The Data Goldmine
- Details
- Created on 20 July 2014
- Written by Steve Burrows
Years ago I worked in a company that had a small CRM system called Goldmine. It did, quite literally, live up to its name. We were so successful that we outgrew it and eventually had to upgrade, we spent c. £500,000 on our next CRM system and got the money back in three months as increased profits. Sounds incredible, but the reality is that most companies don’t sweat their data assets effectively; it’s expensive, hard work, and there are inevitably troublesome techies involved to whom we need to explain the business side in words of one syllable. Which is a pity really, because gathering and analysing customer data is, even though CRM has been around for over 20 years, a real game changer - but don’t take my word for it:
Earlier this year top management consultancy McKinsey & Co published their latest DataMatics Survey, in which they report that companies making extensive use of customer analytics are:
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126% more likely to make above average Profits
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131% more likely to have above average Sales
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186% more likely to have above average Sales Growth
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132% more likely to have above average Return On Investment
than their competitors who do not make extensive use of customer analytics. You can read the McKinsey report for free at , it’s compelling stuff.
Coming back to my own experience momentarily, our company was not merely successful; we grew to be the largest business in our sector worldwide, with over 50% market share in the UK. Effective customer analytics helped us dominate our industry by knowing our customers needs better than our competitors did.
The McKinsey report goes on to make the point that winners “take a truly integrative approach, seeing analytics as a strategic rather than purely IT issue. Hiring C-level executives who take a hands-on approach to customer analytics is also vital”. In short CRM, both the IT and the systems and processes for the gathering and analysis of customer data, is not simply the domain of IT or Sales, it’s a strategic enabler for C-level leaders who want to make their companies greater.
CRM is not easy, in a 2007 survey from the UK four-fifths of senior executives reported that their biggest challenge is getting their staff to use the systems they had installed. 43 percent of respondents said they use less than half the functionality of their existing system. These adoption problems are also C-level issues, if staff don’t put the necessary data into the system then clearly the bosses haven’t pushed hard enough; but the McKinsey figures above show that done properly customer analytics really drives corporate performance, and you can’t do the analysis if you haven’t collected the data.
What is “analytics”? Nothing more than processing data to create information, for example who will buy which product when and why. Know this and you can stop wasting time and money trying to sell the wrong product to the wrong prospect at the wrong time for the wrong reason. In order to produce this magical information you need to collect the right data for your business, which is a big part of what CRM is about, and know what to do with it.
Customer Analytics puts a new face on ‘know your customer’, one that is about more sales, more profit and more growth. It’s a strategic issue for corporate leaders - you wouldn’t expect the IT department to tell you what to sell to whom, or even what questions should be asked in order to get the right answers. The effective use of customer analytics is a C-level matter, it is about business strategy not technology, and the simple question “do the directors regularly demand customer analytics reports from the CRM system?” is enough to indicate whether the company is a potential winner.
