to get the best return. Even if a company is collecting data on their customers, competitors, and the market, finding trends can be daunting, especially since the information is constantly being updated. BA can prove invaluable in such cases.
Make Detailed Buyer Personas: Understanding who is buying from you, what they like/don’t like, and what they are looking for are all important questions helping to optimize your approach. Information gained from website visits, email surveys, social media, and even in-store activity can all help you create a buyer persona—a semi-fictional archetype of your ideal buyer.
A buyer persona can include the buyer’s tastes, preferences, occupation, pain points, possible solutions, tools they use, content sources, etc. Once constructed, a buyer persona guides your marketing strategy to develop highly targeted messages. Here’s a detailed article on how to build the perfect buyer persona.
Create Highly Targeted Content Strategies: Which keywords are bringing in your winning traffic? Which web pages are performing poorly? Which blog post was shared the most? Are most of your sales coming from social media or search engines? Having precise answers to all such (and more) questions can help you develop content that gets read and shared, and generate leads to sales.
Improve Resource Management: Predictive analysis tools use statistical, mathematical and algorithmic techniques to uncover trends and recommend actions to achieve results. By understanding how your customers are acting, you can optimize your inventory and be better prepared down the road to handle demand.
Define and Track KPIs: It’s one thing to have goals, but just how well are you achieving them? The best BA tools can help you identify key performance metrics for your organization. They also have built in dashboards that offer a quick snapshot of how well you are performing against them. Here’s an awesome article on how to build meaningful KPIs and track them.
Spot Business Problems: Many a times, business owners are unaware of underlying problems until they become fully blown calamities. Business analysis tools can uncover troubling trends and alert executives early on.
Implementing Business Analytics
With hundreds of tools carrying an equal number of features, BA is a hard field to navigate. Obviously, a full-on roll out right from the get-go can be both very costly and result in wasted resources should some of the features prove useless. A crawl, walk, run approach is best when implementing BA. This approach allows an organization to successively add tools as needed while building experience using them.
In the crawl phase, a company implements features that offer the greatest returns immediately. It can also learn what is missing and essentially gets a hang of the technology as it identifies best practices.
Once data governance policies are in place, the company can invest in more powerful features. The “walk” phase is where real analytics begin, as data from different silos integrate and a holistic view is gained. Real time analytics also become available.
The “run” phase integrates complex data science practices and statistical models to forecast trends and uncover subtle patterns. At this stage, your company will be fully equipped with the tools, practices, and culture to fully leverage its data pool.
You can learn more about to implement the crawl, walk, run methodology in this podcast.
A Real World Success Story
In the late 1990s, relaxation in US state and federal gaming laws led to a rapid expansion of casinos, especially in Las Vegas, New Jersey and Atlantic City. While most casinos attempted to pull business their way by opening extravagant malls and shopping complexes, Harrah’s settled on a different approach.
The company noticed that 90% of its revenue came from casinos and not secondary ventures, thus, decided to institute a customer loyalty program, hoping to develop long term relationships. Their Total Royalty Program rewarded customers with comps, and collected information from them through a digital smart card that customers had to use on the casino machines. Harrah’s used the information (like which game each customer was playing and how much they bet) to tailor its marketing messages to individual customers.
A massive data warehouse along with powerful business intelligence tools was created to support the initiative. Today, Harrah’s is a leading name in the entertainment industry and is a shining example of what can be accomplished with modern data analytics.
If you have not looked into data analytics just yet, then you may be missing out on incredible opportunities. Data analytics are more powerful and affordable than ever before. Give us a shoutout if you have any questions or doubts on how business analytics works. We will be glad to help!