4 ways data science can help your business
Does your small business have a website, a social media account, send emails or run paid advertising? Then you’ve already got a powerful tool that can lift business performance – data science.
In this article, we explore where you can find data sources in your business to help you plan for the future. We also look at how data science can give your business a competitive edge.
Whether you’re tech-shy or tech-savvy there are plenty of ways you can use the science of data to gain a competitive advantage.
1. Leverage insights to help your bottom line
As a business, you have a lot of financial data available to you, which can provide you with valuable insights to help manage your cash flow.
Factors such as high inflation, slower consumer spending, and rising wages are making it challenging for some businesses to maintain financial stability. Now is the time to harness these insights to help improve your financial position.
Make data-informed decisions
Artificial intelligence is making it easier for businesses around Australia to understand their business data. The National Australia Bank has found that 23% of Australian businesses have already made an investment in AI, while a further 20% are planning to invest in AI in the next year.
For more information on artificial intelligence, check out our article: What you should know when using AI for your business.
However, you don’t have to invest in AI or advanced software to make informed business decisions. Switching from manually kept spreadsheets and investing in bookkeeping software could give you access to automatically generated reporting features that are built into the program.
These reports can give you an instant breakdown of your finances, allowing you to make business decisions very quickly. Examples of these reports include:
- budget allocation: using financial trends to guide where you allocate or cut down the budget
- investment decisions: analysing your cash flow and profitability to determine the best areas for investment
- risk management: identifying potential financial risks and coming up with strategies to prevent them
- forecasting: using financial data to forecast future trends.
Ultimately, data allows you to make decisions that are backed by evidence and can help you save money as well as time.
2. Improve your efficiency and gain back time
There are many ways to improve the efficiency of your business, saving you time, money and resources. You don’t have to change everything, but something as simple as reducing the number of hours you spend doing admin work in a week can benefit your bottom line.
Ditch your spreadsheets and automate
Changing a time-consuming manual process to one that is automatic or automated can reduce the time you spend on tasks for your business and improve your efficiency.
Managing inventory is a common part of operations for many small businesses. This could be stock you’re selling or consumables that you and your employees use.
Counting, tracking and managing your stock can take a lot of effort from you and your staff. If you’re still using the good old-fashioned way of writing (or typing) it down, you are not alone.
Many businesses manage their data using a spreadsheet, making changes manually throughout the week.
This is a time-consuming process and also a risky one. The European Spreadsheet Productivity & Risks Interest Group found that the majority of spreadsheets, around 90%, were commonly full of mistakes, which could take even more time to fix.
Switching to software that can automatically calculate and track your stock can save you time and money. These programs can predict when you’re likely to run out of stock and when you should be ordering or producing new stock based on your current trends.
Not only will this save you time, but it could help your business become more efficient by reducing waste, minimising lack of stock and preventing build-up of excess inventory.
3. Improve your marketing performance
If your business runs its own marketing, you’re already in the business of data. Whether it’s a Facebook page, Google Analytics or email marketing software, there are plenty of ways you can use your existing marketing efforts to better understand your customers.
Harness the power of marketing metrics
Most marketing platforms have a section where you can look at reports or insights from your campaigns. There’s a lot of information to sort through, so here’s a handy guide to the most common and impactful metrics you should be monitoring regularly.
Email marketing
- Open rate: the percentage of subscribers who open an email out of your total number of subscribers
- Click rate: the percentage of people who clicked a link in your email out of the people who were sent the email
- Bounce rate: the percentage of emails that were sent but failed to reach an inbox and were instead sent to the spam folder or were undeliverable (email doesn’t exist)
Social media marketing
- Engagement (likes, shares and comments): the number of likes, shares and comments your posts receive
- Follower growth: the daily, weekly or monthly rate of follower growth
- Click-through rate: the number of clicks that your post receives divided by the number of times that your post is seen
- Reach/impressions: the number of unique people that saw your post
Website
- Page views: the number of users that visited the page
- Average time on page: the time spent on the page
- Bounce rate: users who visit your website but leave after only viewing 1 page
- Traffic sources: what sources (for instance ads, search engines or social networks) direct traffic to your website
- Device type: what devices users are using to access your website
Advertising
- Return of ad spend: the ratio of the cost of the ad and the revenue generated
- Cost per acquisition: what it costs you to acquire a customer
- Number of conversions: the number of users who became customers
- Number of clicks: how many users clicked on your ad
- Conversion rate: the number of users who became customers as a percentage of the total number of users that saw your ad
These metrics give you a way to review your campaigns and adjust them based on your results.
If an email, social media post or webpage is underperforming, compare its metric against your most successful content or the industry average to discover what you could do differently. Testing different approaches is also a great way to see what does and doesn’t work with your customers too.
There’s even more data on these platforms about your users and their behaviours. Once you understand the common marketing metrics, take a deep dive into the more complex data. Even a small change to your marketing approach could boost your sales.
For more information on better understanding your customers, read our article: Crunching the numbers – what the cereal aisle teaches you about your customers.
4. Intelligent innovation
If your small business is looking to take the next step, using data that can predict the future can help you make informed decisions. This is often referred to as ‘business intelligence’. We do this already by conducting research or by analysing or trying to predict market trends.
Whether it’s AI, an accounting program or an advanced business analytics software, there are plenty of options to gather business intelligence, which includes software that can integrate with your existing business systems and programs.
The software enables you to collect, process, store, sort and analyse your business data to provide useful information. This information can then be used to make decisions about the future of your business.
It will also help you to optimise your operations, inventory, marketing, customer experience and so much more. The secret is in setting up systems that are connected and talking to each other.
Business intelligence can futureproof your small business by allowing you to be proactive instead of reactive. It’s also a great way to help you scale your business with an understanding of what could work for you and the likely result.
Whether you’re interested in launching a new product/service or looking to find a new segment of the market to target, data science can help you make the right decisions. All you need is the right program for your small business.
For more information on what systems and software might best suit your business, visit the Business.gov.au webpage on Digital tools and software.