Why does a product sell well to one customer but poorly to another? Which products should you promote in which markets? This article shows how business intelligence can answer marketing questions that are crucial to your profitability.
You’ve read a great deal about leveraging your organization’s operating data, both to gain a competitive advantage and to improve efficiency. In this three-part series, I want to avoid a general discussion and disclose nine specific advantages that business intelligence (BI) tools and technologies can bring to your business-to-business (B2B) sales and marketing processes. In this article, we’ll cover the first three advantages.
Business intelligence tools, when combined with your operational data, 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.
- Predict future behavior of prospects and customers.
Increase sales using fact-based selling tools
Several age-old issues encumber the sales process:
- Sales reps traditionally don’t know what’s selling in a particular account or what should be selling based on a comparison with similar accounts.
- When making appointments, sales reps frequently don’t have a substantial “business reason” to see the customer.
- Although building a customized, timely message for each account is a powerful sales tool, traditional marketing methods make this difficult. Consequently, many face-to-face meetings are bland and nonproductive. Casual chatter about your products or your company is not a sufficient competitive differentiator—not enough to engage the customer’s attention or complete a sale. Fact-based 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.
How can you overcome these obstacles? 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 cross-selling opportunities.
What’s more, sales reps with laptop access to facts are equipped to make compelling sales propositions in real time. Often, this means helping customers make product or quantity decisions based upon on-the-spot analysis of similar accounts.
Finally, great companies are building loyalty by providing Internet access to information. Your customer also needs fast access to solid information, a factor that can become an incremental advantage for your organization.
Here is the bottom line:Sales reps who have more information than the customer about a transaction can “trade” that information for higher prices and increased customer loyalty.
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.
- If we don’t understand what’s driving our profit, how do we focus our efforts and resources? The answer is that we often guess, or adopt a “flavor of the day.” In extreme (but not uncommon) cases, there’s no focus and we simply react to the next phone call.
- 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 high-profit 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.
Finally, 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 ought to be promoting, in which markets and through what channels.
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 certain they’re satisfied. The ideal, albeit difficult, solution is to spot problems early and correct 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 feeding that information back to you in time for action.
What should you measure? First, late and incomplete shipments are generally regarded as the primary cause of customer dissatisfaction. Despite the importance of timely and accurate delivery, few firms have a clue about their record in this area, either overall or with respect to any specific customer. You’ll likely want to start here, by measuring days between promised and actual delivery dates, for example. Similarly, you’ll likely want to monitor customer claims, disputes, complaints, and returns. Be aware that you also have data enabling you to monitor any changes in order frequency.
Once you’ve identified problems in any of these areas, you’ll be able to prioritize your process improvement initiatives according to the areas of greatest customer concern.
Even slightly reducing customer defections may have a big impact on profits. With easy-to-obtain information, you can ensure customers for life by increasing customer satisfaction. As a bonus, you’ll realize improved cash flow because invoice payments aren’t delayed by claims and disputes.
We’ve only cracked the door in this article, but I hope this initial view demonstrates the power of business intelligence tools in leveraging your sales and marketing efforts. I can’t emphasize enough how little lies between where your sales and marketing processes now stand and where they might be if you implement one or more of these advantages. We’ll cover the next three advantages in my next article.
Are you using business intelligence to your advantage?
Do you have experience with business intelligence tools in your organization? Send us an e-mail with your BI tips, problems, and questions, or post a comment below.