Beating the recession and growing profits with Business Intelligence
September 1, 2009
Aberdeen recently surveyed over 250 organizations to see the impact of the recession – and how they were using business intelligence to counter it. Based on the survey data, we used three key performance indicators (KPI’s) to seperate survey respondents into 3 groups – Best-in-Class (top 20%), Laggards (bottom 30%), and Industry Average (the other 50%). The first KPI was the change in operating profit since the start of the recession, the second was the customer retention rate and the third was the extent of BI penetration within the organization.
Base on that segmentation, Best-in-Class achieved an 11% increase in operating profits, compared to the Industry Average group that reported a 5% decrease in operating profit. How do they do this? First of all, they have a much deeper understanding of their sales pipeline. Best-in-Class companies indicate that they are almost a third more likely to track their pipeline rigorously than Laggards (79% vs 60%). Secondly, Best-in-Class have a much better understanding of the relationship between sales and marketing.
Related to analysis of the sales pipeline, linking sales revenue to marketing spend is another capability where there is a big disparity between the most successful and the least successful enterprises. Best-in-Class companies are 42% more likely to be doing this compared to Laggards. With few sales opportunities around, the need to ensure marketing spend is as productive as possible has never been greater. Productive marketing expenditure needs to lead to – or influence – a sales opportunity in some way. It’s impossible to know if marketing spend is productive unless sales revenue can be connected with marketing expenditure – or at the very least, to marketing touches
Thirdly, Best-in-Class companies manage their receivables better, with 82% of Best-in-Class companies doing this, compared to 75% of Industry Average firms, and only 68% of Laggards. During times when credit is hard to get, or is only available at higher interest rates, delays in collecting payment from customers can be fatal to a business, starving it of cash. By closely monitoring payments from customers enterprises can ensure they keep their cash-flow healthy.
You can download the entire report here free if you want to: http://tinyurl.com/kv8rjz
