Why use data analytics?

“Big data” is no longer the exclusive domain of large corporates. Any business of any size can use data to give them an edge over their competitors, without spending a fortune.

The idea of using data to your advantage can be daunting and few companies have the resources or expertise necessary to do so. This is unfortunate as:

  • Companies that use data analytics are five times more likely to make decisions faster than their competition
  • Retailers could increase their profit margin by more than 60% through full exploitation of big data analytics

 

A company that makes good use of data analytics can improve its decision making and profitability. Conversely, companies that fail to do this risk making poor business decisions and being left behind by their competitors.

The thing I have noticed is when the (customer) anecdotes and the data disagree, the anecdotes are usually right. There’s something wrong with the way you are measuring it
Jeff Bezos, founder of Amazon





How accurate is your intuition?

Try these three quick tests to find out

Without a doubt, human intuition has a place in decision making. However, sometimes either our intuition can be wrong or a question can be put to us in such a way so as to lead us to the wrong conclusion.



  • Test 1

  • Test 2

  • Imagine that the UK is preparing for an outbreak of a disease that is expected to kill 600 people. Two alternative programmes to combat the disease have been proposed.
    • If programme A is adopted, 200 people will be saved.
    • If program B is adopted, there is a 1/3 probability that 600 people will be saved and a 2/3 probability that no people will be saved.
  • Imagine that the UK is preparing for an outbreak of a disease that is expected to kill 600 people. Two alternative programmes to combat the disease have been proposed.
    • If programme A is adopted, 400 people will die.
    • If programme B is adopted, there is a 1/3 probability that nobody will die and a 2/3 probability that 600 will die.

Test 3

Many businesses make decisions using intuition, rather than by looking at cold, hard data. This can be fine at times but often it is a mistake. Take this test to find out how accurate your intuition is.

As you can see, our perceptions can be biased depending on how something is presented. Similarly, the way an organisation interacts with its customers (for example, the way products and services are marketed, communicated, or placed), can make an enormous difference.

What this video shows is that people can focus so hard on one particular thing (so say one or two aspects of their business), that they can’t see something unexpected, even though it is right in front of them. Again, data analytics takes this problem away.