COVID-19 has impacted every business. Here’s how data can help you come out stronger and thrive
The spread of coronavirus is delivering a massive blow to the global economy. The lockdown and work from home restrictions have forced thousands of startups to halt expansion plans, cancel services, and announce layoffs.
The virus is also having an impact on startup funding and deal activity, with seed-stage deals taking a serious blow this quarter. It’s clear that the startup community is now facing and will continue to confront an existential crisis in the months to come.
To stay in business, founders are looking for ways to maintain liquidity, better understand their demand-supply situation, identify operational efficiencies with a remote workforce, and scout for opportunities to pivot.
If data is the lifeblood of every business, it’s all the more critical for startups looking to weather a downturn. Here’s how startups can use data and analytics to power through the current crisis.
(Photo by Nick Fewings on Unsplash)
1. Data shows how your customer’s buying patterns are changing
McKinsey found that American consumers are drastically changing their spending and behavior, despite expressing optimism about the economy. The survey found that 43% of the people are delaying purchases due to the uncertainty.
Even as spending shifts to household essentials and remote channels in the short-term, consumer behavior is expected to be permanently reshaped toward online consumption. Startups must keep their finger on the pulse of changing consumer sentiment.
While market research reports and surveys share useful insights, they are lag indicators, at best. Look for alternate public data sources that can give you live or early signals. For example, Kinsa Health found that digital thermometer readings from their online-enabled devices provided insight into the progression of COVID-19 across cities.
(Source: Healthweather map by Kinsa Insights)
OpenTable, an online restaurant aggregator, published data that gave early indications of the falling demand for dine-in bookings. Public search queries on Google reveal insights on what millions of consumers want in a geographical area, right now.
For example, most people in the United States want to know when Disney will reopen and how soon the Nintendo Switch will be in stock. Apart from the availability of toilet paper, they are equally worried about Roblox permanently shutting down.
(Source: Google Search)
2. Data helps you understand how your workforce is coping with the crisis
As employees are instructed to work from home, millions of people are thrown into a work environment they’re not used to, with pressures they didn’t have before. While interruptions and technology challenges are short-term irritants, the biggest mental health risks are due to isolation and burnout.
In times of uncertainty like these, data can help companies understand how their workforce is coping with the crisis. Rather than wait for employee surveys or traditional modes of feedback, natural language can provide vital clues to employee wellbeing.
James W. Pennebaker, a social psychologist at the University of Texas at Austin found that the passive parts of our speech reflect our mental state. For example, people who are less happy tend to use personal pronouns more, that is, “I” or “me” instead of “he” or “she.”https://www.linkedin.com/embeds/publishingEmbed.html?articleId=6932063732916984309
StatusToday has built an AI solution that connects to the email, chat and communication systems of companies to identify if employees are on the verge of burnout. Needless to say, there is a thin line between invasion of privacy and insights that can ensure workforce wellbeing. Organizations need to take their team into confidence and be transparent about how the insights will be used to avoid adding the additional stress of being monitored.
3. Data helps you drive efficiencies and adapt your business offerings
The COVID-19 crisis has hit every industry, without exception. However, there are certain sectors such as aerospace, travel, insurance, and oil and gas that may not rebound until 2021. Among the impacted sectors, there is considerable variation based on the offering, business model and channels of sale and consumption.
(Source: Global surveys of consumer sentiment by McKinsey & Company)
Data can help drive efficiencies in your business in the face of uncertainty. Ladley and Redman suggest the use of structured problem-solving by employing six data value modes.
These value modes are scenarios that cover the most critical aspects of the business value chain — product enrichment, market intelligence, competitive position, human capabilities, process improvement and risk management. This framework lets you identify the potential and limitations of data for your business by driving the right conversations with stakeholders.
For example, when a regional bank lost many of its high-wealth clients, it turned to the data value modes. By systematically collecting data and analyzing them, the bank found that clients were unhappy with their transaction execution and reporting. By investigating two of the value modes, the bank rolled out process improvements that led to market share recovery.
What if your business offerings need a fundamental change to tide over the current crisis? That’s another area where data can come to your aid. Amidst the current economic gloom, there are companies that have retained customers or acquired new ones by adapting their business model. With a strong uptick in consumption-at-home, companies are experimenting with a rapid adoption of online channels.
(Photo by Chris Montgomery on Unsplash)
For example, fitness studios and gyms are battling to stay relevant by going digital. Businesses such as these are built with a traditional on-premise model, and they need new capabilities to engage and retain customers remotely. They must learn to embrace data and use analytics to gauge customer experience and improve online engagement levels.
Startups can take lessons from digital native companies like Netflix, which built its business around user analytics. Netflix has been strengthening its leadership position with continuous digital innovation. Recently, it rolled out Netflix Party, a fun way to watch movies together, amidst social distancing, to make up for lost movie nights with friends.
(Photo by Ross Findon on Unsplash)
Adopt a data-driven approach to come out stronger from the crisis
As you assess and respond to the changing business priorities, combine internal data insights with the intelligence from public data sources.
Tap into digital tools and inferred signals to support and empower your teams. Use the six data value modes framework to define how data can help adapt your business strategy. For the best outcome from data initiatives, ensure you have a balanced data science team and promote collaboration with the business stakeholders.
It is not the strongest of the species that survive, nor the most intelligent. It is the one that is most adaptable to change.
Charles Darwin’s theory of evolution holds a critical lesson for companies looking to weather this crisis. It is not the strongest of the species that survive, nor the most intelligent. It is the one that is most adaptable to change. Founders who are quick enough to use the insights from data to respond, adapt and evolve their startups will come out stronger.