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How to Utilize Analytics Extensions for Data-Driven Decision Making

There’s no place for speculation when it comes to business decisions. Every large investment or customer-related change should be evaluated to maximize profits and minimize risks. Analytics extensions are of great help here, enabling you to automatically collect and compare the necessary data for informed decisions.

In this guide, we’ll explain how analytics can help improve your business and how to utilize dedicated extensions correctly for data-driven decision-making. Additionally, we’ll list the best Magento 2 analytics extensions to improve your e-store performance.

How Analytics Help to Run a Business

Let’s start with why exactly you should gather data on your website. In this section, we’ll list the three main reasons for utilizing analytics extensions to improve your business performance.

1. Keeping Track of Consumer Behaviors to Offer Personalized Experience

Today, high competition dictates trends, making businesses more and more consumer-oriented. People prefer a personalized approach in terms of advertisement and customer service. Analytics help to keep track of consumer behaviors such as buying patterns, website navigation paths, and measure the effectiveness of marketing campaigns.

Naturally, analytics is also crucial to determine the demographics of your audience and create correct market segmentation. The gathered information can be used to make the most tempting offers, determine when and which promotions bring the most profit, and which sales channels work the best with certain customer groups.

Stats show that businesses utilizing data for decision-making are 23 times more likely to attract customers and six times more likely to retain them compared to those that don’t. A great customer experience is essential for making sales and acquiring loyal customers who will bring regular profit. Only a 5% increase in customer retention can increase the company’s profit by 25%.

But what exactly makes a good customer experience? Studies indicate that 91% of consumers prefer shopping with brands providing relevant, personalized offers. Furthermore, 72% of consumers will only respond to an advertisement that is tailored to their personal preferences. In other words, it’s crucial to implement analytics at every stage of the sales and interaction process to improve the customer experience.

2. Driving Performance

Sales and customer retention aren’t the only factors important for business performance. Decisions remotely related or not related to consumers may also affect business efficiency and consequently profits. Analytics extensions help to identify operating issues and improve their streamlining. They provide insights into data correlations useful for cost evaluations, benchmarking, pricing segmentation, and other essential business processes. Naturally, you can also get seasonal performance reports to see how successful your previous decisions were and compare periods. Using sales forecasting, you can make informed decisions about investments.

Let’s take the supply chain as an example. If you have multiple suppliers and delivery channels, keeping track of each one is an intricate task. Analytics extensions can help to identify which channels work slower or bring more expenses than profit. You can perform cost analysis for each existing or potential logistics channels and choose the most beneficial option.

3. Risk Management

Running a business always involves some degree of risk, especially when it comes to large investments or major customer-oriented decisions. Managing risks is essential to minimize losses. To evaluate the risk of a specific decision, you need to gather former and present data. Doing so manually, however, requires a large investment of time and labor. Analytics extensions automate the risk management process, eliminating the need for extensive labor. They help to not only collect data but also to forecast results accurately, based on figures rather than speculations.

How to Utilize Analytics Correctly

Now that you know why analytics are beneficial for running a business, it’s time to find out how to utilize them the right way. Below, we’ll provide the most important points to keep in mind when shifting to data-driven decision-making.

How to Utilize Analytics Correctly

1. Define the Purpose for Analytics

Don’t collect data just for the sake of having it. You should have a clear purpose for gathering it in the first place. Consider how you’re going to utilize the acquired information. To do so, you must first understand which part of your business has an issue and identify your goals. Do you wish to improve the customer service, operation, risk assessment, or something else? Do you strive to reduce costs, drive revenue, shorten delivery times, or find the optimal pricing? You may need to improve everything at once, but you should still differentiate between the required metrics and purposes.

2. Choose the Right Tools and Metrics

Different analytics goals require different metrics and ways of calculation for accurate evaluation. You may get tons of data, but there’s no sense in gathering it if it’s irrelevant or inaccurate. For instance, your goal is to make the most effective discount offers. In this case, you should collect data about customer shopping behavior and preferences. The necessary metrics include but are not limited to sales by product and category, sales seasonality, previous ads performance, and market segmentation. There’s no need to collect information about delivery times or customer navigation paths on your website as these metrics are not related to the purpose.

The way you use data to make decisions also plays a role. In the same example, you should understand why you track every of the chosen metrics and which figures you strive for. Let’s assume you see that product A sells best during wintertime, and product B’s selling pattern doesn’t fluctuate depending on the season. How will you use this data for promotion-related decision-making? Collecting data is the first and easiest step. Your decision success depends merely on your approach to data analysis and creativity.

3. Don’t Rely Solely on Rough Figures

The most common mistake of data-driven businesses is relying solely on analytics, neglecting the human factor. Data doesn’t equal truth; it’s a fragment of truth taken out of context and evaluated subjectively. In other words, data may be misleading. Consider what could go wrong due to unplanned circumstances, human error, or unexpected customer response when making any data-driven decision. You need to see the complete picture with long-term consequences and place data in context to make informed decisions.

Often, businesses start overfocusing on KPIs and other performance metrics after implementing analytics extensions, which leads to a fall in product and customer service quality. This way, instead of improving profitability, businesses only reduce it due to a drop in customer retention. The core objective is to provide the best possible customer experience and learn to look beyond numbers.

4. Value Your Customer’s Privacy

A large portion of consumers reportedly enjoys getting personalized product suggestions. However, not everyone likes sharing their personal data. Stats show that 40% of consumers have found personalized marketing creepy due to wrongful assumptions made from their behavior analytics. If there’s no universal concept of privacy, you must be careful collecting customer data. The ways you’re gathering data and the specific metrics you analyze should be transparent, and site users must have a choice to agree or decline sharing it.

Value Your Customer's Privacy

Best Magento Analytics Extensions

If you already own a Magento 2 store and wish to try out analytics extensions, you may appreciate some of the options listed below:

1. Advanced Reports by Aheadworks

Advanced Reports is an analytics extension for Magento 2 sites that features numerous monitoring and reporting tools for different performance metrics of your store. The extension presents data in user-friendly visual charts and tables for easy assessment. The available reports include:

  • Sales overview
  • Sales by product
  • Sales by category
  • Sales by payment type
  • Sales by manufacturer
  • Sales by coupon code
  • Sales by product attributes
  • Sales by location
  • Individual customer sales
  • Abandoned carts data
  • Traffic data

This analytics extension is the perfect choice for website owners who wish to boost their revenue by making informed decisions regarding promotions, targeting, and product catalog content.

2. Advanced Reports by Mirasvit

This Magento 2 analytics extension provides detailed insights on e-commerce site performance metrics and lets you create custom reports. The gathered data can later be easily transferred into CSV or Excel XML format for further analysis. One feature that will be especially useful for mid- to large-scale businesses is international KPI monitoring. You can analyze store performance and customer behaviors by country, state, town, or postal code.

3. Feedback by SMAC Softwares

Collecting customer feedback in addition to rough data is the best way to improve customer experience. This extension enables you to add a “Feedback” button to your Magento 2 store and gather customer opinions to determine what needs improvement. You can make the reviews appear on the website or only be visible to the admin.

Make Informed Decisions

Collecting customer and operational data is crucial for providing the best user experience, reducing costs, and maximizing profits. Thus, the power of big data can help business owners gain a competitive advantage over their peers. Those who aren’t yet utilizing analytics for data-driven decision-making fall behind, and our mission is to help you stay afloat. Our team will ensure you choose the best suitable analytics extension and implement it correctly in your Magento 2 store. Don’t hesitate to contact us for a consultation to start improving your site today.

By interactivated • on November 30, 2021

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