Boosting Revenues with Better Data
In times of recession, it's time for businesses to look outward -- at their customer data. Cleansing and organizing that data can yield valuable insights that generate revenue boosting, cost reducing strategies.
As the economic downturn extends into 2009, many businesses are finding themselves in unfamiliar territory. Revenue building strategies that worked in the past may not succeed in today's turbulent climate. As we discussed last month, survival depends largely on a renewed focus on IT strategies, particularly consolidating and virtualizing servers to tap into unused storage space and reduce costs. The next step? Getting the most from the vast amounts of data currently stored on these servers.
Quality in, quality out
Data is the fuel that drives organizational marketing and sales strategies. It guides decision making and determines the types of products or services businesses offer their customers. For many companies, customer data is stored among a wide variety of applications such as billing systems, CRM collection systems, and data warehouses. Unfortunately, these databases are not always accurate, up-to-date, or synchronized -- a situation which compromises data quality. By taking steps to improve quality, a company can be assured that the data they use to make critical strategic and tactical sales and marketing decisions are accurate.
As described in last month's column, 80 percent of a company's profits and revenues come from just 20 percent of its customers. Consider what happens when the data or information about those customers is wrong. The company is likely targeting the wrong customers or trying to sell them the wrong products or services. Critical customer service mistakes like these can greatly reduce top line revenues.
When a company does its homework in cleansing the data and organizing it into a common data repository with a standardized data model, the top-line impact can be startling. It becomes information the company can act upon, giving them a clear understanding of the true value of each client. They will clearly see each customer's history, their buying patterns, profit margins, and how they prefer to interact with the company.
Once a company achieves this level of data quality, they can begin to obtain valuable insights, such as which customers generate the most and the least revenue, which have the potential to become better customers, and which are not worth the effort. The company can then determine the best ways to interact with each customer, the frequency of contact and the type of contact, whether through a direct sales person, call center or e-mail campaigns.
Determining the right customers, the right product mix, and the right way to sell them is critical. Consider the cost of various approaches: more and more customers prefer using the Web, a transaction which costs about three cents, versus $20 for a call center order, or up to $1,000 for a personal sales contact. Knowing which customers prefer which type of transaction guides the company to work the hardest on the right customers. They can develop tailored offerings to meet unique needs and organize their sales forces to approach clients in a different way.
The mining of data to drive the sales force or the development of applications such as e-commerce, Web portals, CRM and customer loyalty programs are all driven by the use of effective technology. Using such technology enables companies to employ the 'one to many' concept with personalized contact that yields dramatic results. In fact, research has shown that with laser focus on the right customers with the right products and services, annual sales can be driven up between 2 percent to 5 percent, and sales and marketing costs could be reduced by up to 8 percent.
Despite today's economic crisis, the time is right for companies to generate real competitive advantage. By better utilizing the resources and data that are already in place and deploying new technology, companies can more effectively mine data and interface with their customers. Being successful in this endeavor can set the stage for the growth needed to ride out the current economic storm.
Mike Gorsage is the National Technology Practice Leader for Tatum LLC. Tatum is the nation's largest executive services firm, providing financial and technology leadership to businesses of any size.
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