How Companies Can Use Data to Fight Inflation

May inflation came in at a staggering 8.6%, the highest in over 40 years. It is a truly rare business executive who was in a leadership position the last time inflation was this hot. In fact, most of the leaders in place today haven’t experienced this kind of price spike in their adult lives. So how can a generation accustomed to general stability successfully maneuver their companies when all of their historical precedent goes flying out the window? The answer is both simple and complex: DATA. 

Just as meteorologists use a blend of data sources to project the path of a hurricane, companies can use the data at their disposal to project the impact of inflation on their business. Even better, they can use those insights to take action and weather the storm. The key is to understand all of the data that can influence the business, and apply the right skills to turn that data into actions.

The data that can fight inflation

Valuable data sources to fight inflation include: 

Sales data (both first and third-party) – Can indicate if customer buying patterns are shifting and in which ways. Provides opportunities to adjust product, pricing and promotion plans. Paired with demographic data, may also indicate which geographic markets will be more severely impacted by inflation. 

Competitor pricing data – Can signal whether there is an opportunity to raise prices without losing market share. Alternatively it could provide an opportunity to shift marketing messages towards a pricing advantage when customers are becoming more price conscious.

Raw materials and supply chain data – Can provide predictive insight into future production costs, creating opportunities to adjust sourcing, formulations and overall product mix in advance.

HR and hiring data – Can indicate where labor costs are headed and where labor supply bottlenecks may occur. 

Subscription, Churn and Winback data – Can indicate the degree to which consumers are actively pruning their expenses and point to the potential net value of loyalty-based promotions. 

Beyond these, each business has its own unique data landscape. Turning all of that data into actionable insights takes determination, discipline and a willingness to bring new skills into the organization.

How to get the full value from your data

If you are concerned about the impact that inflation will have on your business, ask yourself these four questions:

1. Do you understand your data? Do you know where all of your data sources are and how they connect? Is this knowledge centrally documented and shared, or sequestered to a few individuals?
2. Have you analyzed the gaps? Have you looked for missing connections and gaps where real data can replace assumptions?
3. Does your team have the skills to master the insights? Mastering insights is about far more than just running reports and querying data. There is an art to insights that requires a special kind of training. Do your teams (all of them, not just your BI or Analytics team) have the skills to find and validate actionable insights?
4. Are you suffering from positivity bias? Do your people feel confident enough to share the balanced truth in the data even if there is bad news in it? Are you only receiving Powerpoint presentations filled with rosy projections and cherry-picked bullet points?

Make no mistake, the next few years are going to be unlike any we have seen in our careers, but if you lean into this challenge and commit to using the full value of your data, there will be opportunities not only to survive, but to thrive.