Many economists say we are overdue for a recession. Despite a low unemployment rate and the economy’s longest expansion on record in the United States, experts in America and the World Bank point to trade wars and other globally financially risky situations as reasons for a dim forecast.
Analytics may not be able to tell you exactly when the economy might shift. However, data can certainly help an organization mitigate the impact of a recession by giving you the right information to better target the right market, save money, and increase profits.
Signs point to a downturn
The American Economic Association held its annual meeting in early January in San Diego, and much of the focus was on the slowdown of the growth the country has been experiencing. The economists point to increasing deficits and lowering interest rates not just in the United States, but also around the world as a sign that a recession is likely.
Just as economists are responsible for using data to figure out the best policies to prevent or lift the country out of a recession, it could be up to an individual company’s data analysts to figure out how to get their organizations through it.
Now is the time for digital transformation
The companies that respond best to an economic recession are the ones that are most prepared for one. And the good news in that case is there is still time to prepare. Some advisors say with the slowdown in sales during a recession, it is a good time to shift some of the focus to technology and ramp up that part of a business. But others suggest that the best time for an organization to conduct a digital transformation is before a recession hits.
Acting before the recession allows a company to be proactive, rather than reactive, with its data. And since it could take time to put the necessary tools in place, depending on where your organization is with its technology, it’s better to already have the tools to navigate the recession rather than wait until after the dust settles to start from scratch.
What analytics can tell you
The best business intelligence tools help save time and money. In a recession, finding ways to do business and spend less money becomes paramount. Advanced analytics tools can help organizations figure out what tasks can be automated, for example, or point to other economic efficiencies that the company can take advantage of. In many cases, customer retention is key. BI tools can be used to focus on customer engagement, identifying which accounts have been communicated with and whether or not there are accounts that require attention.
Analytics can help companies figure out which aspects of their business are most likely to thrive no matter what the global economic conditions are. It may require a limited focus, but by using the data to pinpoint which products do well in certain markets, a company can direct its energies to the areas it knows will continue to sell. In the wine and spirits industry, this could mean focusing on a direct-to-consumer (DTC) approach. If a company is able to identify through the data customers who enjoy a particular product, that enjoyment is unlikely to lessen even in a recession, and the organization is likely to see an increase in profit from a DTC approach.
Even if the forecasts are wrong and a recession is further away than experts predict, only good things can come from taking the time now to come up with a plan for when the record expansion shifts to a downturn. It never hurts to be prepared. And the data that might help a company survive a recession could help it thrive in the current climate.
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