The Power of Analytics

In a world of increasing commoditization – with companies in many industries offering similar products and services – businesses are looking for new ways to differentiate themselves and gain an advantage over their peers. Add to the mix an economy in which customer loyalty is weak and one where the ability to attract and retain customers means the difference between thriving and failing, and what you’re left with is fierce competition among companies over a very discerning customer pool.

So how do companies compete and win in today’s competitive environment? The answer is to know your customers and prospective customers through analytics –using data to identify those customers and prospects that are most valuable to your organization and then targeting their specific needs and preferences.

Many companies think it is enough to understand customers anecdotally and that customer analytics would only confirm what they already know. According to a recent feature in Inc. magazine (September 2009), however, “…though most business owners like to think they know their customers, many are really only guessing. And when it comes to forecasting sales—in fact, when it comes to virtually every aspect of business planning -- an empirical understanding beats gut instinct almost every time. Now is the time to get the facts.”

For many executives, the term “customer analytics” conjures up thoughts of massive databases and expensive business intelligence tools. But, answering key questions about your customers need not be a laborious, overly complex endeavor. Developing robust analytics capabilities is an evolution – not an all-or-nothing approach – and the level of complexity should be driven by an organization’s size and unique business needs. Even simple tools such as customer surveys and basic segmentation can generate enormous value!

When it comes to knowing your customers, analytics should be a continual process that grows and develops alongside your business. Your profitable customers today may not be your profitable customers tomorrow, and their needs and preferences will change and evolve over time. Having the insight into who your best customers are and what matters to them is critical to your organization’s success. Because, when it comes right down to it, your business is all about your customers.

For more information, check out West Monroe Partners’ recent webinar for the Federal Home Loan Banks (FHLB) on the topic on customer analytics.

West Monroe Partners assist companies in developing customer analytics strategies and tools that address their unique needs. For more information, please contact Erica Zidel.