Striving to gain greater insights into how existing customers can be retained and grown while attracting new prospects, nearly all companies are capturing customer data at an accelerating rate.
The challenge is to translate the massive amounts of captured customer data into strategically relevant, insightful and immediately useful action. Too often companies are not getting the most value out of their customer data however. From senior management not being committed to its value, advanced analytics applications including Big Data not managed to its best use, or a proliferation of analytics applications that fail to deliver a unified, solid strategic direction, many companies are falling short of the value analytics can provide.
What makes certain companies so successful with analytics initiatives while others fail to get the results they are looking for? McKinsey & Company looked onto this question in a recent survey and released the results last week. The entire study, Using Customer Analytics To Boost Corporate Performance, Key Insights from McKinsey’s DataMatics 2013 survey can be found here (free, no opt-in, 31 pp).The DataMatics 2013 benchmarking survey was conducted from May to June 2013 with 418 senior executives of major companies from a wide variety of industries and distributed equally across Europe, the Americas, and Asia. Please see the back of the report for a thorough description of the methodology.
Key take-aways include the following:
- 49% of companies who champion the use of customer analytics are likely to have profit well above their competitors. 50% of companies who champion customer analytics are likely to have sales significantly above their competitors. The following graphic illustrates how customer analytics can fuel greater profit, sales, sales growth and ROI performance.
- Companies championing the use of customer analytics are 6.5 times more likely to retain customers, 7.4 times more likely to outperform their competitors on making sales to existing customers (upsell and cross sell strategies), and nearly 19 times more likely to achieve above-average profitability. The following graphic provides a comparison of strategic and tactical Key performance Indicators (KPIs).
- Driving customer analytics deep into the DNA of a company pays. The following graphic shows what McKinsey found when they correlated the level of capability to perceived value contribution of customer analytics. Fact-based decisions, fast translation to action, management expectations aligned with results, using appropriate techniques and actionable insights are the five most important elements that deliver the value of analytics.
- Enabling integrated multichannel marketing (29%), frontline embedding of analytics (28%), expanding customer analytics across the value chain (27%) and processing real-time data (24%) are the four key areas where integrating customer analytics across the value chain of a business are most paying off. See the graphic below for the factors survey respondents considered extremely important in getting the most value out of customer analytics.
- 49% of high performance companies have CEOs who rate the benefits of having strategic, actionable insight based on customer analytics as very to extremely important. Only 15% of the laggard companies view customer analytics this way. The impact senior management can have on profit, sales, sales growth and ROI versus competitors is significant based on the study’s findings (shown in the second graphic below). McKinsey observed that high performers hire C-level executives with the “data gene” in their DNA. The following two graphics illustrate this point.
Five Key Insights: Making Customer Analytics Part of a Company’s DNA
Five key insights from the McKinsey survey include the following:
- Pervasive use of customer analytics leads to superior financial performance relative to competitors.
- Having a solid customer analytics foundation as part of the decision making process leads to more effective customer lifecycle decision-making and higher financial performance.
- Creating and strengthening a corporate culture that values and acts on customer analytics is essential to gain the greatest value from customer data. McKinsey found that just having skilled analytics professionals wasn’t enough; senior management has to seek out and use customer analytics to drive strategy and action.
- Integrating customer analytics into multichannel marketing and selling, including real-time analytics is more effective than continually adding new sources of data.
- Senior management must have an appreciation for analytics and take action on insights regularly to further engrain its value into the DNA of their companies.
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