Better business decisions with data analytics
The current business climate calls for CFOs to be innovative and think out the box in order for their businesses to stand out in their industry. As technology has evolved, so too has data availability and being able to interpret and effectively use the data to improve cost reduction and revenue optimisation could mean the difference between you being an effective or ineffective CFO.
Consider the example of, the now famous, Cirque Du Soleil, who were able to interpret customer feedback thus creating products and services that were unique thereby, helping them gain a competitive edge in their industry.
The circus business model at the time included animals, hired performers and the traditional three ring circus arena and promoted aisle sales. With a growing live entertainment market, the introduction of video games and the public outcry against the inhumane treatment of circus animals, circuses were struggling to compete which resulted in decreased audiences and decreased revenue.
Using data analytics to understand the business
To survive, Cirque du Soleil had to differentiate themselves by breaking away from the traditional circus business model. They did that by getting rid of the animals which was one of the major expenses of their business. The expenses of keeping animals included food for the animals, medical care, insurance, transportation costs and training of the animals. Eliminating animals from their business model, not only cut company costs but also endeared them to the public.
Cirque Du Soleil also recognised the growing live entertainment market most especially, live theatres and saw the opportunity to include a Broadway concert style experience that people would pay premium concert prices for. They borrowed entertainment aspects from Broadway concerts and created their own entertainment model of circus style acts with themes and storylines.
They have since run productions seen by more than 150 million people around the world, including South Africa. Over 20 years, Cirque du Soleil, created revenue that took their competitors over 100 years to generate. The success of Cirque du Soleil came at a time when markets called for innovative thinking and where other circuses failed and closed, Cirque du Soleil reinvented itself and thrived.
Cirque du Soleil understood their customers biggest concern, which was the treatment of animals and the customers demand for a new entertainment experience. With that information at hand, they were able to create an entertainment experience that gave them a competitive edge in a saturated market.
Opportunities for CFO and business leaders
What we can learn from the Cirque du Soleil’s business model is that business leaders and especially, CFOs, have the opportunity to generate real business value by reducing the costs within their organisations and optimising revenue opportunities.
In any business, any interaction a customer or prospective customer has with your company or product leaves an information footprint. This information provides vital insight into the customer’s behaviour helping you understand the “why, how and what” of the customer. When you interpret and understand those findings, your business will be able to predict your buyer’s behaviour and maximise your revenue by providing products your customers want, at a time when they need it.
Data is everywhere from supply chains to production and finance. This data offers businesses the opportunity to find insights into the key areas of the business which can be easily optimised. This can include changing a specific process, increasing or reducing the amount of workforce, optimising the distribution of financial resource among different departments, etc. With the help of these insights, companies can control and even reduce their costs in operational, production and managerial activities which can in turn help them in offering more competitive pricing or an improved customer experience.
Systems such as Customer Relationship Management (CRM) systems and Enterprise Resource Planning (ERP)s provide better understanding of day-to-day operations, making business decisions and learning about customers easier than ever before.
Data Analytics is able to provide your business with enhanced customer behaviour insight and superior understanding thereof to optimize your business’ efficiency and curb your overhead costs.
The objective for CFOs using demand modelling and forecasting, pricing optimization and consumer behaviour predictions ensures the right products are sold to the right customers at the right time and for the right price. It’s not easy to assess where and how to cut expenses. The examples above show how data analysis can help business leaders make those judgments with confidence.
As a business leader, are you able to effectively predict changes in the market to give your business a competitive edge?
How important is it to you to optimise your services to create an exceptional experience for your customer?
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