Why Data Analytics is Important for SMEs?
Small and Medium-sized Enterprises or SMEs are businesses that make upto 90% of the companies and 50% of the employees worldwide. Indian SME sector contributes about 29% of the GDP, which is expected to increase to 50% in 3 years.
SMEs operate in an increasingly competitive and highly dynamic world. There is constant pressure to improve profitability and maintain a competitive advantage.
Analytics, technology, and data are the main ingredients for sustainable growth in such a competitive world. SMEs operate and generate large volumes of data, which, if analyzed wisely, can be the key to success. By leveraging data analytics, a business can increase efficiency and productivity.
Data analytics can help SMEs decide how to promote their products, manage finances and engage with clients. Apart from providing actionable insights, it also aids in reducing costs, driving revenue, and providing a delightful customer experience that makes people stay.
What is data analytics?
Data analytics is the process of employing sophisticated computer systems to extract meaning from raw data. To draw inferences and detect trends, these systems transform, organise and model the data.
A client of ours, Mr. Kothari, is a trader. He decided to have an in-house analytics team, and so he recruited two business analysts. The team tried to find opportunities to give them an edge in this highly competitive world. They were preparing a lot of MIS reports.
But much manual process was done, and they adopted a data analytics tool that helped them automate many things. Now with only one person, they can get much more insights.
The results were terrific. Before using analytics, the business was stagnant. But after using analytics software, the business growth has risen to 23% year on year for the last two years.
5 Key Benefits of Data Analytics for Small and Mid-sized Businesses
- Identify Gaps & Opportunities
With data analytics, you can answer the questions like when are customers likely to make a purchase or which items are dragging the profitability down?Data analytics provide you with the tools you need to solve a wide range of complex problems in your business.Data analytics tools can give valuable insights into customer behavior and trends as they access the data. With the tracking of customers, you can solve problems attached with suppliers, investors, and other clients. Also, with a 360-degree overview of business, you can make intelligent decisions.
- Improve Customer Service
Customer service is more important than ever, and more small businesses use data to retain consumers.With the availability of real-time insights, you can know how customers behave. With the customized services, you can engage with them on a deeper level, and there will be a massive amount of improvement in the services.Increased small businesses are using data analytics to retain customers because a mere 5% increase in customer retention can lead to a 25% increase in profits.
- Hidden Expenses
With visibility of the impact of data on various kinds of expenses, it becomes easy to make future decisions. Some expenses are implicit, and some are explicit. Interest costs on inventory and overdue outstanding are examples of implicit costs. Sales and Marketing expenses are explicit costs.Data Analytics can reduce the impact of such expenses and the overall cost.
- Increase Revenue
An in-depth analysis of customers’ buying behavior can encourage you to identify new ways to increase sales. Also, it gives you the confidence to diversify your business or launch a new product.With a heat map, you can identify unexplored territory. It will give clear visibility of your Pincode-wise reach in the market.On average, companies that incorporate data analytics into their business generate a profit increase of 8%. SMEs can use the same technology and gets benefitted. After all, this technology is for everyone and not only for big businesses.
- Efficient Business Process
A significant benefit of data analytics is its ability to help businesses become more effective. Data analytics is widely used to improve business processes such as production, inventory management, payment, and customer service.This is done by focusing on the processes and understanding how they work and their weaknesses.
How SME’s can leverage the benefit of Data analytics?
Regardless of the size of the business or the amount of information it generates, data analytics is the holy grail for those who know how to use it.
You can analyze your entire information and leverage it for valuable insights that result in better business management and strategic moves.
With the correct assortment and compartmentalization of data, data analytics for small businesses can be a beneficial and essential aspect of SME strategy establishment.
Struggling to figure out how the market will be like next season or how to retain customers based on your guts will not give you a concrete result unless it is backed by data. Rather than guessing why sales are not increasing despite putting so much effort and spending on advertising, you can start leveraging data analytics to gain all the needed insights to grow your business.
Data analytics can be one of the core tools to help you manage and grow your business.
MagentaBi, an online Business Intelligence platform, provides one-click analytics from your business data by integrating directly to your ERP including Tally, BUSY, SAP, B1, etc. Magenta generates Intelligent MIS reports on both web browsers and mobile app.