Big Data is getting bigger by the minute, and it’s been getting a lot of hype for its potential to offer new, previously unimaginable levels of insight into consumer behavior and increased revenue potential. While it’s true that there’s a lot of potential in Big Data, especially for marketing, the sheer amount of data that is available can be overwhelming.
When it comes to using data analytics to cut business expenses, you need to take it one step at a time. For most companies, that’s going to mean using data to improve marketing efficacy. You can also use data to streamline your logistics, saving money on shipping damage and other supply chain issues. And, especially for many retail companies, there’s real potential to use data in the fight against fraud and theft.
Improve Targeted Marketing
Few things can harm revenues like an ineffective marketing campaign. The money you spend on marketing is just wasted if the marketing doesn’t lead to conversions. Data analytics can help you figure out what’s wrong with ineffective marketing campaigns, so you can target your chosen demographics more effectively.
For example, let’s say you’re not getting the conversion rates you’d hoped from your Google Ads campaign. Analysis of customer profiles might lead you to the conclusion that you’re targeting entirely the wrong demographic. Adjust your Ads campaign accordingly and get the return on your marketing investment that you expected. You might even find that you can spend less on marketing, and get more for it.
If you rely on the supply chain to get materials and products, or to get your products to consumers, then supply chain logistics is one area where you should always be looking for cost reduction opportunities.
For example, you can use impact and vibration recorders to determine where and how shipments are sustaining damage as they move through the supply chain, and make changes that reduce that damage, like packaging improvements or a change in route.
By using data to reduce shipping damage, you can manage supply chain costs and losses. And, if you’re shipping very valuable or delicate items, you’ll need to rely even more heavily on logistics data to make the right packaging and transport choices.
Of course, preventing shipping damage isn’t the only option for reducing logistics costs. You can use data to reduce costs associated with adverse shipping conditions, longer or shorter routes or product groupings in warehouses. By upgrading your logistics technology to more data-friendly RFID and GPS tracking and inventory tags, you can eliminate most human error and save man-hours.
If you have a retail business, fraudulent returns are a real concern. Common schemes include shoplifting an item to return for cash or buying the item outright but then attempting to return the empty box, sometimes with junk inside to make up the missing weight. But how can you know which customers are committing fraud?
Most customer returns are legitimate, but fraudsters find ways around requirements like proofs of purchase for returns. You can use data analytics to understand how the behavior of customers, including how many returns to expect from normal customers in a given period of time, and how those returns are conducted.
For example, if a normal, honest customer typically buys about 150 items from your retail outlet in a one-year period, and returns about 20 of them, you’ll know that customers who deviate from that behavior significantly might be committing fraud. Customers engaging in suspicious behavior can be blacklisted, which, along with common-sense preventive measures, like checking contents, can prevent a lot of retail fraud.
Data analytics has been hailed as a huge new source of revenue and a marketing goldmine for companies of all shapes and sizes. It’s not hard to see opportunities to reduce business expenses with data that can tell you more about your perfect customer, and even help you understand and anticipate the behavior of shoplifters and perpetrators of return fraud. Don’t let your data go to waste. Collect all the customer information you can — once you start digging into it, you might be pleasantly surprised at just how useful all of it can be.
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