Republic of the Philippines

CAMARINES SUR POLYTECHNIC COLLEGES

Nabua, Camarines Sur

College of Tourism, Hospitality and Business

Management Module in
ELEC 118 Customer Analytics
2nd Semester, SY 2025-2026

Part III: Understanding Business Analytics

Descriptive Analytics

What is Descriptive Analytics?

Descriptive analytics is a secondary research process of analyzing historical data to summarize
and understand changes that have occurred in businesses. It leverages both data aggregation and
data mining techniques to provide insight into past and current performance.
Descriptive analytics is the process of using current and historical data to identify trends and
relationships. It’s sometimes called the simplest form of data analysis because it describes trends
and relationships but doesn’t dig deeper.

Descriptive, which answers the question, “What happened?” Descriptive analytics is relatively
accessible and likely something your organization uses daily. Basic statistical software, such
as Microsoft Excel or data visualization tools, such as Google Charts and Tableau, can help parse
data, identify trends and relationships between variables, and visually display information.

Descriptive analytics is especially useful for communicating change over time and uses trends as a
springboard for further analysis to drive decision-making.

What Does Descriptive Analytics Do?

Descriptive analytics helps to describe and present data in a format that can be easily understood
by a wide variety of business readers. Descriptive analytics rarely attempts to investigate or
establish cause-and-effect relationships. As this form of analytics doesn’t usually probes beyond
surface analysis, the validity of results is more easily implemented. Some common methods
employed in descriptive analytics are observations, case studies, and surveys. Thus, collection and
interpretation of large amount of data may be involved in this type of analytics.

Here are some common applications of descriptive analytics:

 Summarizing past events such as regional sales, customer attrition, or success of marketing
campaigns.
 Tabulation of social metrics such as Facebook likes, Tweets, or followers.

 Reporting of general trends like hot travel destinations or news trends.

The Five Steps of Descriptive Analytics

Here are the five sequential steps of descriptive analytics, which should be followed to get the best
results:

Step 1 – State the Business Metrics: Any business, attempting to use descriptive analytics for
business gains, must identify and define the key performance indicators (KPIs), also known as
“metrics,” that will be generated through the analytics process. The KPIs are usually tied to the
business goals of the company or the business goals of each functional unit within a company. For
example, the company’s finance department may choose to monitor daily sales, weekly sales,
holiday sales, and other metrics related to time spent on customer payment collections.

Step 2 – Identify the Data Required: The next step is locating the data required to generate the
pre-determined metrics. This step can be complex as relevant data may be scattered across
applications and files. On can hope that with today’s digitized business processes, it will be easy to
track down and extract that necessary data from multiple locations. Additionally, data may have to
be pulled in from an external source like a e-commerce websites.

Step 3 – Extract and Prepare the Data: When data resides in multiple locations, this step can be
tedious and time-consuming. The data has to be first extracted and collected on a single repository,
then combined and finally prepared for descriptive analytics. The data may also require “cleansing”
to remove errors and inconsistencies. In today’s AI- and ML-driven business analytics ecosystem, a
process called data modeling is used to prepare and organize the company’s information for further
analytics.

Step 4 – Analyze the Data: Companies usually apply a vast range of tools for conducting
descriptive analytics, ranging from spreadsheets to advanced business intelligence (BI) software.
Descriptive analytics involves performing mathematical operations on some variables to get the
desired results.

Step 5 – Present the Data: Once the business analysts have completed all the prior steps of
descriptive analytics, the fifth and last step is generating the reports. The reports must be presented
in a format that is easily understood by the intended audience of the reports, which may include a
broad range of business users from finance specialists to C-suite executives. Stunning, visual
dashboards always help to disseminate complex business information. A judicious combination of
graphs, charts, and other visual elements presented on dashboards may be the best answer to
catch the attention of varied audience.

Advantages of Descriptive Analytics

1. Simplification of Complex Data: Descriptive analytics breaks down vast amounts of
complex data into clear and readable results, making it easier for stakeholders to comprehend
historical performances.
 2. Facilitation of Benchmarking: By simplifying businesses present and past performance,
organizations can compare themselves against industry standards and competitors, identifying
areas of strength and opportunities for improvement.
3. Identification of Trends and Patterns: By analyzing historical data, businesses can
identify trends and patterns within their performance and their industry that can inform strategic
planning and decision-making.

Disadvantages of Descriptive Analytics

1. Limited Predictive Capabilities: Descriptive analytics focuses on past events, and while it
can equip us with powerful insights about the past and the present, it cannot be used to predict
the future when used on its own.
2. Potential for Bias: The selection of metrics and data interpretation can be subjective, as it
is chosen by the analyst and the business itself, leading to the risk of biased insightsif not
carefully managed.
3. Dependence on Data Quality: The accuracy of descriptive analytics insights heavily relies
on the quality of the underlying data. Poor data quality or a misunderstanding of what data
should be looked at in the first place, can lead to misleading conclusions.

EXAMPLES OF DESCRIPTIVE ANALYTICS

1. Traffic and Engagement Reports -

Reporting . If your organization tracks engagement in the form of social media analytics or web
traffic, you’re already using descriptive analytics.

These reports are created by taking raw data—generated when users interact with your website,
advertisements, or social media content—and using it to compare current metrics to historical
metrics and visualize trends.

For example, you may be responsible for reporting on which media channels drive the most traffic
to the product page of your company’s website. Using descriptive analytics, you can analyze the
page’s traffic data to determine the number of users from each source. You may decide to take it
one step further and compare traffic source data to historical data from the same sources. This can
enable you to update your team on movement; for instance, highlighting that traffic from paid
advertisements increased 20 percent year over year.

2. Financial Statement Analysis

Financial statements are periodic reports that detail financial information about a business and,
together, give a holistic view of a company’s financial health.
There are several types of financial statements, including the balance sheet, income
statement, cash flow statement, and statement of shareholders’ equity. Each caters to a specific
audience and conveys different information about a company’s finances.

Financial statement analysis can be done in three primary ways: vertical, horizontal, and ratio.

Vertical analysis involves reading a statement from top to bottom and comparing each item to
those above and below it. This helps determine relationships between variables. For instance, if
each line item is a percentage of the total, comparing them can provide insight into which are taking
up larger and smaller percentages of the whole.

Horizontal analysis involves reading a statement from left to right and comparing each item to
itself from a previous period. This type of analysis determines change over time.

Ratio analysis involves comparing one section of a report to another based on their relationships
to the whole. This directly compares items across periods, as well as your company’s ratios to the
industry’s to gauge whether yours is over- or underperforming.

3. Demand Trends

Descriptive analytics can also be used to identify trends in customer preference and behavior and
make assumptions about the demand for specific products or services.

Streaming provider Netflix’s trend identification provides an excellent use casefor descriptive
analytics. Netflix’s team—which has a track record of being heavily data-driven—gathers data on
users’ in-platform behavior. They analyze this data to determine which TV series and movies are
trending at any given time and list trending titles in a section of the platform’s home screen.

Not only does this data allow Netflix users to see what’s popular—and thus, what they might enjoy
watching—but it allows the Netflix team to know which types of media, themes, and actors are
especially favored at a certain time. This can drive decision-making about future original content
creation, contracts with existing production companies, marketing, and retargeting campaigns.

4. Aggregated Survey Results

Descriptive analytics is also useful in market research. When it comes time to glean insights from
survey and focus group data, descriptive analytics can help identify relationships between variables
and trends.

For instance, you may conduct a survey and identify that as respondents’ age increases, so does
their likelihood to purchase your product. If you’ve conducted this survey multiple times over several
years, descriptive analytics can tell you if this age-purchase correlation has always existed or if it
was something that only occurred this year.
Insights like this can pave the way for diagnostic analytics to explain why certain factors are
correlated. You can then leverage predictive and prescriptive analytics to plan future product
improvements or marketing campaigns based on those trends.

5. Progress to Goals

Finally, descriptive analytics can be applied to track progress to goals. Reporting on progress
toward key performance indicators (KPIs) can help your team understand if efforts are on track or if
adjustments need to be made.

For example, if your organization aims to reach 500,000 monthly unique page views, you can use
traffic data to communicate how you’re tracking toward it. Perhaps halfway through the month,
you’re at 200,000 unique page views. This would be underperforming because you’d like to be
halfway to your goal at that point—at 250,000 unique page views. This descriptive analysis of your
team’s progress can allow further analysis to examine what can be done differently to improve
traffic numbers and get back on track to hit your KPI.