Why Is It Important to Utilise Data Analytics?
Types of Data Analytics
Descriptive analytics is very common in the business world because it talks about describing what has happened over a certain period of time. For example, sales over the period of Chinese New Year are higher than sales on regular days. It is basically to describe the data you have.
Predictive analytics is an accurate assumption of what will occur in the near term, based on previous data. For example, if your products are selling more to a certain group of audience for some time, you would then know that there’s a higher probability for your sales to grow. Hence, with a budgeted campaign, it will be more effective to target those audiences in the future.
Diagnostic analytics means analysing and giving explanations why something has occurred. Usually, this is done after descriptive statistics. For instance, let’s say you are a business selling products online and customers are cancelling their orders at the purchase stage. To find out why you can include a small question and answer that tells you why they are cancelling their orders. (etc, shipping fee, no discount, purchase later) This is utilising diagnostic analytics.
Prescriptive analytics works with predictive statistics where data collated is used to determine near-term outcomes and actions to take, to improve decision making. For example, if you have previous data on your inventory levels on special occasions, and there are more sales, you will then take action to restock supplies needed in those situations to meet your demands.
Companies That Are Utilising Data Analytics
Another company that utilises data analytics is Spotify. Spotify has its own campaign called “Spotify Wrapped” every year which summarises the songs and includes fascinating insights into people’s musical tastes. Data is collected from users and then presented to them interestingly, which retains the users to continue using Spotify. This is how Spotify has taken data analytics to its advantage.
Netflix is a production company that makes use of data analytics. How? They collect data from shows and movies that people watch and analyse them. From there, based on their watching habits, they will recommend new shows or movies that relate to that genre, so that people will come back to Netflix for more content, hence retaining them.
It is fascinating to see how data can be manipulated to be used as an advantage for your business, to retain or acquire new customers.
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