SMB s using BI to gain a competitive

Transcription

1 SMB s using BI to gain a competitive edge Eight advantages that BI brings to your business sales and marketing efforts

2 The business value that business intelligence (BI) provides is the enhanced capability to react to market changes and make quick and informed decisions. Business Intelligence is both a management process as well as a collection of software applications and underlying technology that enables organizations to make better business decisions by exposing key metrics that drive the organization. BI technology gives management a methodology for getting a better grasp on the internal and external forces that are driving their organization and assist management in developing a data-based decision making model that provides more consistent results when compared to non-bi methods. Organizations that have successfully implemented BI systems have better and timelier access to customer activities, marketplace trends, supply chain issues and a host of other key performance indicators (KPIs) that are not easily measured in a non-bi environment. Business Intelligence, when properly implemented and used, delivers many benefits. This article will focus on eight specific advantages that BI tools and technologies can bring to your business sales and marketing processes. Business intelligence tools enable you to: Increase sales using fact-based selling tools. Build profits by targeting profitable activities. Increase customer loyalty and retain customers for life. Increase the accuracy and timeliness of sales forecasts. Achieve budgeted sales. Increase proportion of high-value customers in your customer mix. Reduce low-yield activities in the sales process. Deploy higher-yield promotions and advertising. 1. Increase sales using fact-based selling tools Powerful messaging combined with fact-based selling is a powerful sales tool combination. Factbased selling is all about delivering a crisp, customized, fact-based message that compels a face-to-face meeting with an attentive prospect or customer. A fact-based message contains key information your customers can use to increase their efficiency and profitability. Often sales reps lack detailed information about a customer s account such as which products are selling and in which regions. With business intelligence tools, you can analyze why a product sells in one account and not well in a similar account. You can spot inventory problems in a particular store and suggest moving its overstock between stores, or show how changing the product s in-store placement might stimulate sales. In addition, BI data allows you to identify

3 cross-selling opportunities. 2. Build profits by targeting profitable activities Here are some common sales and marketing issues which often act as barriers to higher profitability: While profit is the ultimate goal in most organizations, understanding the impact on profitability of an individual product, customer, channel, or sales representative is beyond the reach of most organizations. Without understanding what s driving profit organizations can t efficiently focus their marketing and sales efforts and resources. In many cases this effort is based on gut feelings. Because credible profitability information may not exist, most sales organizations are driven by revenue. The push is to increase sales, with the hope that profit will follow. However, revenue-driven models treat each dollar of revenue equally, whether it comes from a highprofit or a low-profit sale. To break down these barriers, you require information that allows you to direct your team toward profitable targets. This same information enables you to steer your product mix toward increased profitability. Armed with intelligence, you can enable profit-based compensation and motivate your sales team toward more profitable, not simply more, dollars. The second advantage comes down to this: Business intelligence tools enable you to quickly see which products you should be promoting, in which markets and through what channels. 3. Increase customer loyalty and retain customers for life Increasing your customer base and retaining those customers involves several issues: Customer retention is problematic. Estimates show U.S. firms lose on average 25 percent of their customers annually. A key to maintaining your customers for life is to make sure they re satisfied by spotting problems early and correcting them. Losing a high-value customer is a huge setback because these customers often purchase products with a high profit margin. These high-end customers also require less maintenance and don t require the high costs associated with customer acquisition and start-up. When customers are unhappy, word gets around. Studies show that, on average, each unhappy customer relates his or her experience to nine other customers. On the other hand, many customers never openly complain to the vendor. They just suddenly go elsewhere. Obviously, customer loyalty is built on customer satisfaction. The strategy that is needed, but rarely in place, includes developing processes that monitor leading satisfaction indicators and

4 feeding that information back to you in time for action. Late and incomplete shipments are generally regarded as the primary cause of customer dissatisfaction. Despite the importance of timely and accurate delivery, many organizations have little information and measures that can help them improve shipment times. Monitoring days between promised and actual delivery dates, customer claims, disputes, complaints, and returns can help you focus and prioritize your process improvement initiatives according to the areas of greatest customer concern. Analyze business trends and customer patterns can pay off in many ways. Business intelligence can help you identify and strengthen weak areas of your business as well as pinpoint and expand strategies that are working to all areas of your business.. 4. Increase the accuracy and timeliness of sales forecasts Information concerning future revenue answers the questions of what you re going to sell, to whom you re going to sell it, and when you will make the sale. When it s accurate and timely, this information has immense business value. The product side of your business benefits by knowing that red widgets, for example, are outselling blue widgets in Florida, but blue leads twoto-one in Ohio. Armed with such facts, you re able to increase sales by putting the most attractive product in front of each customer. In addition, you can increase profitability by optimizing procurements and distribution. On the financial side, management loves the reputation of credibility your organization can gain with bankers and investors who view accurate forecasts as evidence that you re running your business well. Tthe challenge lies in actually constructing an accurate forecast. Particularly daunting is the required individual product and customer detail. Most often, gathering this information is a difficult and unreliable process. The following are the common issues most organizations face when building a sales forecast: When substantial facts are missing, forecasts are developed subjectively using different standards. Sales reps are often optimistic while management is conservative; either extreme is costly to the organization. Sales momentum is crippled at budget time, as sales reps and manager s waste time dickering over figures when compiling their account-by-account forecasts. As a result, the preparation of sales forecasts can sideline a sales rep for weeks each year. The forecasting burden can be considerably eased and the reliability of the forecast much improved when the right information is at hand to support the underlying analysis. BI tools give decision makers ready access to information that provides a detailed portrait of sales history. Easy and direct access to historical sales information supports both forecast accuracy and better, faster procurement and inventory decisions.

5 5. Achieve budgeted sales Comprehending and acting upon accurate information early in the process is key to preempting unpleasant month-end surprises. Modern sales organizations employ BI tools, which allow them access to a continuous feed of valuable company information. In these organizations, managers and sales reps are able to, at any point in time, quickly grasp the big picture, and then instantly drill down to identify particular areas of concern, such as individual products, accounts, and sales regions. Armed with this sort of intelligence, you can design and implement surgical microplans to address each small problem area as it is uncovered. The result? Making small corrections enable you to stay the course and make your month. 6. Increase the proportion of high-value customers in your customer mix Your highest-value customers are dependable and low-maintenance. Most importantly, month after month, they contribute a large volume of high-margin sales. It makes sense to proactively seek prospective customers that have similar attributes and to focus your customer acquisition efforts on adding them to your customer list. But many organizations have the following obstacles to overcome to achieve this sales initiative: Often, organizations do not have the relevant customer information on which to build an accurate profile of their most-valued customers, which prevents any attempt to target similar prospects. Even if an organization does have the critical customer information, it s often not ordered in any useful manner. To truly reap the rewards of this information, customer information must be organized by geography, industry, volume of business, number of different products purchased, or any number of other pertinent characteristics to be truly useful in targeting highvalue potential customers. BI solutions enable you to rank your current customers according to their relative value to your organization. Initially, try ranking them by profit contribution alone, and then you can add more sophisticated factors such as timely payment, returns, complaints, etc. Once you ve arranged customers from high to low value, you can do two powerful things. First, you can better target your customer-acquisition initiatives by focusing your customer-acquisition efforts around the attributes common to high-value customers. Second, you can begin to engineer your overall customer mix by targeting high-value replacements for low-value customers. 7. Reduce low-yield activities in the sales process Some customers just aren t worth it if they tie-up your customer support staff with problems like unusual billing or shipping requirements, complaints, and product returns. These high-

6 maintenance customers are responsible for large amounts of nonstandard, low-yield activities that translate to high cost and low profitability. If your company has many customers like this, it becomes difficult to measure the true cost of doing business and then adjust prices to cover this cost. Additionally, low-yield time spent with difficult customers decreases more productive time spent with your better ones. A modern BI system makes it easy to spot the low-yield activity characteristic of problem customers. By measuring such things as nonstandard product orders and hours logged by your customer service or sales reps with each customer, you ll be able to identify problem customers and the real cost of doing business with them. Then you can decide between selectively increasing prices to cover the real cost or dropping these customers out of your business altogether. 8. Deploy high-yield promotions and advertising There is a common saying, Half of each advertising dollar is wasted; we just don t know which half. By leveraging information from your BI system, you can disprove this maxim and maximize the revenue returned from each advertising dollar you spend. Sophisticated information systems supporting customer, product, and promotions attributes have traditionally been out of reach for most companies. Without solid facts, good timing, a strong message, and the right media, advertising decisions are based on guesses and intuition or expensive trial and error. Sometimes you re lucky; often you re not. The principal benefit of the BI system in this area comes from your ability to identify the significant characteristics of the customers who are buying your most profitable products. The level of understanding that comes with the ability to slice customer and product data helps you to create focused messages and to deliver those messages in the right way, to the right people, and at the right time. You ll also use these tools to measure the impact of individual promotions. BI can also help you to repeat successes across your organization. Once you determine which programs are successful, you ll want to redeploy those promotions in similar markets.

7 About BI-Metrix BI-Metrix s integrated Business Intelligence solutions help small and midsize businesses optimize processes, save money, and improve decision-making through the power of information. Its BI solutions are powerful, easy to use, and cost effective and offer capabilities to support the three pillars of BI analysis, reporting and planning. BI-Metrix has deep and proven expertise in delivering business intelligence solutions to small and midsize businesses in a wide variety of industries and departments. Our solutions present data in a business context that business users understand while ensuring data accuracy and consistency throughout the organization. This allows all users in different departments to spend more time analyzing data and formulating business strategy. They can adjust plans, budgets and forecasts to respond quickly and effectively to changing business conditions. BI-Metrix enables small and midsized companies to meet these challenges in one simple integrated solution.