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Data analytics: Importance and benefits for enterprises

Prior to the introduction of data analytics, companies use to simply sit on a massive amount of unstructured data without releasing its potential benefits

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DQINDIA Online
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IIT Kharagpur

In 2020, data is one of the biggest drivers of the economy. Before data analytics or big data emerged, there was plain data, which was analysed by marketers over spreadsheets. On spreadsheets, marketers sorted customers according to various criteria in an attempt to understand their needs. Those days are over.

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Today data analytics is itself a distinct discipline that helps companies increase revenue by granting insights into customer desires.

What Data Analytics Does

A large company has terabytes of data, and mid-sized and small companies have considerable data as well. Before data analytics was discovered, enterprises unknowingly sat on massive quantities of precious data. The value of the data remained untapped except by a marketing team, which often had limited resources to unlock its value. The marketing team could do little except compare columns and rows on spreadsheets in an attempt to market to more customers.

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When big data tools become available, the discipline of data analytics took off. Data analytics helps unlock the value in data because it can quickly make correlations no human being can. Data sets that bewilder professionals are easily digested by data analytics software. An analytics’ software can identify with a great deal of accuracy what kind of product is likely to appeal to individual customers. Once it determines what products a customer will like, it can make recommendations.

How Data Analytics Works

There are over 35 crore smartphone users in India and many more across the world. Such users daily spend a few hours online browsing the internet. Their online activity generates data that helps enterprises serve them better than customers ever imagined possible

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Big data software makes intelligent recommendations online. A customer who spends a few minutes on an e-commerce site looking at an attractive shirt without making a purchase will on a subsequent visit find the same shirt being recommended. While earlier the consumer may have flirted with buying the apparel, on a subsequent visit, prompted by the power of data analytics, he becomes more likely to make a purchase.

The benefits of data analytics don’t end with making recommendations based on users’ online activities, that’s just for starters. Data analytics software can make recommendations based on the kinds of products a customer has bought in the past. It can also make recommendations based on the types of products the customer has liked in the past. Furthermore, it can make recommendations based on products that others with similar preferences have bought.

Data analytics also makes recommendations that complement a current or prior purchase. For instance, a customer who recently bought a box of premium chocolates may be prompted to purchase a stuffed animal like a teddy bear. Such a recommendation may appear before the customer checks out the box of chocolates. The analytics software is ‘intelligent’ enough to understand that a shopper who is buying a box of chocolates will also find a stuffed toy to be an appropriate gift.

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Data Analytics Helps Companies Stay Ahead

Consumers have come to expect personalised experiences from businesses. For instance, they hope that when they visit an e-commerce portal, they see relevant product recommendations. A company that fails to provide such appropriate recommendations will hand over market share to competitors who do.

Increasingly, customers expect retailers and other service providers to partner with them. Such partnering means customers expect retailers to know a great deal about them. An online retailer that understands its customers’ preferences well is likely to create loyal customers and outcompete rivals.

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Data Analytics Makes Superhuman Correlations

Most large organisation save their precious data on the cloud, such data is too valuable to store anywhere else. On the cloud, data is safer than it is elsewhere. Just as importantly, data on the cloud can be mined by powerful software. Such software can make correlations that no human being can. For instance, a lender that uses data analytics can process a loan in a matter of minutes by factoring in thousands of data points in minutes or even seconds. While a human assessor can only factor at the most ten distinct data points to decide on sanctioning a loan, a data analytics platform accounts for thousands of data points more rapidly than a human assessor.

Data analytics is powerful enough to extract insights even from unstructured data. Today every enterprise large and small is sitting on a treasure trove of data that has stunning value. The only way such data can result in actionable insights is when it is analysed using data analytics.

By Salman Khan, Solutions Architect, Liferay

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