The Right Way to Apply Analytics in Business

Big Data

Big data analytics is very important to sales and retailers, which I can attest to from personal experience. Sales reps of consumer goods brokerages will use analytics when they pitch their ideas to retailers like Kroger’s for the good reason that analytics works: it helps them to see how customers interact with displays, product arrangements and organization, lighting, spacing, and more. As LaValle et al. (2011) point out, selling is really as much a matter of logistics as it is about bringing a quality product to market. Marketing, customer service, customer engagement, and experience management all play a part in retailer’s ability to obtain competitive advantage. Sales representatives know this and since they work on commission (obtaining a percentage of every sale that comes about once they get a retailer to accept a product to their shelves) they pay close attention to analytics.

However, as LaValle et al. (2011) also note, a typical organization usually “has more data than it can use effectively” (p. 22). Therefore, simply having the data is not enough. One has to know how to interpret it and use it to one’s advantage. The key to using analytics well is to link it to business strategy and make it easy for end-users to understand. That is what enables the right action to be taken at the right time. Narrowing one’s focus to achieve an obtainable goal should be the aim when using analytics. For instance, a company that wants to gain competitive advantage will apply analytics to make small changes rather than big, sweeping, universal changes. The organizations that excel in utilizing analytics do so because they look at one certain area of the chain value at a time—whether it is ways to improve the customer experience, ways to improve channel strategy, or ways to improve the portfolio or the process innovation. They are focusing attention on specific areas that can improve sales and thus create more value for the company.

Analytics should be aligned with business strategy with a purpose to address a particular business challenge (LaValle et al., 2011). That basic alignment opens the door to possibilities. But those possibilities will not emerge if one is not asking the right questions. So instead of leaping into the Big Data, the correct approach is to start by asking questions and engaging in critical thinking (LaValle et al., 2011). An organization has to ask what it wants to achieve in a specific area. It then turns to the data to find answers. In other words, rather than sifting and processing the data in an attempt to understand the situation, the company poses the central questions first and then uses the data for a specific purpose.

Analytics is there to help—not to hurt. This means that an organization does not need to do away with all its previous ways of handling information and rely solely on its analytics department. Analytics can be used side-by-side with other information because it plays a complementary role. The goal is to reduce the time it takes to get to value, increase the chances the organization has of making important transformations, and focus attention on pursuing steps that are actually achievable.