The eyes of some business owners and executives glaze over when they hear the word “analytics.” They often don’t realize the exciting potential of analytics as a business driver because they never get past the data collection stage, remaining mired in massive amounts of mind-numbing data.
But knowing how to turn that data into insight and then leverage those discoveries can yield results beyond the imagination. One key strategy in using analytics is to look for hidden opportunities that reveal themselves through a well thought out approach to data collection and analysis.
Here’s an introduction to how your business might find previously hidden opportunities by using analytics. This strategy works not just in retail but in other areas as well, including HR and recruiting.
Three Key Analytics Stages
Before we discuss how to find and take advantage of hidden opportunities, let’s review the three key stages of analytics.
First, there is the data collection stage, the accumulation of objective facts. This can occur naturally through processes like logging sales transactions, or it can be part of a concerted effort to obtain facts, such as through a survey or study.
Next, you assemble those data into information, where the data tell a story. For example, instead of just a random list of cash register sales, you see a pattern of rising sales every Saturday morning.
Finally, you work with the information to glean insight from it. Why are sales higher every Saturday? Maybe it’s because you send out email campaigns every Friday afternoon, or perhaps it’s because the restaurant next door offers a brunch special, bringing in extra foot traffic.
Mining for Gold
Sifting through that information and coming up with insightful gems is a lot like mining for gold. First, it helps if you know what you’re looking for, rather than being surprised by random findings. Second, you have to be ready to capitalize on the hidden opportunities you unearth.
Let’s say your goal is to figure out why Saturday mornings are such a blockbuster for your retail outlet. You start asking customers and discover that it’s your company’s Friday email newsletter that brings people in your shop on Saturday morning. That email is a golden opportunity to increase business in multiple ways.
You could, for example, highlight items that are hard to sell online in your stores on Saturdays, when customers will have a chance to see and touch the merchandise in person. Or your might want to use a similar email campaign on Tuesday nights to see if that increases business on Wednesday, your slowest day of the week.
Maybe you decide to use the newsletter to offer coupons or announce new product lines. Once you start brainstorming, you’re likely to find the hidden opportunities are endless.
Analytics in Action
Discovering hidden opportunities through analytics isn’t just limited to boosting sales. You can use the same keen analysis and insight to save money or make your hiring process more efficient.
Imagine you’re thinking about buying an inventory of polo shirts in the standard range of sizes, with a dizzying array of 25 colors. Initially that sounds great, right? Give the customer tons of options in your stores and online.
But once you dig deeper, you realize you’re going to have to decide which stores receive which colors. Do you buy every color in every size, or will some colors not perform well at the extreme ends of the size spectrum? Do you have the operational resources to offer all of these color/size combinations on your website and the storage to house them until they ship?
This is where analytics can save you money. By examining data and information related to these styles, you decide you can capture 95 percent of your intended sales with just seven colors—a gigantic savings in time and wholesale costs that will likely leave you with less leftover inventory and fewer markdowns at the end of the season.
How do you arrive at this conclusion? You could study factors like:
- Last year’s polo shirt sales
- Returned item statistics
- Total sales in each size
- Sales performance by color family
- Customer website reviews
- Competitors’ color choices
Likewise, you may make similar discoveries of hidden opportunities in your business’s HR department. Let’s say you hire programmers roughly once per month. Each time you post an ad, your HR staff start the recruiting process from scratch to find new employees.
Now, what if they used the second and third runners up from the previous job postings? Those candidates are already screened and known to be worthwhile, or they wouldn’t have been in contention for final selection in the first place. You know this because you’ve used analytics to assess candidate criteria, and they’re the same every time you seek new programmers.
“But they finished in the bottom!” you cry about those runners up. Yes, but let’s look at the context here. They finished in the bottom of a super competitive pool, much like those who miss the final cut applying to Ivy League schools or Navy Seals who finish in the lower half of their training class.
If your first candidate had turned down an offer, these applicants would likely have your next go-to. You could save thousands of dollars every month for your business by fishing where you already know the waters are good, rather than trying a new spot with each recruiting cycle.
This is the efficiency and flexibility of analytics in action and a good example of how hidden opportunities are right there waiting for you. Your job is to take the time to look at your data, find the stories the information can tell you, and turn insights into money for your company.
Written by Jim Rushton. The following is adapted from Guaranteed Analytics. For more advice on leveraging hidden opportunities with analytics, you can find Guaranteed Analytics: A Prescriptive Approach to Monetizing All Your Data on Amazon. Don’t miss:
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