How Data Can Differentiate and Drive Growth
Download PDF Version
WHEN TECHNOLOGY MEETS IMAGINATION
Something amazing happens when technology catches up with imagination. The result is an explosion of insights and ideas. Consider the impact of the telescope on the study of astronomy, the effect of the microscope on the field of biology, or the influence of the par ticle accelerator on our understanding of the atom.
A bit less grandly, think about the impact of process instrumentation and information technology on the world of manufacturing. For the better part of the last century, companies produced products and then inspected the output. Good products were sold. Bad products were scrapped. By combining new technologies with statistical theory, companies went from inspecting the output to controlling the process. The leading manufacturing companies dropped their defect rate to less than one part in a million.
Regrettably, we’re still waiting for a comparable leap forward in the ways that companies approach revenue growth. Companies launch sales people into the field, marketing campaigns into the media, and products into the market—and then wait forthe result. A good result is revenue. A bad result is wasted time, effort, and money.
Why not control the processes that drive revenue in order to ensure a good result?
A NEEDLE IN ALL THE WORLD’S HAYSTACKS
A key reason ‘why not’ has often been a lack of useful data. A lack of data results in an absence of information and insight, which in turn impedes effective decision making. For all the money that has been invested in information technology, very little of it has helped grow the top line. The most advanced software applications have been limited by the initial structure of the transactional data. The data needed to support revenue growth has been too messy and too hard to get.
But this is changing.
Extracting specific insight from a gigabyte of random data can seem like finding a needle in a haystack. Extracting insight from terabytes of data can seem like finding a needle in all the world’s haystacks. But with the right technology and expertise, it’s possible to access comprehensive, timely, and accurate data and to use it to drive a powerful new science of revenue growth. This yields powerful insight into efforts that have long been discussed, but have rarely been consistently, fully achieved. Specific areas include:
- Customer and product profitability
- Marketing and advertising effectiveness
- Price elasticity and optimization
- Customer lifetime value application
- Customer and market micro-segmentation
- Sales process effectiveness
- Route-to-market and channel optimization
- Product development and product
TWO DIFFEREN T TYPES OF GROWTH
One of the most important steps in this process is differentiating between late-stage growth opportunities and early-stage growth opportunities. Few companies differentiate between the two stages, and almost none have designed growth initiatives that reflect the unique characteristics of each stage. An exclusive focus on early-stage growth opportunities, like new product development or opening new markets, is a risky strategy that requires large amounts of both capital and patience.
An exclusive focus on late-stage growth opportunities, like price optimization and account expansion, provides immediate payback while sacrificing long term competitive advantage.
Every company has both early- and late-stage growth opportunities available to them. The key to success is balance, data, and a defined set of growth processes. AlixPar tners recently worked with a consumer products client, for example, that had all its eggs in the early-stage growth basket. Nearly 100% of the marketing, research, and creative efforts were targeted at new product development. Executive management, however, was growing impatient with the distant time horizons and reluctant to invest more capital.
An analysis of both internal sales data and external market data revealed lucrative oppor tunities remaining in late-stage growth. This new insight drove specific growth initiatives to revitalize the existing product lines. These initiatives were based on data and had quantified performance targets, documented business cases, and defined action plans. The client teams controlled the processes to drive the desired result.
Specific improvements included product line rationalization, price adjustments, and trade promotion realignment. The resulting resource and investment allocation evened the balance between early-stage and late-stage growth initiatives. More importantly, the rapid payback on the late-stage opportunities helped fund continued research and new product development.
A BALANCED GROWTH PORTFOLIO
What you do now is critical. Continuing down the wrong growth path can consume scarce resources, waste valuable time, and erode market share. You should take a complete inventory of your efforts and evaluate the mix between early-stage and late-stage growth initiatives. More importantly, determine if you have the right data and metrics to actively manage your growth processes, and not just wait for the result.
Download PDF Version