It’s no secret that we’re living in a world full of data – it’s everywhere. The abundance of data may seem so overwhelming that some of us choose to simply ignore it. However, with some planning and careful forethought, data can be used to make smart business decisions. Read on, and see why you shouldn't be ignoring data analysis for your own business.
"Big data" is officially a buzz word. Companies of all sizes are hiring data analysts to collect, manage, analyze, and report on immense quantities of data. But, how immense is immense? Consider this: The Harvard Business Review explains that as of 2012, nearly 2.5 exabytes of data are created each day. I’ll admit – I had no idea exactly how much data that was. So, I looked into it:
2.5 exabytes = 2.5 x 1018 = 2,500,000,000,000,000,000.
EVERY DAY, the world creates 2,500,000,000,000,000,000 bytes of data!
A single company generates far less data than 2.5 exabytes a day. So, rest easy – you won’t need to lease out a warehouse to house your datacenter. Still, companies are collecting more data than ever before. Putting the data to use is a challenge that requires a methodical approach.
Typically, a data analyst manages all of the data a company collects, transforms it into useable data, analyzes the data, and presents the data so that it can be utilized by the company. The ultimate goal for data analysis is to provide actionable insights to the company. Then, the company can make informed decisions. Part of this scientific analysis is knowing what the purpose of the analysis is.
Undertaking data analysis should always start by formulating some key questions – these are technically hypotheses (remember – this is the scientific method). Without your research hypotheses, analysis will be directionless and will most likely provide little useful information, if any. For most companies, there are some relatively standard questions that can be used to form the basis for analysis:
Data is everywhere. Chances are, it’ll be easy for you to collect – especially if it’s from your website.
The questions you ask should always serve one purpose: to guide and push your analysis in the right direction! It isn’t about asking questions; it’s about asking the RIGHT questions. If you ask the right questions, you’ll find the right answers. And let’s be honest… these are the questions you already ask about your business every day! So, all you’re really doing is organizing your existing questions into a list, so you can make your data work for you. Data isn’t useful if it is simply collecting and eating up space. You have to ask the right questions, analyze your data according to those questions, then use the answers to create a positive impact for your company.
For example: Let’s say you’re a boutique owner and you're thinking about adding a new product to your line. You know that you’ve been collecting data from your website for a long time, but you’ve never really used it. You can’t aimlessly analyze a bunch of numbers. In this case, it won’t help you to simply know the bounce rate of your 18-25 year old female i-Phone users. Instead, let’s ask “which product has consistently sold the best over time?” After some analysis, it becomes apparent that your blue soccer ball t-shirt for dogs has sold the best. Interesting find. Your boutique specializes in clothes for women, but your best selling product is a dog shirt. So, let’s add a followup question: “why?”
After even more analysis, we’ve found something else. Guess what? Your top five best products of all time were all soccer related. You had completely missed this! You thought buying more dog accessories was the ticket to success, since you recently sold out of the blue soccer ball t-shirt for dogs. Turns out, you’ve got a following of soccer fans from your college years, and word has gotten out that you sometimes carry cute soccer items. Word of mouth has dictated that your market is full of soccer fans. Maybe your next product should be soccer related. Know your customer!
Data is everywhere. Chances are, it’ll be easy for you to collect – especially if it’s from your website. So, collect the data, put it to use, and start making informed decisions. Or, if you’re not really interested in statistics and scientific analysis, devote some of your resources to someone with those skills. It can make all the difference to your bottom line.