Using data to navigate uncertain business conditions

As Australian businesses map out their strategies for 2023, many are doing so with an expectation of tougher economic conditions ahead.

Rising inflation, supply chain issues, and ongoing conflict in Europe are causing uncertainty and increasing the likelihood of a downturn. Indeed, according to a survey by IDC, 59% of senior business executives around the world believe a recession will occur sometime in the next 12 months.

Despite this somewhat pessimistic outlook, however, businesses are not giving up and closing their doors. Rather, they are critically examining their operations and seeking out potential new opportunities for growth.

A key tool in this quest is data. With data easily discoverable, understandable, and valuable to the people that need to use it, organisations can gather healthy data for analysis and will be able to identify trends and overcome challenges.

The importance of data became clear during the global Covid-19 pandemic. During this period, companies with a strong understanding of their business fared significantly better than others.

Now, heading towards the end of 2022, understanding a business on both a microscopic and holistic level is more important than ever before. With dark economic clouds gathering, data must be treated as a central tool that can guide operations through uncertain times.

That said, simply gathering data from various sources is not sufficient. It must also be critically analysed to ensure it can deliver the informed insights that a business requires to navigate its progress.

Achieving the right strategic mix

Having a single strategy is unlikely to be sufficient for a business in a rapidly evolving economic climate. According to research by the Harvard Business Review, successful firms are likely to have a mix of both defensive and offensive strategies in place.

Defensive strategies include those that help a business to reducing costs, retain staff, and maintain their position in the market. Offensive strategies, on the other hand, help a business to spot new trends and shine a light on fresh opportunities.

Regardless of their type, all strategies need to be powered by business data. Used effectively, data can help in a range of different ways including:

• Predicting customer behaviour: Past sales patterns can be used to guide future investments and business activity. Product mixes can be changed to reflect evolving tastes and new items added to meet fresh demands.
• Budgeting: Accurate financial data gives business managers the ability to accurately budget both income and expenses. This reduces the chances of unforeseen shocks to operators or the bottom line.
• Equipping staff: When informed by up-to-date data, staff will be much better positioned to carry out their roles and meet the expectations of customers.

Using data to evolve and grow

During the pandemic, many businesses found they had to evolve the way they operated to remain viable. Many had to find new ways to interact with customers and provide them with the goods and services they required.

One example is global cosmetics giant Estee Lauder. Before the pandemic, the company had a high dependency on in-person business. Despite the fact that around 80% of customer interactions began online, 85% of actual transactions occurred in retail stores.

With many stores forced to close for an extended period, the company’s management team made extensive use of business data use to completely revitalise the company’s core business model and take full advantage of an all-digital consumer world.

The company worked to create a 360-degree view of customers that helped to increase personalisation, deliver innovative marketing, and better predict consumer trends. This effort resulted in a 30% uptick in revenue, improved management of supply chain inventories, and overall elevated competitive presence in the face of economic downturn.

Such efforts clearly show how critical data is to the ongoing performance of every business. By gathering data from as many sources as possible, and using tools to extract meaningful insights, businesses can be best placed to withstand any economic downturn that might occur in the future.