In today’s digitized economy, efficiency is king. In fact, if you had to choose a single factor that determines the ultimate success or failure of an enterprise, efficiency would be it. And the businesses that focus on it — almost to the exclusion of all else – end up on top.
For proof, you need to look no further than today’s market trendsetters. Companies like Amazon, which created a product distribution network capable of delivering almost any consumer item anywhere in the world in two days or less. Or Tesla, who built factories on an incomparable scale to outdo long-established rivals in the automobile industry.
They’re both prime examples of businesses finding ways to outcompete everyone in their respective markets by doing things faster, cheaper, and better than everyone else.
But for the average business that doesn’t operate on the scale of those industry titans, opportunities to increase efficiency aren’t always obvious. In smaller operations, managers often work to ferret out underperforming employees or reimagine wasteful procedures. And they tend to do it based on their instincts, which may or may not lead to better results. But there’s a better way.
How to use data to improve business efficiency
By collecting the right kinds of data and putting it to use to analyze common areas of concern, businesses can find ways to improve efficiency and measure the results of the changes they make. And they don’t have to be running massive and costly analytics operations to do it. To elaborate, here are five ways every business should be collecting and using data to improve the efficiency of their operations.
1. Stabilize accounts receivable and invoicing
No matter the kind of business, the first place to look to improve efficiency is in accounts receivable and invoicing operations. That’s because even tiny improvements in those processes can have a massive impact on cash flow. For a demonstration of this, try making incremental improvements to the average time it takes customers to pay in a cash flow calculator to see the outsize effects.
But to make the right changes, businesses have to first improve visibility into financial operations by collecting and analyzing the right data. And the good news about that is the fact that most businesses already have the right financial data available in one format or another. They need only to gather it all together and analyze it appropriately.
When it comes to accounts receivable, solutions like the one from vcita make it possible to gain insight from an overview of invoicing data to spot areas of concern. Having easy access to this information makes it easy for business leaders to intervene in the case of chronically problematic customers, to ensure timely invoice payments.
It’s also possible to automate monthly invoice creation and follow-up payment reminders. This way, you can save valuable time and avoid awkwardness, spending your time and energy on actually delivering valuable services to your customers.
In that way, the business gets the maximum bottom-line effects with the minimum amount of work. And this is an especially effective tactic for B2B firms because it helps them avoid the need to turn to a B2B collection agency to handle overdue invoices, which often adds additional complexity to the process. In that scenario, a B2B firm would save on their own labor as well as on the cost of the collections process.
2. Conduct financial planning and analysis
Accounts receivable, though, only deals with the present financial condition of a business. But data can also help businesses to predict their future financial performance and make appropriate plans for it. And doing so can eliminate wasteful spending and help the business to always be in the right place at the right time. The processes required to use data for that purpose fall under the umbrella of financial planning and analysis (FP&A).
But to use data for FP&A, it’s necessary to gather large quantities of data in real-time, and then know how to interpret it in a useful way. And that’s where an FP&A data solution like the one offered by DataRails or a planning and management solution like LivePlan, can make a perfect addition to a business’s data arsenal. Platforms like these can import data from multiple sources, including CRM, ERP, and HRIS systems.
And after the data gets centralized in a cloud database, it then gets cleaned and standardized for analysis, all without any further intervention. From there the business can use it to forecast sales, growth, and identify market opportunities in time to capitalize on them. FP&A also provides the information necessary to secure new funding from investors and banks, which can have a direct impact on the business’s ability to innovate and evolve.
3. Improve employee engagement
Although it’s often overlooked when businesses go hunting for ways to improve efficiency, every business can benefit by measuring and improving employee engagement. It’s a key factor that drives productivity, and a major predictor of a company’s turnover rate. And even making small improvements to overall employee engagement can have big benefits.
The simplest way to use data to improve engagement is to craft and field anonymous employee satisfaction surveys. This is easily accomplished using purpose-built platforms like Connecteam or Glint, which can both collect and help visualize employee feedback data. That can help to uncover operational problems that prevent employees from staying engaged in their work. And many of the issues can have surprisingly simple solutions.
To that end, most of the common tactics businesses use to improve employee engagement don’t cost much to implement. And because the root causes of poor employee engagement tend to revolve around the same issues in every company, all that’s required is to use the survey data to identify the issues and match them with the proper solutions.
4. Increase marketing ROI
Another way businesses should use data to improve their efficiency is to track the ROI of their marketing spend and to look for ways to improve it. When you consider that marketing accounts for 11.7% of total budget allocations for the average company, even slight ROI improvements or opportunities for cost savings are a big deal.
In the digital marketing arena, tracking ROI is a simple matter of using free analytics tools to aggregate and analyze campaign performance. It may require certain changes to campaign execution like adding specific tags and defining conversion goals, but it’s not something that requires much analytics expertise to accomplish.
For conventional marketing, however, data collection is more complicated. For print advertising and other display-based campaigns, including offer codes is a useful way to encourage customers to self-report on campaign performance. Or, collecting sales data from a defined period before and after a campaign might offer clues as to the ROI of the campaign. It’s an inexact measure but is still worth trying.
The collected data can help determine what marketing tactics drive results and which should be altered or retired. And that’s not all. Existing customer data can also be used to create data-driven campaigns to replace poor-performing ones, improving the overall efficiency of the entire marketing operation.
5. Create targeted employee development plans
Last but not least, businesses should be using data to identify their top-performing employees so they can find ways to help others replicate their success. It’s a low-risk high-reward strategy that should be a no-brainer for every business. The best place to start is by defining KPIs to measure employee performance, preferably at the departmental level.
From there, identify the top performers from each department and study their work habits, personality traits, and educational backgrounds. That should allow for the creation of a defined persona (similar to a customer persona) that encapsulates what the ideal employee looks like. Those personas can then help shape employee development plans.
The idea is to offer training and other support to employees to help them improve their productivity and to bring them in line with their top-performing peers. To encourage maximum efficiency in the training process, a customized pathway for each employee is preferable (to avoid wasted time and duplicative learning). In the end, this should optimize the business’s workforce for peak performance. Plus, the same personas may be used to guide future hiring.
The bottom line
Data analysis can go a long way toward helping any business improve efficiency in every aspect of its operations. The areas of focus covered here are just the tip of the iceberg. They’re broadly applicable to almost every business type, but should be just a starting point in an effort to use data to improve efficiency.
And it’s also important to note that they’re not ends unto themselves. Data collection and analysis must be an ongoing process to remain effective. So businesses interested in efficiency should dedicate themselves to putting data at the heart of all of their decision-making. The rewards of doing so are clear. And it’s an advantage that no company can afford to ignore.