Getting started with analytics
Employing data, people, tools and culture in the move to fact-based decision making
Analytics has become a common word in the business world. Vendors are promoting the analytics message – often in very broad terms – in books, magazines and even on TV. For many organizations, however, it’s not easy to derive benefits from analytics. In fact, many struggle to even get started.
This article will guide you through four key foundational aspects so you can get started with, and position yourself to gain the most from, your implementation of analytics:
1. Defining the business problem.
2. Assessing and securing the data.
3. Selecting and using the right resources.
4. Implementing analytics into your organization.
Defining the business problem
As you begin using analytics, choose a business objective that is critical to the success of your business and can be achieved in a short time frame – about three to six months. This will ensure a measurable return on investment.
At a high level, most for-profit organizations are concerned with increasing revenue, managing costs, or some combination of the two. There are many options for applying analytics to help you achieve these goals, but looking at your customers is a good place to start. Analytics can be used to develop a strategy to increase profitability by providing insights to the following questions:
- Does your organization understand the characteristics that differentiate profitable customers from unprofitable.
- Do you know which customers are leaving to spend money with competitors?
- Could you grow revenues from the existing customer base by cross-selling or up-selling?
- Which types of customer groups or segments are likely to buy which products, when and in what order?
- Do you know which offer is best to send to your existing customers?
These are important questions, but pick one or two areas that are most important to you as you develop a proactive strategy to retain or acquire profitable customers and realize the benefits of analytics.
Assessing and securing the data
Data is a crucial part of any analytics project. Do you collect customer purchasing data, demographic data, customer loyalty information, or marketing and advertising response data? Don’t forget the value of third-party data; for example, you may be able to perform better analytical investigations if you gather pricing and marketing information on your competitors.
If you don’t have any data yet, don’t despair. Start collecting information either in a database or a spreadsheet. Data-collection will be an iterative and interactive process. As you evaluate and understand the structure and format of the data and tie it to the business problem, you will gain a better understanding of what other data elements could be helpful.
Selecting and using the right resources
Many companies underestimate the need to have individuals who can understand and translate findings from analytics to their business context. Organizations can choose to recruit internally, hire new employees or engage consultants, but it is important to identify individuals who possess both an analytical mindset and strong business acumen along with some foundational statistics or mathematical training.
The right technology is also critical to a sustainable, long-term analytics foundation. The software you select will depend on the size of your data and the skills of the users, but your program should address the following areas:
Data preparation and cleansing. Before any analysis can be done, data will need to be prepared and cleansed. Analysts, line-of-business domain experts and data stewards in your organization can help prepare and cleanse the data for the type of analysis that will be performed.
Analysis. While some initial progress can be accomplished with manual coding or tedious “back of the envelope” assumptions, in the long run, the best benefits come from commercially available analytics software that allows you to explore your data, build models quickly, assess results and modify the analysis based on performance. The software should also facilitate self-documentation and automation of the analytical process for auditability and manageability. You need software that is flexible enough over time to explore a variety of analytic techniques so you can compare multiple methods and find the optimal combination to meet your business needs.
Sharing the results. Visually appealing and appropriate reports play a critical role in communicating results to the decision makers in your organization so that they can easily understand and interact with the data to get the answers they need. Ideally, the way the results are presented, whether in a dashboard, spreadsheet or Web-based report, should be integrated with your analytic software. This will ensure that the latest analysis and results are readily available, making it compelling for your company’s decision makers to use analytics.
Implementing analytics
To benefit from analytics, your organization must be ready to take action based on the analysis. Be prepared to continually adapt processes to accommodate new information and improved decision making. For example, if analysis reveals that multiple handoffs during customer service calls are lowering customer satisfaction, are you prepared to provide additional training to minimize handoffs? Can you institute custom queues for specific service issues, or hire additional staff during peak service times?
Start by establishing a tolerable level of customer dis-satisfaction as your benchmark metric while you optimize the cost of improving satisfaction. As you continue to define your key performance indicators (KPI), a dashboard can visually track progress. Relevant KPIs, in the example above, include average response time, number of customer complaints, number of calls abandoned and number of calls per employee.
Consider whether appropriate incentives are in place to ensure that insights from analytics will be used in the decision process. Too often, organizations get started with analytics without giving enough consideration to how they will move from analysis to action. To understand if you are building an analytics-embracing culture, ask the following questions:
- Does everyone in my organization understand and appreciate how senior executives use analytics to inform their decisions?
- Do individuals use gut more than they rely on numbers? While there is a role for intuition, analytics should substantiate the intuition.
- Are you fostering an environment that supports appropriate risk taking and does not penalize every failure?
Build a culture where people are not afraid of change. If your organization is unwilling to embrace change, you may never see the benefits from analytics because of the lack of will to execute on the insights from the analysis.
While the use of analytics should be bottom-up, the endorsement, emphasis and commitment must resonate from the highest levels of the organization. Identify and enlist executive sponsors to act as allies in the move to data-driven decision making. If the focus and emphasis on analytics is constant and consistent from the top of the organization, then everyone will adopt that culture.
Analytics can be a powerful component of your company’s strategy in the recovering global economy. It’s not too late to get started, and failure to integrate fact-based decision making and analytical insights could, in the long term, differentiate the winners from the losers. Follow the steps discussed here to start using analytics today.
Bio:
Zulfikar Sidi is the Manager of Global Business Analytics Consulting at SAS. He has more than 16 years of experience in the technology industry and over nine years of experience in professional services and enterprise software sales.
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