A well organized strategic BI implementation transforms Marketing from Art to Science while unfolding an analytical competitive advantage that translates in bottom line impact. I found that Marketing deems BI indispensable when its deployment passes the Strategic IQ test.
I. Select ten questions you find most valuable to have answered in your organization.
II. Ask these questions independently to six people (marketing, sales, financial analyst, IT, accounting or business management) requesting confidentiality and a prompt response.
III. Keep track of the time it takes to obtain each answer.
IV. Compare the answers for quality and consistency between respondents.
Note that answering most of these questions should take a few minutes and the answers need to be consistent across the different respondents.
1) Where are we more profitable: strategic customers, key customers, distributors, agents or dealers? Why? Is it due to pricing, volume or product mix?
2) What is our current market share in a particular business unit in Europe?
3) Are our differentiated brands more profitable than the commodity ones? Why?
4) Are our new products more profitable than the old ones? How much? Why?
5) Who are the top 5% of my customers that generate 50% of profits? Why?
6) Who are the customers and what are the products that drain our cash? Why?
7) How much of which product is Sales-rep X supposed to sell to each of his customers in September of next year? What will his profit margin be?
8) Why is profitability by customer / region / country / business / market segment or sales territory significantly down this month?
- Is this because we lost volume?
- Is it product mix?
- Too many price exceptions?
- Has raw material cost increased?
- Has manufacturing cost increased?
- Have freight / distribution expenses gone up?
- Combination of which factors?
9) Show me a comparative Profit & Loss (P&L) statement
- By region / country / state
- By market segment / sub-segment
- By sales representative / distributor / dealer
- By brand / SKU
- By product technology
- By customer location
- Differentiated products versus commodity products at our distributors
10) Who do our distributors, agents and dealers sell to?
- In what markets / segments / sub segments?
- What is their mark-up? / Profitability?
- What is their new versus old product ratio?
11) What does our opportunity pipeline look like?
12) Which pieces of business are under competitive threat? (By product, competitor and customer location, in units and dollars.)
13) What is each of our competitors’ current market share by segment?
- If you got less than 6 answers, they took longer than one day, or the answers are completely different; your BI deployment maybe supporting the back-office operation but it’s unlikely to drive profitable growth since most strategic decisions are based on raw data and intuition.
- If you got more than 5 answers within one hour with 50% of the analysts in agreement, you are in the right track but need to refine the process further to compete on analytics.
- If you got more than 8 answers within one hour and both analysts and casual BI users from different areas agree; your BI deployment has become a competitive advantage that allows the organization to perform strategic and competitive analysis on-the-fly while ensuring a single version of the truth.
How does your organization score?
by Bill Cabiro and Strat-Wise LLC
„Please visit their web site at www.strat-wise.com for additional articles and resources on the strategic use of Business Intelligence and Analytics”