How technology can improve business exponentially
By Joel Cummings
A 1 percent growth in revenue, a 1 percent reduction in the cost of goods sold (COGS), and a 1 percent decrease in expenses can yield a 19 percent increase in net profit. A 19 percent increase in net profit can help any business get out of debt, retain top talent, improve operations, and invest in the future. This simple math equation to improve profit should forever change how businesses allocate resources.
If you’ve read Scaling Up by Verne Harnish, you may know that we’re pulling from the idea of “The Power of One.” In his book, Harnish identifies seven levers that, with minor tweaks, can improve a business’s cash and returns. He identifies these levers as price, volume, COGS, operating expense, accounts receivable, inventory/work in progress, and accounts payable. You can learn more about each of these in Scaling Up; for this post, however, we’re focusing on three key levers and how technology can help you pull them.
Technology gives you the business intelligence needed to automate repetitive processes and improve critical functions.
Analytics can grow revenue by 1%
The data that your analytics provides creates a competitive advantage by helping businesses predict and respond to customer behavior and demand. Unified data about customers and products drives retail growth by providing deep insights about customers.
Quality data allows retailers to look back and improve profit through operational efficiencies. This data also allows retailers to look forward and forecast trends, creating competitive advantages by predicting and responding to customer behavior and demand.
Automation can increase revenue by 1%
Automation allows retailers to anticipate, meet, and exceed individual customer expectations 24/7, which can improve conversion rate, average order value, and customer lifetime value.
People hate to be sold to, but people love to buy. Personalized marketing helps people buy things that they actually want. Personalized marketing requires a database of customer information that is organized into buyer segments and automation to communicate with them based on their preferences. Automation helps retailers turn interest into orders.
Automation can reduce COGS by 1%
Reducing the cost of turning orders into cash requires these three functions: manufacturing or procurement, inventory, and fulfillment. While outsourcing some of these functions can reduce costs, using automation to keep them in-house can improve service and speed while reducing costs.
Reducing costs starts with visualizing the key processes of identifying ways to increase the speed of closing orders, keeping the right kind and amount of inventory, and optimizing fulfillment costs.
Automation can decrease expenses by 1%
Instead of creating endless assets, retailers can enlist the help of automation to create quality, branded assets so that they can focus on serving their customers.
The result: operational efficiency
Retailers face exponential competition, changing customer behavior, and the technical complexity of omnichannel commerce. Technology helps retailers gain operational efficiency by forecasting demand, improving operations, and reducing costs.
Small improvements made across the organization can drastically improve the speed and quality that a business can deliver value to customers.