What is Data Analysis?
Your business runs on data. Relevant, necessary data drives your revenue. Before the technological age, there was no way to keep track of so much data in a unified manner that would yield insights and data trends. Back then, things had to be done with gut feelings. Not anymore.
Data analysis is a vital part of running a business. When used effectively, data leads to a better understanding of a business’s performance and gives you a roadmap to follow for better decision-making for the future. There are many different ways to use data for your operations; all of them deal with analyzing said data.
Data analysis allows your business to stand toe-to-toe with bigger competitors. Paired with artificial intelligence, machine learning, and data science, data analysis has disrupted the landscape of companies all over the world.
In the form of tooling and talent, the demand for data analytics has increased 60% over just the last three years. Businesses large and small use various forms of data science and analytics to make smarter decisions that lead to lower operational costs, higher productivity, and more efficient operations.
BatchData offers comprehensive data solutions for businesses to make better decisions through data analysis. With the help of predictive analysis, you can segment your customers into different types based on their demographics, behavior, and attitude. Then you can tailor specific products or services targeted to them.
Forecasting lets you predict specific patterns that allow you to understand the demand for a service.
Or perhaps analyze data from numerous sources to create the best pricing for a product.
Customer satisfaction is also directly proportional to the success of your business since, in this era, consumers hold all the powers in the industry.
Types of Data Analysis
There are four main types of data analysis. These include:
- Descriptive Analysis
- Diagnostic Analysis
- Predictive Analysis
- Prescriptive Analysis
Key performance indicators describe how a business performs based on some selected benchmarks. The descriptive analysis tracks these indicators through KPI dashboards, monthly revenue reports, and sales lead overview.
Descriptive analysis lets you, the business, know what happened in the past. You can use that information to understand how specific products and services perform. You get a data description of every stat, including how much money you have invested in the product/service, how much money has gone into advertising, how many clients have been converted into long-term customers, etc.
Sometimes, businesses make a fundamental mistake. This mistake can include a slow shipment in a specific region for a freight company. Now, if this company wants to determine the causes of an error, the diagnostic analysis gives them insight from data that connects the data to the cause of the error.
With this form of analysis, you create detailed information portfolios that you can consult anytime a problem arises. Since you already have collected data on the issue, you can consult the rectifying strategy for that issue thanks to diagnostic analysis.
Now, businesses are focused on what’s going to happen. They already have a strategy in place for what is already happening. By forecasting the needs of their services, the rise in their prices, the trends of their customers, and projecting into the future, a company can essentially understand, create, and control demand for a product.
You can use predictive analytics for assessing any risks affiliated with your business. You can use it for segmentation to determine what works best for which demographic of your customers. You can use it for sales forecasting. Customer success teams need predictive analysis for better metrics.
When you want to construct a mode of action, a course for your business’s future, and do it right, you turn to prescriptive analysis. Through the data accumulated from previous forms of analysis, you can take it all and assimilate it to create strategies for the present and the future. Simply put, it’s a prescription you have to follow if you want to be successful.
Importance of Main Types of Data Analysis for Your Business
Depending upon your business, each type of data analysis serves to provide you with these four main benefits:
- Tackle any roadblocks that may arise in the future preemptively by allocating resources to a problem.
- Understanding trends to make better products and create demand for new products by introducing ideas into receptive markets.
- Troubleshooting and fixing big business issues through data analysis.
- Strengthening the business strategies through prescriptive analysis to achieve sustainable goals.
Data analytics take four main types of analysis that include descriptive, diagnostic, predictive, and prescriptive analysis, and package them in such a capacity for businesses that they can utilize them for solving any issues in the present, meeting customer demands in the future, and allocating resources to areas of high potential return based on segmentation.
Each data analysis type offers tremendous benefits to a business in its unique way.