Business owners often think that they need to make dramatic changes to improve the profitability of their business. This doesn’t have to be the case.
Improving turnover need not require colossal effort or investment. It pays to be more efficient with what you have. Making better use of your assets is one of the most logical ways you can increase profits, in other words – Sweat the assets you already have.
I believe there are five basic ways that improving your company data can help to make a business more profitable:
In marketing terms, leads are people who could potentially buy a product. Not a random person walking past the store, but someone who has a genuine interest. They may have visited your store or joined your email marketing list.
The quality of data is critical at this stage. A lead could go stale in 24 hours or less. Your lead could buy from a competitor in a few weeks’ time. You need to know that your leads are valid to avoid skewing responses and that means eradicating duplicated or invalid leads from your list.
A conversion is a lead that makes a purchase: the customer is effectively converted from an interested person to a customer. Improving conversion rates means increasing profits and the best way to do this is to target the right leads at the right time.
You also want to inspire a ‘feel-good factor’ so that the converted customer remains a customer in the medium and long term. That’s even more reason to collect the right data and manage it correctly.
Each sale you generate will incur a certain cost: a marketing cost, advertising cost, admin cost and possibly a cost for physical products. If you can decrease the cost per sale, you’re effectively improving the cost to profit ratio.
Again, if you’ve got good quality data for your leads, and you’re getting a good conversion rate, you will get a better fit of client. They’re more likely to spend with you, which means better profits and a better client retention rate.
Once you’ve acquired a customer, it’s a good idea to invest in the relationship to ensure they keep spending with you in future. If you can bump up the average spend per client, you will simultaneously improve your marketing ROI.
Nurturing data means keeping client records up to date, week by week and month by month. If you neglect records over time they will decay and that can lose you business. Think about it: you need to be able to contact your customer to increase engagement. Even if they move or change their name. And if the customer wants to interact, you need a clean database record to understand their past engagement with the business.
When looking at your business’ finances, get your reference points straight. Having a million-pound turnover sounds great on paper, but how much of that turnover is going straight back out in costs?
The indicator you really need is the net profit: the amount of money you retain. This is where good quality data can indirectly influence your profits. When you cleanse, de-duplicate and verify your data, you can ensure there are fewer defects, less remediation work, less churn and better efficiency. This will indirectly get you the results you need.
You may think that poor data quality has only a marginal impact on profit. You might find it difficult to apply the logic in this post to your business. Maybe you think your database is too small or your business is too niche, or your clients are forgiving enough not to notice.
To prove how important it is to manage data, check out the table below. It shows the clear consequence to your profit margin when data quality is neglected.
The business with better data achieves better accuracy, better efficiency and lower costs. Targeting is more precise with better quality of leads, resulting in better conversions from the sales team. Trust is greatly improved as customers feel valued and cared for. As a result, we can see a huge increase in profits: 66 % in this estimate.
If your business hasn’t invested in its data, it may not have realized the potential for efficiency gains or the potential uplift in profit. Data quality should be considered part of your sales and marketing strategy and it should be an inherent component of your support and aftersales service, too. If you invest properly in customer data and you follow the 5 golden rules in this article, your business has the potential to increase its profits and refocus its marketing campaigns.