There’s a looming recession and companies are scrambling to cut costs and curtail hiring to prepare for it. But what more should be done?
The start of the previous global recession was nearly 15 years ago; banks failed, the stock market plunged, millions of homes went into foreclosure, and millions lost their jobs. It was a nightmare. As we go through another period of economic downturn, it’s clear that market conditions are volatile and the best thing that a company can do is focus on making the right decisions.
Moreover, things are not the same as they were in 2008. Technology has improved way beyond what people could have imagined. Data, especially, has played a key role in technology’s role in the economy. Clive Humby, a British mathematician and entrepreneur, said in 2006 that “Data is the new oil,” but some would go as far as to say that it’s more valuable than that.
When you take a look at the field of data science in the last few years, it has completely transformed every industry. Analyzing the right data will help key stakeholders make the right decisions, especially in an economic downturn. So, let’s try to understand how you can leverage the data at hand to prepare your business for the turbulent times ahead.
Understand Your Consumer
You want to get into the minds of the consumer—and what better way to do that than to use data!
According to a survey conducted by McKinsey & Company in 2020, consumers in the United States were cutting back on discretionary spending and prioritizing essential items like food and healthcare during the COVID-19 pandemic. This indicates that consumers’ behavior changes during an economic crisis and this effect is not limited to the US.
When a crisis hits, most people cut down their spending and find ways to save money. So when you own a business it’s imperative to be receptive to dynamic consumer behavior and try to understand their mindset. For instance, consumers might look for deals and discounts while trying to cut their spending. Their purchasing behavior might not be the same as it was before the crisis. So to be in line with what consumers want, it is essential to study their purchasing behavior. These efforts could include tracking their search queries, browsing patterns, and browsing history to understand their needs better.
There’s always been a need to understand customer behavior to optimize business processes. But why it’s more important in an economic crisis is that consumer behavior changes based on economic conditions and the strategies that worked prior to an economic downturn might not work in the current economic state. So customer behavior insights gained from data analysis can significantly help improve day-to-day business processes as well as the outcome of the products and services being offered.
Make the Right Decisions
According to a study by the McKinsey Global Institute, organizations that base their decisions on data and analytics are 23 times more likely to acquire customers, six times more likely to retain customers, and 19 times more likely to be profitable compared to companies that do not emphasize data-driven decision-making. This is crucial especially in an economic downturn as companies cannot afford to make mistakes, meaning it’s important more than ever to analyze each and every decision.
Business leaders often went with their instincts earlier. But that’s increasingly not how things work today; business decisions should be backed by data. Bearing in mind that there won’t be any additional funds to rely on, there is more pressure while making critical business decisions. So, leverage the data in hand, analyze that data thoroughly, and ensure that the right decisions are made to run a profitable business in an economic crisis.
In today’s business climate, with over 100 zettabytes of data being generated each year, there’s a need to refine business processes based on the data in hand. So, it’s imperative to democratize data and draft data-driven strategies to survive economic headwinds. That way, even if history does repeat itself, your organization would be relatively secure thanks to data and the insights derived from it.
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