Have you ever checked out an online store and added something to your cart, but then backed out of buying it? Maybe you were shopping for a new camera, a fitness tracker, or a gift for a loved one. But then you changed your mind because you found a better deal elsewhere, or you realized that you didn't really need it, or you got distracted by something else. When that happens, the online store has what's called an abandoned cart. According to e-commerce platform Shopify, online merchants lose 20 billion dollars a year in sales revenue because of cart abandonment. This is a huge challenge, but it's one that business intelligence professionals are very good at tackling. In this post, we'll show you exactly how they do that.
How BI Professionals Use Data to Understand Customer Behavior
BI professionals can use data to track where a customer came from, whether it was a Google search, an email link, or a social media post. Then they can visualize the journey the shopper took when visiting the website. They're even able to pinpoint exactly where that customer left and try to figure out why. For example, a BI professional might create a tool to monitor how attractive and relevant the website's product images are. If the team finds that they are too low-quality or outdated, the company can update them to better showcase the features and benefits of their products and persuade the customer to buy. The attractiveness and relevance of the website's product images is an example of a metric. A metric is a single quantifiable data point that is used to evaluate performance.
How BI Professionals Use KPIs to Track Progress Towards Goals
In BI, some of the most important metrics are KPIs, which are quantifiable values closely linked to business strategy that track progress towards a goal. Many people confuse KPIs and metrics, but they are different things. The basic point to keep in mind is that metrics support KPIs and in turn, KPIs support overall business objectives. It's also helpful to understand that KPIs are strategic, whereas metrics are tactical. Going back to our abandoned cart example, strong KPIs might be the number of visitors who complete a purchase, customer retention, or average order value. Think of it this way: A strategy is a plan for achieving a goal or arriving at a desired future state. It involves making and carrying out plans to reach what you're trying to accomplish. A tactic is how you get there. It's a method used to enable an accomplishment, including actions, events, and activities. Tactics take place along the way as part of your strategy to reach your final objective. Like stepping stones between each milestone. Reach enough milestones and you'll reach your goal.
How BI Professionals Use Monitoring Tools to Enable Data-Driven Decisions
Understanding business objectives and what is needed in order to achieve them is the first step in BI monitoring. BI monitoring involves building and using hardware and software tools to easily and rapidly analyze data and enable stakeholders to make impactful business decisions. Let's say our e-commerce merchant sets a goal to decrease cart abandonment by 10% in six months. The BI professional would create a tool that monitors product images in order to help achieve that KPI. Rapid monitoring means that the people using BI tools are receiving live or close to live data. In this way, key decision makers know right away if there's a sudden drop in the number of visitors who complete a purchase, or if they run out of stock on a popular item, or if customers are leaving negative reviews or feedback. Knowing right away means that the company can fix whatever the problem may be as quickly as possible. This is one of the main ways in which BI professionals add real value to their organizations.
