Summary: We’ve all heard the generic BI benefits: BI improves decision making. It puts data at your fingertips. It helps you answer critical business questions. Those are all great, but…how will it help your company? What specific questions can it help you answer? While the answer varies by company, here are 7 common questions that BI can help your business answer.
Businesses today are drowning in data. We have more than ever before…by a long shot.
How much? Eric Schmidt was famously quoted as saying, “Every 2 days we create as much information as we did up until 2003.” He said that back in 2010. How much more do we generate today?
The question facing businesses today isn’t, “Where do we get data?” Rather, it is, “How do we make sense of our data?”
“How do we use it as a strategic advantage?”
The answer lies in Business Intelligence (BI). By now, you’ve probably heard all the reasons why BI is so important to modern businesses. For instance, BI:
- puts valuable data at your fingertips
- improves decision-making
- answers critical business questions
They sound great, but…what does that mean to your business? Which questions will BI answer for YOUR business? How will it improve YOUR decisions?
Today, let’s get specific. Let’s move beyond the generic, and explore a few specific questions BI can answer for your business. Now, this is by no means a comprehensive list. After all, BI can answer thousands of questions–many of which are specific to your business or industry. Rather than try to list every question BI can answer, here are a few important questions that apply across industries:
1. Who/what are our best (customers/salespeople/products)?
Do you know which product generates the most revenue? Do you know which customers purchase the most product, or refer the most prospects? These are all valuable pieces of information that BI can easily deliver.
“It’s amazing to me how often even the most obvious questions go unanswered when basic BI tools can deliver the data,” says Ben Landers, President of Blue Corona, Inc. “At a minimum, I think every business should use BI to track and report which lines of business are the most profitable; who their best customers are–depending on the business, best might mean: most loyal, fastest payers, most profitable, best referrers, etc.–and to identify training and development opportunities for our employees.”
2. Which customers will likely be early adopters of a new product?
Suppose you plan on releasing a new product or service. Which customers should you target? Which customers have adopted new products in the past? This information could be the difference between success and failure.
“We answered this question for Citibank,” says John Paul Engel, President of Knowledge Capital Consulting. “Using mathematical modeling, we built predictive models of adoption using customer transaction data appended with external data like magazine subscriptions. Using this approach we created a model that could segment customers based on their likelihood to adopt and use different incentive schemes to entice them. It led to one of the most successful direct marketing programs in Citibanks’ history.”
3. When is the best time to reach out to past customers?
What if you knew when past customers were ready to make another purchase? What if you could send out automated reminders at the perfect time? Do you think that would boost revenue? Of course!
It’s possible with Business Intelligence. Engel explains below how one company analyzed past transaction data and determined the best time to contact customers.
“Using past transaction data for a online flower company set up reminders of wife/mothers birthday,” says Engel. “This led to double digit response rates.”
Now, this is a very specific example. But, the concept behind the example applies to many companies: What if you could analyze transaction data and accurately predict when customers are most likely to need your product/service? Wouldn’t that be valuable data? Of course!
4. How can we retain more customers?
You’ve probably seen the research. It costs roughly 6x-7x more to gain a new customer than it does to retain an existing customer. Even just a 5% increase in customer retention can create a 95% profit increase.
What if you knew how many customers were switching to the competition? BI lets you monitor these stats in real-time, and take action where needed–ultimately improving customer retention.
“What data from our software taught us, however, is that the biggest hurdle that businesses experience is maintaining quality of their services and turning new customers in repeat customers,” says Boris Bosiak, CEO of Reservio. “Customer retention is statistically one of the most important factor of building sustainable business (customer service oriented companies generate 60% higher profits, repeat customers spend 33% more and maintaining existing clientele is generally cheaper than acquiring new one). Answering questions such as how people utilize your time, decreasing “no-shows” clients and measuring customer satisfaction (e.g. Net Promote Score) can improve services and boost the bottom line of the business.”
5. Why does it take so long to collect payment?
How many of your customers are regularly late with payments? How much does this cost your company?
BI helps you understand both of these questions, and adjust accordingly. For instance, using this data, you could automate reminders to delinquent customers, or send special offers to your best customers.
“BI can visualize which clients are taking the longest to pay, how often they are past terms of invoices, the average amount of time it takes to collect, the average value of each of these invoices,” says Gregory Hauenstein, Account Executive at iDatix. “This gives the owner a snapshot into who he or she should be adjusting payment terms with. This way by being able to see all of the data summarized and grouped they can increase cash-flows and incentivize the clients that are the best in working with them.”
6. What is our website’s conversion rate?
What happens when a user visits your site? Do they get stuck on any pages, or do they convert into paying customers? Are certain pages driving potential customers away? These are all questions you can answer with analytics.
“Online businesses may use BI to track web visitors and conversion rates,” says Aidan Gawronski, Co-founder of I.CX. “Is the new marketing bringing visitors in? If so how low are they staying and are they converting to paid customers.”
7. Where are our best potential customers?
What is the biggest challenge for most businesses? Bringing in new leads. Getting in front of good prospects. What if you could analyze past customer data and identify your ideal customers? As explained below, one organization used BI to do just that.
“A higher education institution with a number of regional campuses was getting plenty of student inquiries but not hitting their student start target,” says Liz Dye, director of marketing analytics at Sparkroom. “By reviewing the demographic information of both the inquiries that did and those that did not convert and comparing that data to population density of the region, we were able to identify target zip codes in which there was a sizable population of inquiries with a high propensity to become students.”
So, what do you think? Is there anything you would add to this list? If so, please share your thoughts in the comments.
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