Snoopy’s (Peanuts) brother Spike knows how to cut costs and stay frugal. Many big companies have taken a page from Spike’s playbook, but their approach is slightly different. They’re using data analytics to lower their operating costs. Companies that practice this approach indicate that they have reduced their costs by 10%. So, what can we learn from them?
The Importance of Lowering Business Costs
Cutting business costs can mean more profit for your company, but only if your sales and pricing stay steady. Of course, you can easily cut costs in your operations, but you need to also be mindful that you don’t cut back on quality and reliability. That could lose you customers or could give you no choice but to lower your prices to match the lower quality. And when that happens, there go your profits!
Fortunately, analytics can help you achieve reduced business costs without sacrificing everything that already makes your company fantastic.
Reduce Marketing Budget with Highly Targeted Campaigns
Access to your company data is vital in setting up an effective marketing campaign. It can be an excellent way to make your messages more direct and feel personal. By using the data you’ve collected, you aren’t just throwing a random wide net and crossing your fingers for the best results.
Collecting data from your customers gives your company a clear insight into their interactions with you; you understand their purpose, wants, and behavior. If only we could use analytics to make all our relationships easier. (Imagine how much easier relationships would be if you had clear insights into the other person!)
Once you get a clear picture of who your customers are, your team can personalize offers and recommendations to them. You can direct highly targeted ad campaigns once you’ve analyzed all the factors that may contribute to getting those elusive clicks. Marketers waste 37% of their budget thanks to bad or low-quality data, according to Forrester.
And you’ll be spending fewer dollars to do so, because you’ve targeted patterns that work for your business. You’ll also be less likely to waste money on campaigns that go nowhere.
Reduce the Impact of Supply Chain Disruption
Business owners know that it’s imperative to have eyes on your supply chain at all times. That can be quite the trick to pull off, sometimes.
However, when you digitize your supply chain, your business data and supply locations come together to give you the complete picture of where your business stands in terms of product; you’ll know what you need and where everything is at any given time.
How can this help reduce costs for your business? It means you can work toward getting ahead of disruptions and keep supplies moving efficiently. You don’t risk falling behind for lack of inventory.
There’s much data to be mined in terms of your supply, and it’s all useful in identifying long-term problems and solutions that can save you money when you get them fixed. By avoiding recurring issues, you’re avoiding recurring costs.
Incorporating analytics into your supply chain also helps control its management. Your business can make faster decisions as issues arise; the data provides a better foundation for these decisions, once again saving you money, because the wrong call can cost you a lot.
Reduce Loss Due to Fraud
Fraudsters gonna fraud. Thankfully, you can cut off much of their efforts with analytics.
According to the Association of Certified Fraud Examiners (which sounds like a fraud itself, but is totally legit!), businesses lose 5% of their revenue each year to fraud. And that’s even scarier when you learn that 54% of these businesses don’t recoup any fraud losses!
With the help of your company’s analytics, your data trends can point to anything that’s out of place. Whether it’s odd customer behavior or suspicious activity within one of your departments, you’ll be able to notice that your typical data isn’t adding up, and that it’s time to investigate why.
Reduce Customer Loss
Loss of customers means loss of revenue. So, the solution then becomes clear: employ analytics to improve your customer relations; improved customer relations means increased loyalty and the likelihood of first-time customers turning into long-time customers.
Analytics can pinpoint problems your customers are having, allowing you to resolve these issues faster and satisfactorily. When you make them happy, you have an easier time convincing them to return.
By analyzing your customers, you know what appeals to them and what you need to do for the next step in their buying process. Keeping your customers is less expensive than seeking out new ones. When you increase your customer retention, you can increase your profits anywhere from 25% – 95%.
Reduce Employee Churn
We know that companies spend more money if they need to hire a new employee vs. keeping a current one around. So how can your analytics keep your workers from fleeing?
Analytics can be useful in two ways here. One way is to measure insights into what makes your employees dissatisfied. Collecting survey data can give you an accurate measurement of what areas are making your employees most unhappy; it’s similar to customer satisfaction. If you can change those, you can gain their loyalty.
The other way your analytics can ensure your employees stick around longer is in the hiring process. Analytics can identify candidates who best match your company’s culture and business needs. That gives you and your new hire a better start right off the bat.
The Bottom Line
Conducting business so that you make maximum profit is a fine balancing act. The old adage tells us that you have to spend money to make money, and while that’s true, there’s a limit to what you should be spending. The more you put in doesn’t necessarily mean the more you get back.
Investing in company analytics can have a tremendous impact on your company’s financial output. Your metrics and insights can show you where you can spend less without sacrificing what makes your company successful in the first place.