Acquiring and leveraging customer data continues to be enticing to business leaders, as consumer behaviors have been forced to change via adoption of channels such as digital commerce. Yet we frequently hear from clients that they are not getting the value they expect from their data. This is often despite the fact that they have a team of individuals with analyst titles.
Data and analytics are only valuable if they are used to generate insights, learning and evidence that inform business decisions.
If you are looking to get more out of your data, ask yourself whether your analysts are actually analyzing it? It has become an increasingly common trend for companies, and the Data Analysts they work with, to simply report data rather than analyze it.
What does this mean for your organization? It means that you’re not using your data to the fullest. You have the numbers, and you’re able to present them, but you’re not using them to identify trends, challenges, or opportunities that may have an impact on your results. You’re not questioning the why behind the numbers. And worst of all, you may not even be aware that you’re missing out.
So what is the difference between reporting and analyzing, and why is it so common for companies to stop before they get to the real analytics?
Analytics vs. Reporting – What’s the Difference
As a decision maker, you want insights about why your sales are down, why your cost per acquisition is high, or where the next big opportunity is. A report won’t give you this answer. It will simply present data and numbers—telling you your sales are down—without any context or insights.
Reporting is the process of gathering information: from finding the information, querying it, putting it together, creating dashboards and the overall movement of the data. It looks nice, and it may feel good to see the numbers going up or down, but it won’t actually help your business move forward because it doesn’t provide any real insights for you, the decision maker.
Analytics provides stakeholders with what they really want to know – what decisions should they make next, and where they should spend their money. Once the data has been gathered, a strong Data Analyst will be able to ask the right questions, enabling them to find new insights, trends, or opportunities. More importantly, analytics can show you why things are the way they are, and provide recommendations on what to do next.
For example, reporting would show that a group of people went to a webpage on a certain day, which pages they visited, and how long they spent on your site. Analytics would ask more questions: Why did those people go to the site? Was this behavior unusual or expected? Did a surge in visits lead to increased sales? And do we notice anything about these people that is similar, or different, to other groups? And what can we learn about these people to get more visitors in the future? Put simply, analytics asks questions about the report.
Focus on the Analysis – Not the Reporting
Others may falsely think that because the reporting shows a trend, that the trend is the answer. It’s not, because a report doesn’t tell you why those trends are happening or how to change them. It is also not helped by the fact that many reporting tools are referred to as ‘analytic tools’ so your analyst may not even realize the distinction.
Data from legacy data structures must be stitched to data streams from IoT or the Web and that process is time-consuming forcing the analyst to spend more time on that element of a project (and conversely less on analyzing the results).
Secondly, advances in technology have made reporting far more effective. Data Visualization tools allow analysts to create impressive dashboards and automate the production of reports. The ability to shine with these timely and visually pleasing reports has meant that many have overlooked the need to review the results and analyze what they mean. People have been dazzled by the output and have forgotten to ask how the information can help generate business results.
As a result, you’re missing out on valuable insights that can be used to make stronger decisions.
Instead, your Data Analysts should be spending 80 percent of their time analyzing and 20 percent of their time reporting. They should be able to take the time to think about what the data is saying and dig deeper into the underlying numbers to come up with insights that were previously hidden or unknown.
Analysis is an iterative process; the report is only the first step. Looking at the data presented should lead to further questions and avenues of investigation, not be the end goal.
Learn Something From Your Data
In the future, there is a good chance robots, or artificial intelligence, will be able to do the reporting; this is already starting to happen. The human aspect of the job – asking the hard questions, being strategic, producing insights, and providing recommendations – lies with analytics.
When it comes to analytics, your goal should always be to learn something that no one else knew before or to validate gut-feel hypotheses. After the information has been gathered, the real work starts so that the business can respond and adapt in the right way.
That’s why it’s so important to recognize the difference between reporting and analytics. To succeed with your data, you need to flip the 80/20 rule around to focus the most time and effort on the part that provides the most value to your business–the analytics.
If you would like support in getting more valuable insights from your data, talk to Shift Paradigm today.