Data can be a powerful tool. It provides insight and perspective that you simply cannot get in any other way. And yet, it’s easy to overlook the importance of data in your business, especially when it comes to pricing and cost analysis. This is how brands end up making subpar decisions that affect their bottom line and ultimately their brand growth as well. But with proper planning and strategy, accurate data can have an incredible impact on your brand’s growth by helping you make better decisions about where to focus your efforts.
The importance of accurate cost data
Accurate formula and ingredient cost impact data is critical to the success of a brand. Without accurate, reliable information about your costs and expenses, you cannot make informed decisions about where to invest in marketing efforts or how much money you should be spending on product development.
Data can also help you focus on the areas that have the biggest impact on your bottom line–and those may not always be what you think they are.
Make better strategic decisions with accurate data
Accurate data is the foundation of effective strategy. It enables you to make decisions that support your brand’s growth, rather than hinder it.
You can get accurate data by implementing a cost accounting system that tracks all of your costs, including indirect expenses such as COGS and Ingredient Impact Cost in formula.
Once you have accurate information about how much it costs to develop a new product, it will be easier for you as a manager or owner to make informed decisions about where best to allocate resources. Or, if we know which ingredients are the main cost drivers of our formulas we then know where to dedicate our time in negotiations with the ingredients suppliers.
Focus on the areas that have the biggest impact on your bottom line
Now that you have a clear understanding of where your costs are and how they are impacting your total in-bottle formulation costs, it’s time to focus on the areas that have the biggest impact on your bottom line.
With this information at hand, it’s easy to see which areas should be prioritized for cost reduction:
- Focus on reducing costs in areas that have a direct effect on brand perception (i.e., marketing) or market share (i.e., sales). These are two key factors when determining long-term profitability and growth potential for any business.
Increase brand growth and market share
Data-driven decisions can help you grow your brand and market share.
- By understanding what customers want, you can create new products that will drive growth and market share. For example, if you know that consumers want a new “Hero Ingredient” on your product, then it makes sense to invest in research and development (R&D) to add this feature. You’ll need the right people working on this project–people who understand what customers want–and they will to understand the ingredient impact costs of those new ingredients before they’re ready to hit the drawing board.
- You can also use data-driven decision making as part of an overall strategy for increasing sales over time by improving customer satisfaction through better service delivery processes or product offerings that meet specific needs better than competitors’ offerings do (e.g., having lower prices). Knowing which ingredients have the biggest impact on formulation innovation is critical in these cases.
Create products with new, innovative formulas that drive innovation and growth
When you’re creating a product, it’s important to consider how it will be used. If you want to increase market share or sales, then your product needs to be relevant and useful. If you want to increase innovation and brand awareness, then your formula should be unique and exciting.
You can do this by focusing on the customer experience when developing new formulas. As as part of that development process, cost drivers, specifically ingredient impact costs, will be a big metric to track.
Data has always been a critical part of the success of any business. It’s what helps you make decisions, it allows you to see where your weaknesses are and how they can be addressed, and it guides you in building strategies that will lead to growth. Data is what gives meaning to the numbers on your spreadsheet–without data, those numbers would just be random digits with no real meaning behind them. Cost My Formula powers up instant formula and ingredient impact costing for your portfolio.