The word Data is used quite often, whether in the Business World, the Scientific world, or any other. It is also often used colloquially. So it is pretty apparent to wonder what exactly this word means.
In our everyday talk, we commonly refer to data as a set of numbers, as an output of some event (the money earned or the result of an experiment or something else). But broadly speaking, data is a piece of information (meaningful) stored or transmitted. It could be anything written on paper, facts inside a human mind, and bits stored electronically.
Specifically, in the business world, data is the statistics and every bit of raw facts about the company that helps get a general overview of the company's status over the past years. As a result, data plays a crucial role while making decisions for the company and helps in probabilistic predictions and many other things.
DATA IN BUSINESS
As mentioned earlier, data plays a very crucial role in any business. In a broader perspective, the data dealt with by a company can be either External or Internal. External data consists of the data collected from any source outside the company, like customer data, tax records, government datasets, and weather forecasts. Internal data consists of the data collected from any source inside the company like customer behaviors, sales figures, marketing expenses, social media trends.
Here are a few examples of the importance of External data:
BETTER DECISIONS: Suppose a company runs a business of hotels. If it wants to build a hotel near an airport, it must consider some factors like weather conditions and flight cancellation rate. Therefore, the company goes through the flight cancellations and weather reports and, depending on the data, it could easily predict whether building a hotel will be profitable.
It is just a simple example of the benefit of data analysis before making important decisions. Building a hotel is an investment of a lot of money and time. The data of the considered factors played a significant role in the decision.
FINDING NEW CUSTOMERS: Social media target advertisements to a person by the data they collect of the keywords most used by them. It is a straightforward example. However, there are more ways in which the information is used to target new customers depending upon various factors.
Social media is the leading platform that acts as the data source for targeting new customers. But, of course, different websites serve as a source, and also, there are other sources.
IMPROVING CUSTOMER SERVICE: We often encounter various applications and websites run by different companies which ask us for a rating and a review for the service they provide. A perfect example would be any shopping website. These ratings and reviews, which we provide, act as data to these companies. Analyzing these data help them make the quality of their service better.
Here are a few examples of the importance of Internal data:
UNDERSTAND PERFORMANCE: Employee overall data and company investments data are among a few factors to consider while evaluating the company's overall performance. For example, if collecting these data shows that the number of products the company's sales department can sell is comparatively (in money) much lower than the amount the company is investing, then it is time to take a few steps regarding the matter growth of the company.
Specifically, there are many factors to be considered. A few of them are the data set of the number of employees, pay scale, working hours, company investments, company loans, variation in the value of stocks, etc.
IMPROVE PROCESSES: Advertisement is a significant investment for a company to grow. First, the company needs to go through the data set of the channel's views or websites and the content presented there to target a specific demographic through an advertisement. Then, depending on whether it attracts the particular population and the number of views, a company might advertise.
Depending on the result of the data set acquired after putting up the ad (data set of the sale concerning the intensity and the timing of the ad), the company could improve the process. This is one of the many examples of the importance of internal data for enhancing the company's operations.
SOLVING PROBLEMS: After a month of poor sales and an overall loss, the company needs to figure out the mishaps. To figure out the problems, to make sure this is not repeated, the company has to go through all sorts of data (both internal and external data), specifically the internal data.
Suppose a car company faced abysmal sales in the last few months.
The company now analyses all the data over the past few months and concludes the following:
It had recently set up a new showroom in a city which has not sold much. It also lacked a little bit in analyzing the review of the customers—a considerable amount of employees left due to low pay scales. Also, the remaining employees have not been working very well.
It will now take the required steps to make changes to increase the sale. This complete process shows how important data sets help solve various problems (above was one of them).
As a whole, data plays a significant role in business. A data-driven company is 23 times more likely to acquire customers and 19 times more likely to remain profitable! As the chain of marketing and business becomes more complicated, companies have started understanding the importance of data for providing better service to customers and for the company's growth.