The Importance of Data Insights
Data is HUGE in order to understand and predict what will happen in business. The best part is that data is all around us. You can collect and analyze data on almost everything. That is MAJOR in business because it gives you the ability to draw conclusions and improve visibility into what is coming.
Are you using data insights in your business? If you are, great. If you haven’t started yet, it's all good! It doesn’t matter where you are at in terms of using data. The process of collecting and analyzing data can always be added in and tweaked to support your business.
Data Insights FAQs
What are data insights?
Data insights are the conclusions that are pulled from studying data. Data is the information collected in your business. Data analysis is conducted to summarize what that data is telling you. The combination provides the data insight.
How do you pull insights from data?
In general, there are steps to pull insights from data. Here are 4 common steps.
Ask a question or create an exercise to begin collecting data.
Gather, edit, and organize the data.
Begin analyzing the data to look for patterns. (Ex. Majority of users who clicked a certain promo link purchases the product).
Make decisions and communicate results. (Ex. X promo ad performs well. It should be recycled/pushed more broadly)
How do you know what insights to pull from data?
Be clear on what your end result is. By clarifying WHAT you want to uncover from the data, then you are appropriately able to use the data to show insights to the process. If you don’t know what you are looking for, the insights will be hard to find and use.
Typically analytics are broken down into 4 basic types: descriptive, diagnostic, predictive, and prescriptive. These different types of analytics each impact your business in a different way.
Let’s look further into each of these and how each is used.
Descriptive Analytics
Descriptive analytics, very much to the name, produce data that describes what has happened over a period of time. This is done by leveraging historical data. Descriptive is often called the simplest type of analytics. However, descriptive analytics needs another form of analytics to truly add value to the data.
Impacts to the business:
Simple to conduct
Can identify areas of strength and weakness in a company
Shows what has happened over time
Diagnostic Analytics
Diagnostic analytics takes the data that was collected in the descriptive phase to the next level. This form of analytics works to uncover WHY something happened. Just as a mechanic performs diagnostics on a car to determine what is causing the issue, diagnostics in data is meant to determine what is driving trends and anomalies. This is great for identifying patterns and discovering why these patterns are occurring.
Impacts to the business:
Can identify trends that are occurring
Help identify the root cause behind these trends as well as outliers
Shows why things have happened
Predictive Analytics
Have any guesses on what predictive analytics does? If you guessed, predict…. Ding ding ding, you’re right! Predictive analytics are utilized to solve tougher problems and have a better guess at what is coming down the pipe. Using predictive analytics can help improve marketing campaigns by showing what consumers are responding to and what is leading to conversion. It can also help in operations when it comes to inventory management.
Impacts to the business:
Goes further than what happened and why, begins to show data that will impact the future
Drives action and business strategy decisions
Can improve marketing and operations decisions
Prescriptive Analytics
The most advanced type of analytics is prescriptive. This aims to take and analyze data to determine what needs to be done or what needs to occur to accomplish a specific goal. It focuses on insights that impact big picture objectives, like customer satisfaction, profits, and cost-savings. The most complex of all data analytics, it also has the biggest bang for its buck in terms of the information it produces.
Impacts to the business:
Insights contribute to key business decisions and objectives
Decisions made from prescriptive analytics can increase efficiency and improve operations
Data provides detail into how decisions will impact other areas of the business which helps with risk mitigation.
Data insights are powerful tools within a business. Need help getting started and/or maintaining data insights? We can help! Our team is full of rock-star data junkies. Our operations support includes weekly customizable reporting and data insights. We will help you begin collecting, understanding, and capitalizing on the data around you.