Check Out Our Industry Tips for Applying Data Analytics to the Benefit of Your Company’s Bottom Line
Data analytics is an excellent tool to figure out what’s going behind the scenes of your business. If you know what to look for, or you enlist the help of expert data analysts, you can pinpoint what’s working and what’s hurting your business. You may have plenty of data, but it’s all about how you make use of it to benefit your company.
By applying your findings to the right areas of your business, you can solve challenges, make better decisions, and improve revenue.
Here are several ways you can use data analytics to boost your bottom line.
Reduce Physical Inventory
If your business sells products that you keep in stock, you will likely have a physical inventory of these products. And while inventory is inevitable, you don’t want to hold on to a pile of products that aren’t selling often.
These products in your inventory are not giving your business any profit. Potential cash is tied up in inventory instead of going towards other necessary business initiatives. It’s important to understand what type of inventory and the amount of inventory you should have at certain times to keep it moving and bringing in revenue.
Data analytics can help you figure out the type of inventory you need—and that will actually sell—by studying customer ordering patterns over a period of time. This data will reveal:
- How many of each product is sold each month;
- How stable the orders are over time;
- Which products are high runners;
- Which products have stable order patterns; and,
- Which products are unpredictable.
With the use of data analytics, rather than having too many products sitting in your inventory, you can decide on which products to carry and how to stock them appropriately. With analysis, you can do this without the risk of running out of stock.
Remove Dead Products
Products have a lifecycle, and you may have product offerings that are no longer worth keeping around. Dead product offerings are products that no longer bring in revenue for your business, and could cost you more to manage ultimately negatively impacting your bottom line.
You can find dead products using product analytics—a part of data analysis that helps businesses to prioritize and focus on the products that generate the most profit. This can be done by looking at a product’s overall contribution to your total profit. Product analytics can help you figure out:
- Which products are increasing profits—your bottom line;
- Which products are going down in profit contributions; and,
- Which products are dead—costing you more to keep around.
This information can help you decide which products to remove from your product offerings and which products to focus your efforts on to boost your bottom line.
Adjust Customer Service Levels
All customers are valuable to businesses, however, some offer more value than others. Often, only a few customers will provide most of the profit, making them the most valuable to a business. And over time, these customers and their needs will change.
Data analysis can be used on customer contributions as well. You can figure out which customers bring in the most profit to your business all the way down to which are no longer profitable. This can help you focus your customer service efforts and resources on the high-value customers.
Improve Quality & Customer Service
Quality products, services, and customer service are what keep businesses afloat. You can excel as a business if you have a reputation for treating customers well and selling quality products and/or services. But if any quality falls behind and leaves customers disappointed, your business will feel it.
Dissatisfied customers will make complaints to businesses in the form of phone calls or e-mails. If you document these complaints, you can categorize them to see which ones are occurring most often. You can also determine how each type of complaint affects your bottom line. And with these two types of data, you can address the most critical complaints first to boost your customer service reputation, your product/service quality, and your bottom line.
Focus the Efforts of HR Employees
Analytics can help you determine which areas in the company experience the highest turnover rates, and which recruitment efforts are the most successful. Instead of focusing on turnover for the whole company, analytics can highlight the smaller pockets of high employee turnover so you and your HR team can focus your efforts in these areas.
Data analytics can also help you determine the success of various recruitment channels. For example, you can measure the effectiveness of recruitment initiatives, such as:
- Which colleges and universities delivered the top-performing graduates; and
- Which recruitment activities delivered the top-performing employees.
This information will help you save money by only focusing on the recruitment efforts that bring in high-performing employees and reducing the amount of recruitment channels used overall.
With data analytics, you can make better decisions for your company as a whole, focusing the appropriate time and effort on the areas that matter most. Instead of wasting money and falling behind, you can save, get ahead of competition, and boost your bottom line.