As any executive will tell you, end of year figures have a major impact on the year ahead. It determines whether you can invest in new plans, or is time to scrap those bonuses. The profit and loss statement has become one of the central pillars on which company strategy is built. But are you only scratching the surface of your potential by focusing on those profit and loss accounts?
As calm as the sea may appear on a summer’s day, below the surface opposing currents move with the seasons, creating the global conveyor belt that determines much of our climate. Plateaus and troughs, tectonic plates, microorganisms and marine life; life beneath the surface is in a constant state of flux and teeming with
life. Just because we can’t see it with the naked eye does not mean it isn’t there. Similarly, whilst your P&L might reflect a stable state of affairs, a lot might be happening below the surface.
Staying with the marine life analogy, do you know which currents led to last quarter’s results? Which troughs caused a slowdown in turnover and which plateaus caused clients to drop off by the wayside? Transposing this magical underwater world to the field of data science could help you achieve new heights in business, if only you care to take a look.
Customer data can tell you exactly how many formerly mid value clients have become low value this year. It can also show you how many potential high value clients you have lost to the competition. By closely examining your data you can discover why the risers are rising and why others are on a downward trend. This kind of analysis helps you predict risk and churn, allowing you to make sure that your marketing efforts are no longer simply a numbers game but a targeted approach.
Room for Growth
One of the easiest ways to increase revenue is to increase your price per item and/or your distribution network. Perhaps you were considering a special offer – decreasing the price for a limited amount of time – to give those sales a boost. However, these will always have an impact on your bottom line. And although they may be effective, there are more efficient ways of increasing revenue.
Data-driven analytics provides you with below-the-surface insights that will help you launch premium offers or services that are fully geared towards meeting clients’ needs. With most of us more than happy to pay a little extra for something that we feel offers added value, we are looking at something with a much greater lifespan when we start mining our data.
Actionable Data Science
Usage based segmentation helps you fine tune your offering as – once you know which features are most popular with which clients – you can develop the products and services they really want. This investment in the customer’s overall lifetime value creates a much more sustainable revenue stream than simply applying price hikes or increasing your distribution. Similarly, customer data can help you identify opportunities for cross-selling and upselling.
Information like this is invaluable as it can help you predict what lies ahead, yet none of this will show in your company’s profit and loss statements. Your P&L simply shows this year’s total sales figures and does not take into account the likelihood of customers returning, what purchases they have made in the past and which they may make in the future. Yet you know your customers better than anyone. So why not start using this knowledge to improve your marketing efforts?
Developing Best Value Proposals
Every transaction leaves a trace which is stored in a central database. By mining this data and applying machine learning algorithms, you can gain a deeper understanding of your customers based on their activity and propensity. Interestingly enough, as data scientists we often find that the true value group isn’t actually the one our clients had in mind. All this of course sounds rather abstract, so let’s use a real-life example to illustrate how you too can create a sustainable revenue stream through revaluating your customer base:
A particular telephone operator marketed a mobile package with cheap local calls after 4p.m. to teens and students, thinking they would be interested in cheap calls outside of school hours. Nothing could have been further from the truth however: their actual high value customer base turned out to be the elderly, who felt they were getting a great deal and ‘beating the system’ at that. We say more power to granny and granddad, but of course this put the mobile operator at a crossroad: would they continue marketing their product as they had been, or would they fine tune and rebrand?
With parents often paying their children’s phone bills, it turned out to be much more interesting to develop a family package with a number of mobile numbers under a single telephone bill and remarketing the cheap calls after 4p.m. package to its actual client base. These insights led to a win-win situation with each generation enjoying the deal that best suited their needs, and the mobile operator tapping into a previously unknown market.
Getting to grips with your customer data allows you to improve your complete marketing mix so that you can get the right offer to the right customer at the right time and through the right channel. It helps you focus your actions and formulate a strategic plan for the years ahead. It might be time to start looking beyond your financial data and dive into the wonderful world of data science…
We provide data science and treatment as a consultancy service that turns customer data into ready-to-use solutions to get, to keep and to increase customers. If you would like to know more about how to turn your data into actionable insights, then please get in touch. We’d love to help.