Not long ago, analytics was seen as the secret domain of mysterious data wizards. They toiled away on select projects, far removed from the daily workings of a company. Even the C-suite wasn’t quite sure what they did. Today, that kind of data siloing is a recipe for disaster.
The ability to capitalize on data insights and analytics can make or break a company. And big data, artificial intelligence, and predictive analytics have every organization scrambling for an advantage—or fearing disruption.
While all successful enterprises capitalize on data and analytics to some degree, new research from Forbes Insights and Cisco shows how pervasive modern analytics strategies have become within nearly all business initiatives. In fact, 51% of C-suite executives at large enterprises in both North America and Europe say analytics will only continue to grow in importance for maintaining and growing market share over the next two years.
To reap the rewards of data-driven business initiatives, enterprises must make targeted investments in traditional and emerging analytics tools, as well as in underlying IT infrastructures to support them. But how can the beneficiaries of analytics convince senior managers to invest in these areas?
Here are six key reasons to invest in analytics now:
- Analytics maturity puts companies in a stronger competitive position. The combination of historical and near-real-time data, plus the ability to merge and analyze all this information, gives enterprises a competitive edge as disruption continues to impact almost all industries. For example, companies in highly competitive markets where customers are ready to switch vendors whenever better deals come along (think: telecommunications providers) can spot tell-tale signs of “churn” and send offers designed to retain profitable accounts.
- By capitalizing on corporate and departmental data, companies can quickly identify new business opportunities and emerging market trends. Sophisticated analytics provide essential insights to marketing departments to help them understand how best to engage with customers across multi-touch, multi-channel communications and transaction pipelines. What separates the savviest users of analytics from the rest is their ability to drill into historical information to see what past programs have been successful, and then apply predictive algorithms to become more successful in the future.
- Analytical insights uncover ways to reduce expenses. Data insights developed at the corporate and departmental levels can identify cost-avoidance opportunities and cases of wasteful spending. For instance, insurance companies scour large volumes of claims data for patterns that may be signs of possible fraud and worth a closer look by investigators.
- Near-real-time data provides early warnings about production and service problems, ultimately leading to higher quality products. More than half of executives across North America and Europe rely on analytics to improve the quality of their products or services, according to research from Forbes Insights and Cisco. By analyzing customer engagement, companies can better understand the concerns and changing desires of consumers, and innovate products accordingly. Manufacturers can also embed their production lines with scores of digital sensors to closely track and correct problems associated with out-of-range tolerances, production waste, and other quality-control issues.
- Advanced analytics lead to a deeper understanding of customers. Traditionally, companies were satisfied with segmenting customers within broad categories, such as age, gender and location. Now, there’s greater access to sophisticated analytics, such as AI, as well as third-party data that fully illuminates the digital footprints of online customers. Decision-makers can now study more factors, including affluence, different levels of price sensitivity, affinities to different brands, and key behavior traits of potential customers. One large European insurance company is even using analytics to segment millennials. Instead of segmenting this important group solely by age, the company has identified 87 different subgroups within the millennial demographic, all with different needs. Such insights are impacting this company’s product development strategies.
- A better analytics strategy leads to higher growth. An impressive 85% of companies that are succeeding with analytics (i.e. those organizations that consider themselves to be analytics pacesetters in their markets and have an enterprise-wide analytics strategy in place) are seeing revenue growth greater than 7%. Less than a quarter of analytics laggards reach that percentage, according to Forbes Insights/Cisco research.
The payoff for successful analytics is clear and quantifiable. Becoming a data-driven enterprise delivers benefits across customer-facing and internal operations — and even the bottom line.
To learn more, read, “Advanced Analytics: The Key to Becoming a Data-Driven Enterprise.”
Originally posted by Forbes Insights.
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