Our “Ask the Expert” column taps into the knowledge of digital commerce gurus to provide insights into commonly asked questions surrounding the industry’s trending topics.
We live in a world where data is embedded in every decision, interaction and process. From personal daily habits like checking social media and shopping online to strategizing in the workplace, a lot of our actions generate data that can inform future decisions. As a result, the ability to understand and draw meaningful insights from data is crucial for businesses and organizations to thrive in the digital era.
To help us better understand data and analytics and how businesses can transform their data into crucial insights to aid decision-making, Bjoern Kroog, gfknewron sales expert leader at GfK Asia, shares his expertise on the matter.
What is analytics, and what are the different types of analytics that businesses can employ?
Analytics is a systematic and computational process of analyzing data with the aim of discovering, interpreting and visualizing meaningful patterns and insights within the set of data that we are examining. In short, it helps individuals and organizations make sense of data.
There are three main areas where analytics can be implemented: descriptive, predictive and prescriptive. Descriptive analytics deals with evaluating and extracting trends and patterns in past data, such as sales and revenue reporting. Predictive analytics uses statistical modeling and machine learning to predict future outcomes based on historical data. Simply put, you are trying to answer the question of what might happen in the future given what has happened in the past. If you want to go one step further and see how things might look like in different scenarios, you might employ prescriptive analytics, which leverages more computer science for scenario planning to determine the optimal course of action or the best alternative.
Why is it important for businesses to leverage data and analytics?
We attribute a lot of value to data, and we can think of a multitude of means we can use data for. Thinking a little harder about this, we also realize that we need to process data to make it useful. This metaphor also makes it obvious that with great data comes great responsibilities, especially the importance of ensuring that its use does not cause harm. In my view, this is where analytics comes in, ensuring that you process data in a meaningful way, turning it into information and insights.
Data and analytics are mission critical to businesses. The ability of a business to analyze market trends and consumer behavior will shape its ability to uncover opportunities, enhance its resilience to market changes, avoid waste and minimize risk and, lastly, futureproof itself by increasing its ability to generate value and return on investment.
Therefore, for businesses, the speed of decision-making needs to be faster than ever before. You can’t delay key business decisions. Making core decisions based on anything other than solid data is a high risk. How do you handle and make sense of the extreme amounts of data available, and how do you make the right decisions? That is what we aim to address at gfknewron, our always-on intelligence platform for the consumer tech and durables market.
What type of analytics is suitable for businesses in the digital commerce industry?
Businesses in the digital commerce industry are well-positioned to enjoy the benefits of leveraging data and analytics given the digital environment they operate in. All three types of analytics – descriptive, predictive and prescriptive – are interconnected solutions that can help businesses make the most of their data. They have the potential to improve businesses’ operational capabilities, inform business strategies for long-term success, create a competitive edge and more.
For example, an online merchant selling consumer goods can utilize descriptive analytics to see the impact of their latest pricing and promotion strategy. They can also employ predictive and prescriptive analytics in product portfolio management when they want to forecast which product segment or product category is going to enjoy faster growth than others and ensure that they are seizing the right opportunity.
How can businesses start using analytics?
The problem most businesses face today is that they have too much data to make sense of. That’s why we recommend that businesses who wish to employ analytics should start to familiarize themselves with data through the use of descriptive analytics so they understand and trust the data that they are working with. From there, they will also be able to discern between meaningful data and “noise” that can be excluded from their analysis.
The next thing they should do is spend time building hypotheses for testing by asking themselves what the desired or expected outcomes are and how they can get there. They should then determine what data should be collected to guide these decisions. For instance, a business can model changes to pricing or product offerings to determine how those changes would affect customer demand. Changes to product offerings can be A/B tested to validate the hypotheses produced by such models. After collecting sales data on the changed products, enterprises can use data analytics tools to determine the success of the changes and visualize the results to help decision-makers choose whether to roll the changes out across the business. From these starting points, they should be able to select intelligence tools that can allow them to make sense of the data that they are working with.
There is an investment to be made into data and analytics. In my view it is probably one of the best investments that businesses can make.
Bjoern Kroog hails from Germany and spent 20 years in market research, analytics and category management across Europe and Asia with companies such as Nielsen and the Kellogg Company. He joined GfK in 2014 and launched GfK’s first integrated analytics practice covering marketing mix modeling and digital and social media analytics. His global and regional experience in GfK includes sales effectiveness, supply chain forecasting and retail partnerships. Kroog pioneered the launch of GfK’s customer success management team in APAC and is now the commercial lead for GfK’s advanced analytic platform, gfknewron, in APAC.
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