Using Big Data To Make Smart Business Decisions
Published on Apr 21, 2016 by Sean Kantrowitz
Business intelligence software and practices have provided a significant revelation for those paying attention - big data analytics can give businesses and organizations of all sizes a competitive advantage in their respective fields. Using data strategically to gain insight into the behavioral patterns of customers, and aligning business practices accordingly, can increase efficiencies and assure that decisions can be executed with a great degree of confidence.
Huge corporations like Wal-Mart, for instance, rely on this type of efficiency rather than wasting precious time relying on a store manager’s instincts to inform how they restock their shelves; they don’t want to run the risk of human error in the decision-making process. That type of blind decision-making over time can be the factor that sinks a business. Using analytics to recognize customer shopping trends minimizes the margin of error and frees up time that might otherwise be spent pouring over details – or scrambling to fix mistakes - and consequently leads to greater productivity.
“By accurately gathering data and objectively analyzing it, important customer patterns can be derived,” says marketing data analyst/specialist James Jessup, who has worked with brands like Charles Schwab and Quiznos throughout the course of his career. “These patterns will almost always indicate ways things can be improved or optimized. Tweaks to the inputs will generate changes in the outcomes.” From optimizing staff allocation to ensuring the right products are on the shelves in the right quantities at the right time, data analytics can serve to smooth processes, minimize waste, save money, and more.
The reason that big data analytics is such a quickly growing field is clear, and business intelligence is capturing the interest of companies big and small. Having as much relevant data as possible, and knowing how to spot the patterns it holds, can greatly improve decision-making processes. However, as Jessup cautions his students as an instructor in Full Sail University’s Business Intelligence Master’s degree program, data alone can’t account for human nature, and must be combined with common sense to make decisions that are not only data-supported, but also rational.
“One company I worked for was gathering data to show that clean, fast, courteous restaurants generated more sales. After using basic correlations analysis, our team discovered that there was, in fact, no such relationship; customers came to the closest restaurant for lunch, no matter the service,” says Jessup. “The company decided it was a waste of money to pursue programs that supported courtesy and cleanliness, since they didn’t correlate directly to sales, and saved millions of dollars in the process.”
“Ultimately, this proved to be short-sighted, as the sales throughout the whole chain withered, and they have since filed for bankruptcy,” he continues. “Correlation is important to understand, but the difference between correlation and causation is critical for a company to know.”
At the end of the day, big data analytics can provide unprecedented insight into the business world, but work best when coupled with common sense. Gut instincts and other human elements are unlikely to be fully replaced by software anytime soon. The marriage of the two schools of thought can result in truly impressive results.
“Know your customers and clients. Know what makes them happy. Know what drives sales. Know your own employees, what makes them happy, and what drives performance,” says Jessup. “When you have the information you need, you can align behavior drivers with strategic goals, and this has a huge impact on your bottom line.”
Full Sail University’s Business Intelligence Master’s program provides students with the tools to manage, understand, and strategically utilize the wealth of data collected by modern businesses. To learn more, click here.