A rapidly growing economy usually brings rounds of cheers. Business is booming, innovation reaches new heights, and buyers can't get enough. But when that growth accelerates too fast, inflation isn't far behind. And too much inflation will start to squeeze corporate pocketbooks before price hikes reach consumers.
Recent economic data shows that inflation shot up 7% in December 2021. And although this is skewed by pandemic recovery, it's worth noting that prices haven't increased this much since Reagan was in the White House. As supply chains break and costs keep rising, consumers and businesses feel the strain.
Inevitably, an inflationary economy shines a spotlight on what companies can do to control expenses. Soaring costs don't only impact people trying to buy life's essentials. They're also a concern for business owners struggling to adapt.
When decision-makers use data and analytics to identify strategies that are and aren't working, they can often discover new cost-saving measures. Here are some ways data can help your business reduce expenses, too.
1. Target Your Marketing Efforts
When the C-suite discusses cost cutting, the marketing budget is a frequent target. It's easy to see why, since average design and production expenses for national TV and print ads can cost millions.
More affordable digital mediums, such as PPC ads, still eat up thousands of dollars per campaign. And each potential lead or customer that those efforts don't convert is wasted time and money.
For marketing to be effective, it has to reach the right customer at the right time with the right message. With the help of analytics, survey responses, and A/B tests, companies get a clearer picture of which promotion efforts work.
Experimenting with different copy, media, and audiences is one way to figure out the correct answers for your business. However, you need data from the results of those experiments to reach accurate conclusions. Everything from visitor activity on your website to influencer attribution metrics is an opportunity to learn what prompted -- or didn't prompt -- customers to make a purchase. It's vital to make sure that your website load speed on your website is fast. Each second a page loads can cost a website 5% of it's traffic.
2. Optimize Supply Chains
Any business that delivers physical products to customers depends on supply chains working as designed. Getting something from a manufacturer into the hands of a consumer requires the cooperation of every moving piece in a distribution network. While distribution strategies vary between businesses, direct store delivery (DSD) companies offer an illustration of how you can use data to cut supply chain costs.
A typical DSD distribution strategy involves sending sales reps and merchandisers to call on stores using company-owned fleet vehicles that follow predefined routes. DSD companies like Frito-Lay use data such as sales volume, vehicle drive time, and GPS tracking to improve their efficiency. With this data, leaders can design routes and sales territories to reduce fuel costs and the time it takes for the right products to reach the right stores. The upshot is reduced expenses and increased sales opportunities.
One example of this is the recent growth of Tradefull. They use data to help eCommerce companies streamline supply chains by using tools such as warehouse management software. This tech helps shippers with multiple warehouses sift that data to choose the most cost-effective warehouse from which to ship products. Decisions are based on location, which saves the business money and gets products to customers faster, representing a solid Win-Win. No matter your company's distribution model, leveraging the right data will enable you to cut supply chain costs.
3. Reduce Employee Turnover
Employee engagement experts agree that it costs much more to hire employees than it does to retain them. Current estimates show businesses spend up to twice a worker's annual pay when turnover occurs. While it's true that companies can't prevent every employee from leaving, managers can use data to mitigate a mass exodus.
Information from exit interviews reveals mismatched expectations, culture problems, and training opportunities. However, exit interviews aren't exactly opportune times to prevent people from walking out the door. Rather, companies that gather the right data can spot signs of dissatisfaction long before employees turn in their resignation letters.
Use staff surveys, engagement platforms, one-on-one meetings, and onboarding and coaching sessions to glean the necessary information about employee sentiments. These insights make it easier to correct training gaps and leadership or communication failures promptly, before they incite costly resignations en masse.
Education opportunities are an important part of limiting turnover. It's no secret that if you help an employee become better that they may have an increase in loyalty towards your company. Studies have shows up to 44% of employees are more likely to continue employment if there are educational opportunities.
Companies will always be looking for ways to streamline costs. It's part of Business 101. But it's the full use of data that can improve your accuracy and results.