Efficiency is the key to success in today’s digitalized economy. Efficiency is the most critical factor in determining whether an enterprise succeeds or fails. It is the only factor that makes a business succeed, and it is the one that dominates all others.
Today’s market leaders are a good example. For example, Amazon and other companies have created product distribution networks that can deliver almost any consumer item anywhere on the planet in just two days. Or Tesla, who built factories at an unmatched scale to beat long-established competitors in the automotive industry.
Both are prime examples of how businesses can outcompete others in their markets by being faster, cheaper, or better than the rest.
Opportunities to improve efficiency for small businesses that don’t have the same industry reach are not always obvious. Managers often try to find underperforming employees and reimagine inefficient procedures in smaller businesses. Managers tend to follow their gut instincts which can lead to poor results. There is a better way.
How to use data to increase business efficiency
Businesses can improve their efficiency and measure the impact of any changes by collecting the correct data. They don’t need to run expensive and complex analytics operations to achieve this. Here are five reasons every business should collect and use data to improve its efficiency.
1. Stabilize receivables and invoicing
No matter what type of business you are in, accounts receivables and invoicing operations should be the first to be improved. Because even minor improvements can make a big difference in cash flow, to see the enormous effects of incremental improvements in the time it takes customers for cash flow calculations, you can try this:
Businesses must first increase visibility into their financial operations by gathering and analyzing the correct data. The good news is that most businesses have all the financial data they need in one form or another. All they have to do is gather the data and then analyze it.
Solutions allow you to see and analyze all invoice data to identify areas that need attention. This information is easily accessible by business leaders, allowing them to intervene when customers are chronically troubled quickly and ensure prompt invoice payments.
Automating monthly invoice creation and follow-up payment reminders is also possible. You can save time and avoid awkwardness by automating monthly invoice creation and follow-up payment reminders. Instead, you can focus your energy and time on delivering value to your customers.
It allows the business to achieve maximum bottom-line results with minimal effort. It is a particularly effective strategy for B2B companies because it avoids hiring a B2B collection agency to collect overdue invoices. This can often complicate the process. As a result, a B2B company would be able to save both their labor and the costs of the collection process.
2. Perform financial planning and analysis
However, accounts receivable only addresses the current financial situation of a company. Data can help businesses plan for the future and predict their financial performance. It can help businesses avoid unnecessary spending and ensure they are always in the right place at the correct times. Financial planning and analysis (FP&A) cover the required processes to use data to achieve this purpose.
However, to use data for FP&A, it is necessary to collect large amounts of data in real time and then understand how to interpret it. Therefore, an FP&A solution such as the one offered by DataRails, or a planning and managing solution like LivePlan can be a great addition to a company’s data arsenal. In addition, these platforms can import data from many sources, such as CRM, ERP, and HRIS systems.
After the data is centralized in a cloud-based database, it can be cleaned up and standardized for analysis. The business can then use the data to predict sales and growth and identify market opportunities to maximize their potential. FP&A can also provide information that is necessary to obtain new financing from banks and investors. It can directly impact the company’s ability to innovate and evolve.
3. Improve team member engagement
It’s something that is often forgotten by businesses when they are looking for ways to increase efficiency. However, every company can benefit from measuring and improving team member engagement. It is a critical factor in driving productivity and a significant predictor of a company’s turnover. Even small changes can make a big difference in team member engagement.
An anonymous survey of team member satisfaction is the best way to increase engagement. These can be done quickly with purpose-built platforms such as Connecteam and Glint, allowing you to collect and visualize team member feedback data. In addition, it can be used to identify operational issues that are preventing employees from being engaged in their work. Many of these issues are simple to solve.
Most of the most common strategies businesses use to increase team member engagement are easy to implement. Because the root causes for poor team member engagement are the same in all companies, it is easy to use survey data to identify them and find the right solutions.
4. Marketing ROI can be increased
Businesses should also use data to increase their efficiency. It includes tracking the ROI of marketing spend and looking for ways to improve it. Consider that marketing is 11.7% of the total budget for an average company. Therefore, even minor ROI improvements and cost savings can make a huge difference.
Tracking ROI in digital marketing is as easy as using free analytics tools to analyze and aggregate campaign performance. Although it may require some changes in campaign execution, such as adding specific tags or defining conversion goals to track ROI, this is not something that requires much analytics expertise.
Data collection for conventional marketing is, however, more complex. Print advertising and other display-based campaigns that rely on offer codes are a great way to get customers to report on campaign performance. The campaign’s ROI can be determined by collecting sales data over some time. Although it’s not an exact measure, it is worth the effort.
These data can determine which marketing strategies are most effective and which ones should be retired. It is not all. You can also use your customer data to create data-driven marketing campaigns to replace low-performing ones and improve the efficiency of the whole operation.
5. Create targeted team member development plans
Businesses should use data to identify top performers so that they can help others achieve their success. It is a low-risk, high-reward strategy that should be an automatic choice for all businesses. It is a good idea to define KPIs that measure team member performance at departmental levels.
Then, you can identify the top performers in each department, analyze their work habits, personality traits, and educational backgrounds. It will allow you to create a persona, similar to a customer persona, that represents the ideal team member. These personas will help to shape team member development plans.
Employees should be offered training and support to improve productivity and bring them up to the level of their best-performing colleagues. A customized training program for each team member will encourage maximum efficiency and prevent wasted time. In addition, it will ensure that the company’s workforce is at its peak performance. These personas can also be used to guide future hiring.
The bottom line
Any business can benefit from data analysis to improve its efficiency in all aspects of its operations. However, these are only a few of the many areas that need to be addressed. These focus areas can be applied to nearly every type of business, but they should only be used as a starting point to help you use data to improve your efficiency.
It’s important to remember that they are not an end in themselves. Data collection and analysis should be a continuous process. Businesses that are interested in efficiency and effectiveness should put data at the core of their decision-making. It is a wise decision. It’s a benefit that every company cannot afford to overlook.
Disclaimer. The opinions and views expressed in this article are the authors Shalom Lamm.
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