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The Value of a Data Analytics Strategy in Driving Competitive Advantage for Franchisees
the VaLUe of a Data anaLytiCs strateGy
in DriVinG CoMPetitiVe aDVantaGe for franChises
data has gone from an esoteric term to a critical entry on many organisations’ balance sheet in the last decade or so. As the world’s reliance on digital systems has increased, the amount of data being generated has exploded.
More than 90 per cent of the world’s data was created in the past five years alone1 and, by 2025, more than 463 exabytes of data will be created each day2 .
This data is coming from a range of sources. Social media interactions, transactions, and the Internet of Things (IoT) account for most of this data. Capturing and analysing it effectively can shine a bright light on trends and behaviours that can help businesses make smarter decisions. Everything from which product to manufacture at which time of year, to what discounts to offer customers in a particular demographic, can be determined with a high degree of accuracy if this data is managed properly and analysed strategically. Data plays a crucial role in helping decisionmakers anticipate market changes and opportunities before they occur, positioning the business to respond faster. For example, data can be used to analyse a customer’s pathway through the organisation, highlighting points of friction and showing where customers may become dissatisfied. The organisation can then address those areas directly. This helps businesses improve internal processes and efficiencies, reduce costs, and enhance the customer experience. It can also show where technology can remove costly, manual, repetitive tasks for further savings. With this in mind, it’s not surprising that many companies are choosing to list data on their balance sheet. The competitive advantage it can provide is enormous and, potentially, even game-changing. And, it’s not just large enterprises that can benefit from big data and analytics. Small and medium enterprises such as franchises can use data to help drive competitive behaviour. Regardless of the size of the business or the market in which it operates, nearly every problem confronting a franchisee or executive can be addressed using data analytics. Having a data analytics strategy is no longer a nice-to-have for any business. If a business isn’t leveraging the data at its disposal, then it’s throwing away the potential to become a market leader, improve profits and operational resilience, and empower decision-making that improves performance and profitability. Never has it been more important for small business owners to think like big business and eke out every opportunity to outperform the competition. As organisations continue to recover from the pandemic, many are finding that the approaches that worked before COVID-19 aren’t as effective now. That’s
“it’s not just large enterprises that can benefit from big data and analytics. small and medium enterprises such as franchises can use data to help drive competitive behaviour.”
srdjan dragutinovic | director, data Analytics | rsM AusTrAliA
because customer expectations and experiences have fundamentally shifted and businesses need to come to a new understanding of their customers, the environment they’re operating in, and the levers they can pull to gain an edge over their peers. Data is the most reliable way to achieve this. By collecting, aggregating, and analysing data, then acting on the insights it delivers, businesses can plan for an unpredictable future and chart a sure course to a strong recovery and even market leadership. Data analytics removes the need for decisionmakers to rely on experience, gut feel, or intuition. Instead, it gives them a solid platform on which to base their decisions, rooted in accurate and comprehensive information.
For data to live up to its potential and deliver real value to an organisation, it must be treated appropriately. This starts with a clear understanding of what data is important to the business and how it will be collected and stored. For some organisations, this may be as simple as compiling data points into a spreadsheet. For others, it could mean collecting data from a complex array of sources, culminating in billions of data points collected each day, stored in a data lake, and analysed using purpose-built big data tools. For most, the reality will fall somewhere in between those two extremes. A strong data strategy starts with identifying and articulating the business’s key challenges. From there, the organisation can determine what type of data to collect and analyse to help solve those challenges. Without this direction, it can become easy to get buried under the sheer volume of data available and fail to put that data to good use. The next step is to develop a plan for collecting and analysing data. The right databased insights can help identify industry and business trends, opportunities for growth, areas for improvement, and, importantly, red flags that need to be addressed immediately. When businesses use this type of data well, they can operate more efficiently, increase productivity, attract and retain customers more reliably, and increase revenue and, ultimately, profits. Some business decision-makers have avoided embracing data to this point due to a perception that data and analytics is a complex, expensive area requiring significant resources and best left to larger organisations. Data analytics spans a broad range of capabilities including data integration, management, warehousing, and modelling, as well as machine learning and application design. However, a report by Deloitte found that companies that became data analytics leaders achieved 60 per cent more profits.3 This suggests that a strategic investment in these capabilities is likely to deliver a strong return for most companies. Franchisees that choose not to invest in data analytics will be left behind in a data-driven landscape. Even the smallest businesses will have access to customer and transactional data that they can leverage for immediate insights. Other types of data that could be worth analysing include business expenses, marketing and financial data, supply chain data, and industry trends, available through industry bodies. Getting the foundation strategy right is the essential first step. This will help organisations develop a data-driven, insights-led culture. The next step is to implement the technology solutions required to underpin data-related activities. This includes storage and security. Cloud-based platforms tend to be costeffective and sustainable, with a comparatively small investment that delivers outsized returns.
As the economy continues to heat up, small businesses and franchises that have embraced data and, potentially, worked closely with their business advisor to develop an effective data strategy, will be first in line to leverage opportunities and reap the benefits. Failing to do this could be viewed as tantamount to negligence. Data is too important to ignore.
1 https://www.forbes.com/sites/bernardmarr/2018/05/21/howmuch-data-do-we-create-every-day-the-mind-blowing-statseveryone-should-read/?sh=1117e0b860ba
2 https://www.weforum.org/agenda/2019/04/how-much-data-isgenerated-each-day-cf4bddf29f/
3 https://www2.deloitte.com/au/en/pages/deloitte-private/articles/ global-perspectives-private-companies.html
