Your ultimate guide to data analysis process (Step by step)

Today's business world has only one keyword, which is data. If you want to be successful, you should definitely utilize data analysis. However, don't worry; whether you are new to data analysis or looking to understand more about it, this guide will help you in each step of the process. 

We will start with the general definition of the data analysis process and continue with why you should do it, how to do it, and what the steps are. At the end of the article, you will be able to turn data into actionable insights!

First things first: What is a data analysis process?

It is arguably the main pillar of the decision-making process in businesses and organizations. It has several steps, starting with defining objectives, collecting data, cleaning data, conducting the analysis, and interpreting the results. The ultimate purpose of this process is to have the data answer a specific question like “What did happen in this event?” or “Why did it happen?”.

Importance of the data analysis process

First of all, it is very normal to think about why you need this whole data analysis process at first. You may have questions such as, would it be a problem if this step was missing, or would these steps make me successful? The answers to your questions are given in the following items:

🔮 Predicting future trends: Data analysis is used to identify patterns. These patterns often help businesses to understand and predict future situations.

🎯 Optimizing your workplace efficiency: You can always reach optimal values ​​by closely monitoring the status of your employees and your business in general with data analysis.

🔎 Market research: You can learn about the situation of your competitors, the supply-demand situation of the market, trends, and more through data analysis and take appropriate actions accordingly.

🚨 Risk management: You need to urgently find out where the mistake was made in order to prevent your problems or solve them immediately. That's why data analysis is an ideal tool for finding things that are going wrong.

How to start a data analysis process?

Although the beginning may seem a little difficult for those who are not used to the data analysis process flow, once you get used to it, you will see that each process and method is carried out through approximately the same steps. There are some critical points to keep in mind before starting your data analysis process, these are:

Data analysis process steps

The data analysis process is a journey, and there are some things you need to do before, during, and after the journey. This is important both for the journey to go well and for you to reach your destination without any problem. There are roughly a few steps in the data analysis process diagram you should follow:

Steps of data analysis process

1. Determine the purpose of the analysis

This step is often known as the problem statement. You should come up with a hypothesis and consider how to test it. For example, consider a situation like this: You have a few stores and constantly lose customers. Then you may have the following hypothesis: This situation happens because customers are unsatisfied with your stores. Find a topic where you can establish a cause-and-effect relationship, just like this.

2. Collect the data

Now, things are starting to get a little trickier. First, understand the type of the data. For example, there are quantitative and qualitative data analysis processes. Quantitative data is data containing numbers, while qualitative data is data containing subjective thoughts. Qualitative and quantitative research questions are different, so they are easy to differentiate.

Apart from data type, there are three categories in data collection. They are first-party, second-party, and third-party data. First-party data is what you collect directly from your customers. Second-party data is organized data from another company. 

Third-party data is unorganized data from various sources (social media, interviews, games) by a third-party organization. Eventually, if you collect data yourself, you will need data mining knowledge, data management tools and programs, or a data analyst to work for you.

3. Clean the data

What is more difficult than finding data is finding suitable data. It can be very time-consuming but a must for the research process. Therefore, you need to classify the collected data and eliminate those that do not meet the criteria you are looking for. Erroneous, incomplete, and duplicate data should be discarded immediately. You should spend a particularly long time on this step because the backbone of the entire analysis process depends on what you do here.

4. Analyze the data

The analysis is another part where you must choose from the options. These options are different data analysis techniques. At its most basic, analyses are divided into four parts: descriptive(to describe the situation), diagnostic (to understand the situation), predictive(to foresee future situations), and prescriptive(to get meaningful insights).

5. Present the results

You should present the result of the analysis in a very simple way that can be seen and interpreted. For this, you can use tools and programs to visualize your data so that both you and the others understand it better. The important part here is to interpret the result correctly and take action. 

Even if your data analysis is completely perfect, there is always room for error. However, in a well-done analysis, this is such a small proportion that the result is completely compatible with the real world.

Frequently asked questions about the data analysis process

This article provides a general overview of the data analysis process. To gain more detailed information and focus on the areas that interest you most, consider checking out our frequently asked questions section.

Key points to take away

All in all, the data analysis process is all you need if you want to turn raw data into insightful information. You must proceed carefully through each step of this process and perform the steps appropriately. Create a perfectly reportable result by using data analysis methods effectively. This article showed you the way to data analysis; all that remains is to start doing an analysis for your business.