Use data analytics to drive outcomes

In today’s emerging markets, data analytics is a key driver to business decision for it not only helps businesses improve processes and efficiency but also addresses the customer’s consumption behaviour or pattern.

Simply put, data analytics is the process of mining, interpreting and transforming data to guide decision making.

In the last five years, companies across all industries have been impacted by technological advancements, regulation changes, and market movements. Small and Medium Enterprises (SMEs) need to be agile and responsive to the changing context they operate in. Increasingly, data analytics and predictive technologies are proving an effective way of understanding consumer patterns, external policies, and economies.

Introducing data analytics to one’s business can reveal trends and metrics that would otherwise be lost in the mass of information. SMES can use data analytics techniques to;

• Segment customers
Every business has unique customers. So it is important to divide the customer base into groups of individuals that are similar in specific ways. One can collate data in regard to a particular pattern, such as a customers’ demographics (age, gender, family size, income), geography (where they live and work), psychographic (social class, lifestyle and personality characteristics) and behavioural (spending, consumption, usage and desired benefits); and use this type of information to target specific group of customers with personalised products, services or content that meets their needs which in turn increases customer loyalty and retention.

• Target customers
As a result of customer segmentation, target marketing is made possible. Your target customers are those who are most likely to buy from you. Resist the temptation to be too general in the hopes of getting a larger slice of the market. That is like firing 10 bullets in random directions instead of aiming at just the centre of the mark which is expensive and dangerous. As SMEs, a specific well-defined customer base can drive more sales to you than chasing the pack and losing all.

• Track performance
“What isn’t tracked, doesn’t get done”! This applies to businesses as well. However, it is not about tracking but what does the information tell you?
Without tracking, the SMES simply cannot know what works and what does or has not. It is also difficult to see where the inefficiencies are and how they can be improved upon.
Use data analytics to track how the business is performing, which sales model is more productive, what can be done better and what needs to be exited.

• Predictive analytics
“What does the future hold?” SMES can use trends and history of business performance to anticipate the future and make the right decisions. Data can simply guide you in knowing how much to stock during peak and off-peak seasons.
“As we get into the Christmas Season, there is always an increase in demand on particular products. So how should the business prepare for this?”

Past seasonality sales trends can support the SME anticipate sales and use the same analytics to stock up or down. That way instead of business owners using “gut” feelings they use data to make informed decisions.

It’s important for SMES to embrace a data culture and use the information to make key business decisions. “Without data you’re just someone with an opinion.”

The writer is the Acting head of data analytics at dfcu bank.