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Updated Oct 29, 2024

How Data Analytics Impacts Small Businesses in 2024

Small companies can gain valuable insights to make them more productive and efficient.

Mark Fairlie
Written By: Mark FairlieSenior Analyst & Expert on Business Ownership
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Gretchen Grunburg
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SMBs was just beginning. As a pioneer in the SaaS industry, Salesforce provided businesses with a platform that constantly monitored and recorded employee actions and tracked KPIs. The vast amount of data it captured and its robust reporting capabilities allowed business owners to analyze performance metrics for individuals, teams and companies.

Today, nearly all business applications, including CRMs, accounting software and human resource information systems (HRIS), record real-time actions and changes. These platforms generate massive volumes of data that seamlessly integrate with analytics tools. This integration provides SMBs with detailed insights to inform cost reductions, improve profitability and identify inefficiencies. We’ll look at current trends affecting SMB data analytics and share how businesses use data analytics today.

FYIDid you know
More companies are basing business decision-making on data analytics instead of past experiences. As a result, their productivity has increased by 63 percent, enabling them to work more efficiently and reduce costs.

How can SMBs use data analytics?

Consider the following four impactful ways SMBs are using data analytics: 

  • Data analytics helps SMBs improve closing rates. One of the main applications of machine learning for small businesses is tracking customers throughout the different stages of the sales cycle. Small businesses can leverage data analytics to identify specific customer segments who are ready to buy (and, more importantly, when they’ll be ready).
  • Data analytics helps SMBs provide better customer service. AI-powered data analytics tools help provide an enhanced understanding of customers’ needs and pain points, allowing SMBs to deliver personalized service. For example, as our ​​RingCentral Omnichannel CX review explains, this platform’s built-in sentiment analysis can record all phone calls, emails and live chat conversations over the past 90 days, analyze them, and present its results as a word bubble. Businesses can see what issues impact customers and ensure agents respond appropriately. 
  • Data analytics helps SMBs identify and respond to trends. Businesses can leverage data analytics to identify overarching patterns and trends. For example, if numerous customers contact a business asking the same questions, creating an online knowledge base that addresses these questions in depth might make sense. This resource could even increase sales as it addresses common questions potential buyers face and helps strengthen a brand’s unique selling proposition (USP).
  • Data analytics helps SMBs better understand customer behavior. Data analytics provides detailed analyses of customer behavior, showing business owners what motivates consumers to buy their products or services. Sporn noted that analyzing customer behavior and identifying patterns allows SMBs to create targeted marketing strategies. “For example, by using data from previous sales and website behavior, a small business can tailor its marketing campaigns to specific times of the year or customer needs, cutting waste and increasing efficiency,” Sporn explained.

Data analytics can be budget-friendly

Leveraging data analytics is cost-effective for SMBs. Consider the following affordable resources that can provide small business owners with a wealth of information:

  • Website reporting tools: Google Analytics and Clicky offer website reporting with free and premium versions. These tools are ideal for tracking web traffic, helping you discern which marketing strategies are most effective, how visitors explore your site, potential friction points and more.
  • Wolfram Alpha: Wolfram Alpha is a computational intelligence platform with free and paid versions. It allows you to compute expert-level answers using its signature algorithms, knowledge base and AI technology.
  • Microsoft Power BI: Microsoft Power BI is a robust platform for generating visualized business data on everything from gross profit and revenue to store and warehouse demand and turnover. The Pro option costs $10 per user per month, making it affordable for most small businesses.
  • AI-powered tools: AI-powered tools like ChatGPT and Claude can help businesses simplify complex data to identify patterns, trends and solutions. AI tools can also support businesses with limited resources by automating tasks, such as data entry, freeing up more time for staff to focus on other essential tasks. 

Zhang stressed that SMBs getting started with data analytics have numerous options. “We began with simple spreadsheet analysis and gradually moved to more sophisticated platforms like Google Analytics and Tableau,” Zhang shared. “These tools offer powerful insights without breaking the bank.” 

Did You Know?Did you know
Data analysis insights can help reduce marketing and product development expenditures. Instead of funneling funds into multiple marketing efforts that yield minimal results, small businesses can pinpoint strategies proven to generate high-quality sales leads.

How to get started with data analytics in your business

Integrating data analytics into business processes can be complicated. But it’s worth it, according to Stuart Barber Yarborough, consulting business lead at global consulting firm Royal HaskoningDHV. 

Before starting a data analytics project, be sure you have the following:

  • Team members who understand data analysis
  • Easy-to-use software that can analyze your data efficiently
  • A constant data feed from other business apps into your data analysis software

Consider the following best practices for starting a data analytics project: 

  1. Hold a planning meeting to set goals. Barber Yarborough stressed that any data analysis journey must support the business’s overall strategy and goals and shouldn’t be treated as a separate task. “The key first step is a planning meeting, where you look at where your business is now, where you want it to be, and the pain points or gaps that will confront you before you get there,” Barber Yarborough advised.
  2. Get your team on board. After setting your goals, it’s time to get your staff engaged with the project. You must communicate the benefits their work will bring to the business. “Work with your team to identify high-priority tasks that will get buy-in and enthusiasm from your staff,” Barber Yarborough recommended. “If they don’t see the vision and the end goal, they’ll view this data project and others as nothing more than extra work for them.”
  3. Identify the data you want to analyze. A data analysis project must use key metrics, like KPIs and customer satisfaction data, that provide insights into performance. “By having a clear picture of the ways you’re improving and defining a basic project goal, you can identify the data that’s most important for your project’s success,” Barber Yarborough explained. 
  4. Collect and analyze relevant data. Initially, you should focus on collecting and analyzing only the most relevant data. This will prevent your team from getting bogged down with unnecessary information and adding greater complexity to the project. As you go on, you can collect and analyze more detailed data, but always be selective about the data you include.
  5. Choose the right data analysis tools. Barber Yarborough advises starting a data analysis journey with straightforward, widely used software like Excel. “This lets people begin without needing specialized software,” Barber Yarborough explained. “Later on, you can use more complex apps and software to help uncover important insights more easily.” Tools providing clear visual reports are ideal. “Whatever apps and software you choose, try to make sure they are easy for project team members to use so they spend their time productively, rather than struggling to use them,” Barber Yarborough added.

Data analytics will keep transforming business

Data analytics can bring transformative insights to businesses. Bruce Zheng, founder and CEO of strategic valve manufacturer NTVAL, shared how data analysis helped transform the company from a small local firm to an international provider.

The business analyzed its production cycle and discovered it overstocked 30 metric tons of raw materials annually. It adjusted its order cycles and saved more than $150,000 in inventory holding costs. “We used Excel to track daily production rates and find inefficiencies,” Zheng explained. “Tracking these metrics could reduce downtime by 60 hours per month and save about $20,000 in labor and missed deadlines.” The company now uses AI-driven tools to forecast valve demand. It also identified $300,000 in savings by optimizing its supply chain and restructured its capacity to produce an extra 10,000 units a week, generating additional revenues of $500,000 a year.

With results like these, it’s no surprise that 93 percent of businesses plan to increase investments in data and analytics, according to an EY study. The trends mentioned here indicate a swift evolution of data analytics and demonstrate their power to transform multiple aspects of operations. 

Whether it’s mimicking the human brain’s knowledge acquisition through machine learning and deep learning or capitalizing on unused dark data to gain a competitive edge, the new era of data analytics has intensely practical applications that businesses should not overlook.

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Mark Fairlie
Written By: Mark FairlieSenior Analyst & Expert on Business Ownership
Mark Fairlie brings decades of expertise in telecommunications and telemarketing to the forefront as the former business owner of a direct marketing company. Also well-versed in a variety of other B2B topics, such as taxation, investments and cybersecurity, he now advises fellow entrepreneurs on the best business practices. At business.com, Fairlie covers a range of technology solutions, including CRM software, email and text message marketing services, fleet management services, call center software and more. With a background in advertising and sales, Fairlie made his mark as the former co-owner of Meridian Delta, which saw a successful transition of ownership in 2015. Through this journey, Fairlie gained invaluable hands-on experience in everything from founding a business to expanding and selling it. Since then, Fairlie has embarked on new ventures, launching a second marketing company and establishing a thriving sole proprietorship.
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