You probably have a friend (or maybe more than one), who believes that he knows what to do to overcome the economic crisis in Ukraine better than the president and the government, not to mention the IMF and the World Bank. Another friend of yours could easily have led the national football team at least to the semifinals of the World Cup – just let him steer the squad for a couple of months.
Sadly, we have a similar situation in the business. Many businessmen believe that they are doing everything the right way, and "business data analysis" is some kind of excess aimed to rip them off their hard earned money. Understanding that the analysis is not a luxury but a necessity to achieve success is the lot of a few. In this article, we'll try to explain why business needs analysis and why it is very important.
1 Doing Business the New Way
To begin with, let's consider the basic characteristics of the domestic business environment's current state.
Firstly, almost a quarter century after the collapse of the Soviet Union the old approach to business continues to dominate in the newly independent states. It is expressed in "Buy – charge extra – resell" formula.
The fact is – it is no business. It's huckstering, the essence of which is to become just another vendor. On the contrary, a business is defining the client's problem (that's where you need the analysis), creating demand, and selling a solution to this problem.
Out of point #1 follows the point #2: many businesses are still staying in the last century, not keeping up with scientific and technological progress. For example, in Ukraine hardly a dozen companies keep track of the emerging tools to optimize business and even less do implement them. And we're talking not even about online services, but about the fact that it is impossible to pay for cigarettes with a credit card in a kiosk at a bus stop. "Do you have a POS-terminal? - No, why?"
Out of this "Why?" the third problem arises: businesses do not know how to analyze and do not even want to do this. The strongest incentive to analyze is... a bankruptcy. The thing is, you have to start figuring things out and analyze BEFORE the problems knock on your door, not AFTER. Do this – and maybe you'll avoid those problems.
2 Introspection Session
It's time to give a definition of the concept we're talking about here. We claim that business data analysis is a comprehensive approach to studying users' and businesses' actions that uses modern technology and analytic tools to find correlations and support business decisions.
The thing that our businessmen usually drop out of sight is that you need to analyze not only the customers but also themselves. Below you'll find several key areas where you should introspect your business. Shall we start the session?
- Education or adaptation?
Adaptation is "customization" of your business to fit the market. Example: everybody takes bricks at a factory for $3 and sells for $5 – and I will do the same. As we've said before, this is not even close to the business. But what if we analyze the situation in the building materials market taking into account the ever growing energy tariffs and start manufacturing, say, a super energy saving brick at your own plant and sell it for $20? Educating yourself and staff lets you gain experience and identify the vector of business development in order to be independent of the market.
- Where the problems are rooted – in the executor or management?
In fact, this one is the simplest question. Of course, in the management, because it almost never understands what a personnel needs. And the executors... Just teach and educate them.
- Experiments or proven tactics?
Here it's much more complicated than in the previous case. If you're not taking into consideration longstanding experience gained by others, there's nothing for you to do in business. As well as if you're not willing to experiment. But this should be done consciously and after deep analysis – no "let's hope that the idea fires off" allowed. By reasonably experimenting, you might discover a working model that you then can use to scale the business in the new niches.
- Analysis or intuition?
We think everything is clear here: there's no place for intuition in business. Fall for intuition – and you'll cease being a top manager.
- Easy solutions strip of multiple options
When it comes to business, forget answering "Yes" or "No." Answer a question with a question is a pretty good idea in this case. For example, when an employee comes to you with an idea, avoid the temptation to reject it immediately as baseless or accept it as a genius one. Instead, ask him (and yourself at the same time) - why? what for? what do you need to implement the idea and what will it bring you? And you'll see that there are way more options than just two.
- Rules against freedom: restrictions, control, creativity
It's proven by the record of thousands of western companies that without numerous restrictions and frames employees work better. On the other hand, it's not that easy to maintain order after announcing general free rein because you risk finding yourself in the middle of chaos. This is the case when you need to seek and find a balance, providing complete freedom, limited only by the need to produce results in reasonable terms. Thus, there's no need to set up a time-billing system to count every second spent by employees working on a PC – it's depressing. Much better option is to give them a laptop – and let them work where they feel comfortable.
3 The Role of Analysis in Decision-Making
Let me say it again: the analysis is needed to make decisions. Naturally, QUALITY ANALYTICS drives up the probability to make GOOD DECISIONS. And the right decisions bring profit. Consequently, the analysis helps to achieve the main goal of any business – to make money. When it comes to the money, surface analysis cannot be tolerated.
Hereat, you must remember that there are no two identical businesses and, therefore, there are no two identical situations they might find themselves in. With an understanding of the uniqueness of each business (even a beer stand down the street), comes the comprehension that each case needs to be analyzed independently. On the other hand, the mere knowledge alone is not enough – you need to use it properly. That means to set up analytics in such a way that it only covers what is needed and doesn't give too much information that can hinder the decision-making process. This is the only way for analytics to represent the entire purchase funnel (from the first contact until the purchase), which will allow you to see "bottlenecks": where the costs are high, where the profit is lost and what should be optimized.
4 Instead of Conclusions
Summarizing all the above written, we can stress out three main points:
- One must have the courage to admit the truth: if you do not analyze data about your business – it will die. In fact, it's already dead, you just haven't realized it yet. And when you realize - it's going to be too late. So do not make the mistake of convincing yourself that everything will be fine. Just start analyzing today.
- When any problem occurs, you need to analyze all segments of your business comprehensively, rather than inspect any component separately, i.e. customer behavior or logistics. After all, the problem may not be where you think it is. It could be a consequence of the wrong approach to other segments. Such kind of comprehensive approach should become the main principle of your business development.
- Set up Google Analytics - the one of the most accessible and at the same time one of the best tools for analyzing business data. But it's like a piano – to work nicely and effectively proper setup is vital. Plus properly trained person is needed to operate it. After all, even the world's best 'Steinway' wouldn't help a clumsy pianist to perform a masterpiece. With Google Analytics, a certified expert can consolidate the information, deeply analyze the data and standardize the sales funnel. A hint for you: while today Google Analytics is usually used in the Internet marketing, modern settings allow using this tool for off-line sales easily and effectively.
As a result, you get a universal model that can be applied to a specific product on different trading venues, allowing you to scale your business. So, analyze and remember what one of the pioneers of online business, John Reese said: "Understanding what's going on in your business is a very profitable habit."
Marketing Web Analyst at DIGITAL BEE
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Creative Copywriter at DIGITAL BEE
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