Your seemingly unimportant data can be used to help your company lower costs which increases profits. When companies gain more experience in analyzing data, the real costs to serve become more visible. Instead of cutting costs at random, data analytics provides insight to make strategic adjustments. Companies who can quantify gains from analyzing data report an average 10% reduction in costs each year. In addition to lowering costs, data analysis helps companies invest capital more efficiently. Boost productivity
The first step to lowering costs is to identify inefficiencies. This enables managers to introduce and make adjustments that streamline or automate processes across the company. For instance, valuable time is wasted when employees must spend time looking for the information they need to make a decision. A data analytics solution such as Phocas merges all of your data into a single interface that can be quickly accessed from a dashboard. In just a few clicks your data is converted into a report that can be quickly and easily shared with team members or customers during sales meetings. Without an intuitive analytics solution, your employees may not have the technical know-how to understand the data and be forced to turn to your IT team to generate reports.
Cut costs on delivery
One way for e-commerce businesses to save a significant amount of money is to better manage product returns. The cost of a product return is 1.5 times that of the initial shipping expense. Data analytics can help a company assess the likelihood of a product being returned. By identifying the products that are most likely to be returned, a company can take the steps necessary to mitigate those financial losses. On the other hand, analytics can show you customers frequently return products and, therefore, have a high cost-to-serve.
Another way to minimize delivery expenses is to monitor your delivery in full, on time (DIFOT) metric. Delivery in full, on time (DIFOT) is a fundamental measurement for analyzing the performance of your supply chain. The whole purpose of your supply chain is to get the products your customers need, when they need them, in the quantity they ordered. If your DIFOT is low, you can drill down into your data to discover the reason. Perhaps there is a problem in one of your warehouses? Analytics reveals the cause so you can come up with the most effective solution.
More targeted marketing campaigns
A great way to lower costs while increasing sales is to create meaningful and targeted marketing campaigns. Armed with data analytics, your marketing team can evaluate customer buying behavior. By learning about your customers, their needs, and ideal price points, you can develop refined promotions. Moreover, your team can use your analytics to discover new trends and sales opportunities. Without an analytics solution, your team won’t have the ability to quickly respond to emerging trends.
Following a campaign, your team can use your data analytics solution to evaluate the performance of the campaign. For instance, your team can see how many new customers or prospects the company has and where they are in the sales funnel. By comparing this number to a period of time before the campaign, you have a good assessment of the campaign’s effectiveness. By minimizing the expenses associated with unsuccessful marketing campaigns, your team to invest in strategies that contribute to business growth.
Provide better customer service
As everyone knows, it costs much more to convert new customers than it does to retain the ones you have. Companies that overlook grievances may find their customers ultimately switch to their competitors. Since companies are constantly gathering customer data already, an analytics solution such as Phocas can help transform that data into powerful customer profiles. These profiles can provide insights such as which customers are buying which products, and more importantly, who isn’t and why. This information enables your sales team to address potential problems and find the best products and mixes to suit a customer’s unique needs. Taking the time to cultivate relationships with your customers rather than just pushing for a sale will demonstrate that you understand their business. Relationship building reinforces customer loyalty and costs much less than replacing lost customers.
A small company will quickly notice when they are losing a customer. However, this is much more difficult for larger corporations. A data analytics solution can monitor customers in decline. For example, with Phocas, your sales department can create a widget for their dashboards that continuously displays the number of customers in decline. Clicking on the widget will reveal which customers are declining, and a click on a customer will reveal their purchasing history, including products, value, volume and more. With quick identification, your sales team can intervene before a customer is completely lost.
These cost cutting processes are easy to perform in Phocas. Using our dashboards, you can keep track of performance and, in just a few clicks, drill down into the underlying data. With streamlined processes and an understanding of your customers, you will be well-equipped to increase your company’s efficiency while mitigating indirect costs.
For more information on finding hidden costs, click here to download our free eBook on the subject.