4 Ways Analytics Can Improve Your Bottom Line
With so many possible uses for analytics, it’s not uncommon for decision makers to feel a bit lost. Where do you begin? How do make data meaningful? Below, four ways analytics can improve your bottom line. Regardless of your role, industry, or business function.
1. Reduce your inventory. If you produce physical products, you undoubtedly stock inventory. Inventory ties up cash and prevents you from using that money elsewhere. Reduce your inventory and free up cash flow.
Data analytics can create insights into how many products were ordered, how predicable your order levels are, which are “high runners” and which have highly volatile order quantities. As a result, you can determine how much inventory is needed to meet demand.
2. Improve quality and customer service. Whether you provide products or services, there are two things that can really distinguish a company: quality and customer service. If you track customer complaints, product defects, or missed points of service, you can begin to determine patterns in your operation. For each type, you can assess the level of impact they have on your bottom line. By putting these two pieces of data together, you can determine which issues you should address first in order to improve your reputation as quickly as possible.
3. Eliminate stale product offerings. As a company grows, often its list of product offerings grows too. Product teams are great at creating “the next best thing,” but rarely is anyone dedicating sufficient time analyzing the entire portfolio. Products have a life cycle and that life cycle needs to be managed.
Product analytics helps companies strategically focus their efforts on the products that generate the bulk of their profit. An analysis of each product’s overall contribution to the total profit will reveal which products are growing the bottom line, which are tapering off, and which are costing you more to manage than the profit they generate. This simple but critical information keeps decision-makers from flying blind and allows you to reprioritize your profitable versus stale products.
4. Use analytics to set your customer service levels. Over time, the value of each customer changes. Your most important customers five years ago may no longer hold that top spot. Having access to accurate and easy to understand analytics allows you to make tough decisions regarding customers.
In many organizations, the majority of their profit comes from a few, valuable customers. As you analyze your customers based on profitability, you’ll realize which customers are contributing to the bottom line in a meaningful way. With analytics, you can easily identify which customers are worth the cost of support.