Continuing the theme of Big Data initiatives need to be very intentional, we now turn our attention on how to build momentum by focusing on examples of how companies are financially benefiting from their successful efforts with Big Data. Specifically, let’s talk about three areas that are getting a lot of attention in many companies.
Product Segmentation – having accurate insights with regardto how a particular product is performing with regard to contribution to profit can be eye opening. Forget the expected “bell-shaped” distribution curve and expect to see more of a skewed left hand spike (left is negative or marginal behavior) and a prolonged tail of the curve to the right. Couple this with where the product falls in its product life cycle and you have the tools necessary to drive actionable steps to dramatically impact financial performance. This has been demonstrated in multiple industry with astonishing results. You may be saying, “Yes but we have to have product x to sell product y”. That may be true but what if the customer is “cherry picking” and you actually have an opportunity to identify where that paradigm just doesn’t hold water. Getting to these forms of actionable insights builds excitement and momentum for your Big Data efforts.
Customer Segmentation – talking about skewed bell shape curves, how about having over 50+ % of you customers performing marginally or continually being unprofitable. Want to fire them? Well possibly a better strategy would be to understand why they are unprofitable vs a minority of similar type customers who are contributing to the bottom line. A better strategy for some customers may be to determine how to get the marginal customers to emulate the behavior of the well performing ones. Moving away from a “one size fits all” customer strategy can offer significant increases in profit contributions.
Operational Realignments – no, we are not talking about a large, time consuming optimization project that will be difficult to accurate monitor the realized ROI due to unforeseen changes in the future. In fact, it is just the opposite. Identifying very specific and target changes using Big Data can yield impressive results and have the organization want to do more hunting for operation improvements. A recent example was the changing of certain inventory stocking decisions tied to customer demand yielded not only higher service levels but cut millions of dollars of cost out of the operation.
The above are just a small sample of how companies are driving increased momentum for their quest of improving financial performance using Big Data.
We would appreciate hearing your thoughts and comments.
All the best, Richard
Richard Sharpe is CEO of Competitive Insights, LLC (CI), a founding officer of the American Logistics Aid Network(ALAN) and designated by DC Velocityas a Rainmaker in the industry. For the last 25 years, Richard has been passionate about driving business value through the adoption of process and technology innovations. His current focus is to support CI’s mission to enable companies to gain maximum value through specific, precise and actionable insights across the organization for smarter growth. CI delivers Enterprise Profit Insights (EPI) solutions that enable cross-functional users to increase and protect profitability. Prior to his current role, Richard was President of CAPS Logistics, the forerunner of supply chain optimization. Richard is a frequent speaker at national conferences and leading academic institutions. His current focus is to challenge executives to improve their company’s competitive position by turning enterprise wide data from a liability to an asset through the use of applied business analytics.