The Importance of Data Analysis and Its Role in the Success Online Businesses

The Importance of Data Analysis and its role in the success online Businesses

If we compile the list of current hot industry buzzwords, “Data analytics” would be at the top of the list. With online business becoming a norm, nothing has impacted the transformation of companies more than the availability of data.

Never before in the history of mankind have we had as much access to data as we do now, and the big data analytics market is estimated to reach $103 billion by 2027. A 2020 report by MicroStrategy stated that 94% of companies believe that data analytics is key to business growth and transformation.

The importance of data analysis is immense for any business. Still, for online businesses, access to good data is the only shot they have if they want to outpace their competitors in growth.

Predicts Customer Behavior:

To be competitive in an ever-evolving landscape of online businesses, it’s not enough to focus on the present. Instead, companies must predict the future, which is only possible through data.

Data empowers you to predict your customers’ behavior in advance through predictive analytics as to how many customers are likely to purchase again and who will churn in the future.

Suppose you have sufficient insights at your disposal to inform you which users can be customers. In that case, you get the opportunity to take remedial actions like reaching out to those users by asking for feedback, sending a gift card, or a special discount so that the customer doesn’t leave you.

This predictive analytics practice is now widely used by all small and large online businesses. It is an integral aspect of an online business information systems degree that imparts technical and business knowledge to study data and make more informed decisions.

Informed Decision Making:

When you have the correct data at your disposal, data analytics can make decision-making simpler. In the initial phase of their existence, online businesses often face the dilemma of scaling by offering services in new locations or improving services in existing markets.

Once you have the insights from the data you have gathered, you will make more informed and objective decisions based on facts rather than a hunch.

For example, you have sales data from two geographic regions where a product is doing well in one area and is running in losses in other areas. Then you might want to redirect your effort and resources to the regions where the response is better.


Data analysis plays a central role in expansion decisions about whether or not expanding into a new geographic region will be successful. Since people’s preferences change from region to region, data analysis equips you with crucial information to modify your offering to distinct tastes based on demographics.

By analyzing data of similar products offerings and competitors, you can determine whether your product will appeal to the local market or launch operations for a specific segment to measure response with the help of analytics.

Data has enabled companies in North America to expand their products or services successfully in South America. In contrast, the same products or services aren’t accessible for Hispanic people in the US due to their geographic location.

Improves Customer Experience:

Many studies on the importance of customer experience suggest that customers are willing to pay more for better experiences. Word of mouth from your customers is a critical determinant of the success of your online business, which is improved if you know what your customers are thinking and leverage those insights.

Sentiment analysis is a great tool that helps companies determine whether customers speak positive, neutral, or negative about your online business.

Using insights from the sentiment analysis, you can improve areas where your customers are experiencing difficulty and study newer data later to see the improvement.

Cost per Customer:

This is critical for the success of both, whether an online or offline business, to see how much money you are spending for every customer you attract and the ROI.

Suppose the industry average for attracting a customer for a specific business is $2. In that case, you can use this as a benchmark against your promotional and marketing activities to analyze whether they are successful or not.

You’re not marketing the right way if you spend more than that for every customer; similarly, your marketing activities are successful if you can attract customers at lower rates. Data analysis helps you to draw this line, without which it is not possible to plan marketing campaigns.


To innovate quickly or successfully, nothing can serve you better than data analytics insights to meet the distinct needs of your customers or locality. Apart from the possible expansion opportunity, this helps you win the loyalty of your customers when you give them what they need.

The best part is that data analytics gives you a clear picture of the rate at which customers purchase your products, how many new customers you get once you upgrade your product & sell it at a premium, or the number of people buying more if you lower the price.

In any case, you will mitigate the risks and win with the help of data analysis.


Throughout history, every seasoned person in business has been analyzing data to launch, grow or scale back their business based on available resources. Its importance cannot be overstated in today’s age, especially when you have access to so much data from internal and external sources.

The data may look like some facts and figures, but it is the new oil for businesses. The good thing is, online companies have free access to data through hundreds of free and paid tools available online.


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