Millions of businesspersons worldwide wrongly believe that data analysis is something complex and refers to online businesses only. In fact, most people believe it to be some new-fangled technology that’s somehow connected to eCommerce.
However, all these beliefs are wrong. In fact, data analysis is important for the success of every business. And data analysis is existing on this planet for centuries.
Perhaps my statements may amaze or even baffle you. How could ancient people have known data analysis at a time when computers didn’t as much as exist? And how did data analysis help them and continues to help the success of every business in our times?
In this article, I’ll endeavor to answer these questions and explain the top reasons why data analysis is important for the success of every business.
Let’s begin by understanding what the term data analysis actually means.
Understanding Data Analysis
In simplest terms, data analysis is nothing but checking records of your business. This means finding out more about your customers, knowing what they buy and how much they spend as well as their preferences and purchasing habits.
In some cases, it can also involve keeping tabs on your competitors to find out who’re their customers and their spending habits, preferences, and other details.
Ancient traders and merchants did data analysis by keeping a record of their customers and ensuring adequate stocks. They knew what would sell where and for how much. And sometimes, they traveled to lands afar to make more profits.
In modern times, we have brick-and-mortar businesses as well as online ones. Both these businesses engage in data analysis, albeit in a different manner. While a traditional brick-and-mortar business will go through records to improve customer service and make profits, online businesses do so through various Internet-based resources.
This proves that data analysis, though an ancient art, remains relevant to date. Though methods have evolved and changed, data analysis is important for the success of every business.
And here’re some strong reasons why data analysis is critical for the success of every business.
Importance of Data Analysis for Every Business
Founder of Berkshire-Hathaway and American entrepreneur, Peter F. Drucker says: “Every business has two functions: marketing and innovation.” In these few words, the business magnate also sums up the importance of data analysis for every business. Let’s see how his adage applies to modern businesses.
Data analysis, whether it’s for your online or offline business helps you draw a near accurate marketing strategy. This means you can target the right audiences for your business with the correct blend of products or services. Additionally, you can also charge different rates in different markets due to shipping or currency conversion issues.
When you analyze data available from your website or eCommerce portal, you can get a clear picture of where the bulk of your customers are located and their buying preferences, budgets, and other vital details. These details can form the backbone of your marketing strategy for any business.
Data analysis helps you innovate a product or service line to meet the requirements of a local or distant market. It also enables the extension of your product line if necessary to appeal to a higher number of people. Expanding a product line is possible through data analysis only. Because you can find why people prefer a specific product and are willing to pay a certain amount of money.
By offering a better, innovative product for a slightly higher price or adapting something to sell for a lower rate. By doing so, you’re encouraging more people to patronize your business. Data analysis gives you a clear picture of frequencies at which people buy something. And as I mentioned earlier the price range.
Lowering the price can lead people to buy more while upping your rate for an innovative product can help bag newer customers. In both ways, data analysis helps you win.
Data analysis is extremely important for every business that is serious about expanding its operations for success. For example, your business wants to enter a foreign market. You can launch a small range of products or services for that specific market and gauge the response through data analysis. Here, data analysis helps you understand the preferences of people based upon demographics.
When you have a clear picture of the demographics of a distant location and their requirements, it is possible to enter that market with products or services that have a local appeal. Companies in America, for example, often expand into South American markets with product lines that suit the demographics of those countries. However, the Hispanic population in the USA cannot access these products or services due to their geographical location.
Cost Per Customer
Regardless of whether you have an online business or an offline one, data analysis helps you understand how much money you are spending to attract every single customer. And how much money your business is earning in return for this spending on marketing or other activities.
For example, if your business spends $100 and attracts 40 customers, it means you’re spending $2.50 per customer. That means, your profits per customer have to be more than $2.50.
And if for spending $100 you’re attracting 200 customers, the marketing and other campaigns are very successful. Because you’re spending only half a Dollar per customer but getting much more in return.
Unless you know the cost per customer, it isn’t really possible to draw an advertising or promotional campaign.
Covering Gray Patches in Business
Data analysis helps expose gray patches in your business and effectively counter them by deploying different strategies. Unless you know where you’re going wrong, it’s hard to know what you can do right. Data analysis will clearly indicate areas where your online or offline business lags. And you can devise ways and means to counter that.
Covering gray patches is only possible through extensive data analysis. It helps you understand peaks and troughs that your business may hit and relate them with various external scenarios such as political situations and economic crises, among others. And you can find ways and means to plug these loopholes to ensure consistent year-round business.
Furthermore, you may require to hire someone with special skills to stay ahead of your rivals or gain an edge over them in the same market. Data analysis helps you compare the performance of your business with the closest rivals.
As you can see, these are some of the top reasons why data analysis is important for every business. Businesspersons have been doing data analysis in different ways since the very dawn of trade on this planet. However, in modern times, we’re lucky to have online resources for data analysis that helps ease the complex job and helps our business to succeed.
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