Businesses employ numerous data analysis methods to process their information and extract actionable, insightful results. One of the most straightforward methods is known as trend analysis. Trend analyses can use a broad range of data types to find patterns that keep businesses competitive and relevant. Check out this quick guide to harnessing alternative data for trend analysis.
What is trend analysis?
Trend analysis refers to comparing information over a predefined period to establish a consistent pattern, known as a “trend”. Based on these trends, business managers can make efficient decisions according to their corporate objectives.
Trend analysis can be performed internally, so you can compare your business performance over different time periods, or you can perform it externally. For instance, market trend analysis can help you identify selling opportunities.
Consequently, you can perform trend analyses to identify where your business performance is increasing, so you can keep performing well, find out where you can improve your existing processes, and find trends to support your daily decision-making process.
Types of trend analysis
Trend analysis uses numerical data points on a line chart. Examples of alternative data used for trend analysis include the number of job postings of your competitors, the number of new offices opened by your competitors in the past five years, the amount of credit card transactions of your customers, and many more.
Depending on the direction of the line, there are three types of trends. Once you add this numerical data to the chart, you can notice an upward trend, a downward trend, or a flat (horizontal) trend.
An upward trend shows an increase. For instance, if your competitor’s number of new facilities opened in the past five years is increasing, it means that they are expanding. Based on this, you can make relevant business decisions or adjust your strategy to counteract increased competition.
A downward trend would show that your competitor is opening fewer stores or perhaps even closed some of them. A business manager could use this information to identify the opportunity to increase market share by expanding to the areas where the competing business closed their facilities.
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You may also combine this information with firmographic data, a type of alternative data that can show you the location of a business, size, industry, and more, painting an in-depth, granular image of your competition’s strategic moves.
Finally, the horizontal (flat) trend does not show any increase or decrease. This may help your business realize the lack of opportunity in a certain field, or it may help you invest your valuable resources in other dynamic, growing areas.
Alternative data and trend analysis
Trend analysis is extremely versatile, and so are alternative data. In other words, you can perform trend analysis for a plethora of purposes. You can use website traffic numbers to identify your or your competitor’s virtual traffic, identify trends in customer complaints to improve customer satisfaction or identify inefficiencies, and many more. All of the insights you gain from trend analysis are then the basis of your data-driven decision-making and forecasting.
Making comparisons
One of the most popular ways of using alternative data in trend analysis is to facilitate comparisons between your company and competitors in a given period. You can also compare your own company with the industry average.
For instance, firmographic data provides access to all the details you need, such as business size, location, number of employees, and more. Technographic data would help you determine the digitalization level of your company compared to the industry average or your direct competitors.
As a result, trend analysis is a straightforward method of analyzing your strengths, weaknesses, and competition when using alternative data. This allows you to identify and address gaps, challenges, and even market opportunities, so you can make relevant business decisions.
Customer satisfaction and alternative data
Many brands use alternative data to analyze customer satisfaction. Using social media data and other types of information, such as website traffic, business managers can identify market trends, peaks or declines in customer satisfaction, popularity, and more.
Knowing how well your brand resonates with your target audience is the cornerstone of creating efficient marketing campaigns. It also allows you to retain your customers and boost the quality of your after-sales services. These are achievable only when you are able to use fresh, accurate alternative data for your market trend analyses.
Although this type of trend analysis may seem highly relevant only to marketers, it also plays a critical role in business development. This is because it allows your team to stay in line with your customers’ demands, preferences, and even anticipate their needs. Ultimately, this does not only lead to enhanced business reputation, but also a higher ability to generate leads and expand your customer base.
To Conclude
All in all, any business benefits tremendously when using alternative data for trend analysis. Alternative data represents a broad range of information that can fuel your decision-making, so your firm moves in the right direction, stays competitive, and satisfies its clients.
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