By Dr Geetha Nadarajan, Lecturer, Department of Marketing Strategy and Innovation, Sunway University Business School, Sunway University
At the height of COVID, many Malaysian small and medium-sized businesses (SMEs/SMIs) across all industries had accelerated their adoption of digital tools for their businesses, in order to acquire, nurture and retain their customers.
The common elements implemented include electronic point of sales (ePOS) for brick and mortar outlets, expanding into e-commerce platforms, enabling cashless payments, connecting through digital sales and marketing channels, as well as cloud computing among others.
As more and more businesses embark on these digital practices as a way of business, it now becomes challenging to remain competitive when being digital no longer becomes a distinct competitive advantage in the marketplace.
Although these digital transformations enhance revenue and sales for businesses, it is not a sustainable competitive advantage in the long run as digital adoption reaches a saturation point and becomes a hygiene factor in the marketplace.
However, some long-term oriented SMEs/SMIs reflected on this trend and have made conscious efforts to explore the possible innovations from the insights that their businesses and customer data are generating on a regular basis from digital technologies.
These first movers are rightly tapping into their data and analytics to draw on, aggregate and analyze data from their marketing, sales, and customer services. This will help to derive insights into customer behaviour and preferences to accelerate their growth and stay competitive and gain a bigger and more loyal customer base, better profits and lower cost in their respective markets.
Data analytics results in transparency and clarity that drive numerous improvements for businesses of all sizes. This includes enhancing service level performance, improving order fulfillment, upgrading supplier management, maximising customer value, lowering costs and augmenting product management and innovation.
Businesses which utilise these data as part of their growth planning are more likely to outperform competitors in key performance metrics including sales, sales growth, profit, and return on investments.
Generally, the use of data analytics provides a wide range of opportunities for SMEs – including a deeper understanding of their production process, of clients and partners’ needs, and the nuances of local and international markets.
Data analytics and data-driven decision can create a significant impact for business performance when it is used to enhance research and development. Businesses can develop new goods and services by using data either as a product or as a key factor; optimise production or delivery processes with insights; refine sales and marketing through targeted advertisement; develop new organisational and management approaches or improve existing practices (Bianchini, M., & Michalkova, V. (2019).
Studies demonstrate that businesses that adopt data-driven decision-making will achieve more than 6% higher than regular returns on technology investment, delivering positive influence on performance metrics such as yield, asset usage, return on equity and market value.
Those that actively use their data for decisions are 13% more productive than those who do not. The data utilised for decision-making are from multiple sources which include customer transactions, social media activity, sensors and geolocation of smart devices amongst others which are available to all digitally transformed businesses.
On the other hand, it is interesting to note that there is a negative relationship between data-driven decision-making and businesses’ time of life, suggesting that newer companies are more likely to adopt innovative solutions.
With the wide availability and capabilities of cloud computing, businesses are empowered on their data-driven journey to access, store and manage their business and customer data securely on demand and in a cost-effective manner. With these available technologies businesses should consider data analytics for better and more sustainable growth.
Dr Geetha Nadarajan is the Programme Lead for Sunway University Online MBA programme and is also an active, experienced industry data strategist. She has more than 15 years’ experience delivering data-driven insight and strategy to telecommunications, financial, and education industries across ASEAN and North Asia regions. She has a PhD in Management (Marketing) from Putra Business School (AACSB), an MSc in Information Technology from Universiti Putra Malaysia, and a BSc (Hons) in Mathematics from Universiti Kebangsaan Malaysia.