The deep secrets data can unlock about your market

Data is increasingly referred to as the new oil. The most valuable companies in the world today, including Apple, Facebook, Google, Amazon and Uber, are regarded industry titans of the data age.

These businesses have massive information on their users, which is constantly mined and analysed to figure out people’s tastes and preferences, and target advertising. You might have noticed that when you like a tours and travel page on Facebook, for instance, you’ll get a Tembea Kenya fan page as a suggestion of something else you might like.

Or if you look through certain online stores, the scrolling ads on your email site advertise other offers from that store.

Spending power

Every business generates data, and it can be used for all sorts of decision making, including what products to stock, what opening hours work best, how many employees you actually need and how to run a more efficient operation.

However, the term data analytics has long been associated with large firms, like banks and supermarkets, yet even small businesses stand to reap massive benefits from analysing the bits of information they get from their customers’ buying habits.

Some information is easy to interpret – a bookshop owner who notices a spike in sales of books and stationery at the beginning of January knows to stock more of these products to cash in on the start of the school year.

If you run a restaurant, you may realise that the demand for meats like chicken and beef is highest in the last and first weeks of the month, so you know to lower your orders for these products mid-month when people’s spending power takes a hit.

You own an M-Pesa shop? Analysing the data you generate can tell you the kind of float you need to have at what time of the month so you don’t lose out on business by not being prepared for the ups and downs of demand.

Once you start looking at the trends in your business, you’ll realise you stand to make much wiser decisions about your operations, which could easily improve your bottom line.

Many entrepreneurs take for granted the information they can obtain from recording bits of transactional, location or time-bound data points that their businesses generate.

By itself, the information can seem of little help, but when looked at over a period of time and analysed using affordable (sometimes free) applications, you’d get valuable insights.

Armed with these details, entrepreneurs no longer need to spend a fortune on business strategists and coaches, as the data will provide accurate and real-time details. Here are four reasons you need to start collecting and putting together the data your business generates.

1. Helps you know what’s happening in your business

Collecting and analysing the data that your business generates is a foolproof way to get a handle on what’s happening with it.

Milton Ziwira is a distribution manager with Red Dot Distributors, a firm that purchases and distributes software solutions. Milton sells and also relies on data analytics software for his business, and says many entrepreneurs are yet to learn about the benefits of the systems that exist in the market.

“In the past, we used to put data in an Excel sheet and this was cumbersome and tedious when it came to reviewing it to find business sense,” he says. He uses Power BI, a business intelligence service from Microsoft.

Through aggregating information collected over time on indicators such as the movement of products, dates when the highest purchases are made, and the quantities purchased by each customer, Red Dot can create an accurate picture of the demand.

“The system we now have provides all heads of departments with a dashboard where they can view real-time data and remain updated on everything that is happening in their departments,” says Milton.

2. Helps the business spend limited resources better

One of the challenges businesses face is how to spread out their financial or human resources to get the best results.

According to John Bororot, the chief operating officer at Telkom Kenya, analysing data on user patterns is one way telecommunications service providers determine where to set up expensive network infrastructure.

“Base transmission stations are costly, and because our capital investment is often limited, we have to use a data analysis of how our clients are distributed to know where to set up new stations,” he says.

John adds that mobile phone service providers are able to generate heat maps of the spread of their subscribers, including the type of mobile devices they’re using.

“This tells us how many 4G, 3G or 2G stations to put up, and at which sites for a maximum return on our investment,” he says.

3. Levels the playing field between small and big firms

Thanks to the competition between the many service providers in the growing field of data analytics, small businesses have many options for affordable tools to choose from and deploy.

Many providers of data analytics software, including Microsoft, SAP, Oracle and Google, provide their customers with the option of purchasing the software as a service. This means that instead of buying expensive equipment or long-term licence agreements, entrepreneurs can opt for affordable pay-as-you-go options.

“You only pay for what you use and if you are a small company, this saves you a lot of hustle while giving you the same advantages large players in the market have,” says Milton.

And there are some data analytics tools that are free of charge. Businesses that have active Facebook and Twitter pages, for example, can already access important insights into their customers’ habits.

These platforms will tell you where your customers are accessing the page from, their age and gender, what their likes and dislikes are, and what time there’s the most activity.

Google also provides free data analytics insights to users who are prolific on the company’s platforms, such as YouTube and Google search.

“As a publisher you need to know what kind of content keeps people coming to your site and what makes them stay and become engaged,” says David Steinacker, one of the project leaders behind Google Ad Sense.

“Analytics on viewer trends, which we share with our publishers, helps content creators know what to publish and when.”

4. Helps in generating important business records

Besides creating useful insights into the everyday operations of a business, data analytics is also important in generating records.

Consistent data from a trader detailing the number of customers, the goods they bought and how much they paid is invaluable to an entrepreneur who’s looking for additional money from a bank or investor.

Some financial institutions already require entrepreneurs to hand in business account statements bearing this information to evaluate their credit worthiness.