In our digital age, data is incredibly powerful and not something you should ignore – so it’s time to take action. The thing is, not all data is created equal and not all analytics are designed to answer the same question. You’ll need to know which type of analytics will best fit your goal in order to make better decisions. So let’s break down four key types of data analytics and how they work:
Descriptive analytics – what happened?
This is the perfect place to begin, as descriptive analytics looks at past data to tell you what’s been going on within your business, such as tracking KPIs like sales performance, website traffic or customer churn. You could use dashboards or charts to spot trends, monitor progress or keep up-to-date with statistics. Descriptive analytics will tell you, for example, that your website traffic dipped last month – but it won’t get to the bottom of exactly why.
Diagnostic analytics – why did it happen?
In this phase of your data analysis, you become the detective. Diagnostic analytics is a method to dig into your data and find the root cause behind a change. For example, you might have lost sales after increasing your delivery charge, or maybe your web traffic increased after launching a new marketing campaign. Using diagnostic analytics helps you determine any issues and get to the bottom of any changes.
Predictive analytics – what will happen next?
Predictive analytics is a method of using historical data and machine learning models to forecast potential future outcomes and it can even shape smarter buying decisions. Of course, you’ll never get a crystal clear overview, but it’s a really helpful tool for planning ahead. A data analysis company, such as //shepper.com, can help you with implementation.
Prescriptive analytics – what do we do about it?
This is where the action happens. Prescriptive analytics recommends taking action rather than just providing data insight. It’ll help you choose the best path forward by simulating different outcomes and weighing trade-offs, allowing you to make big decisions based on your data.