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Leveraging Data and Analytics to Make Strategic Investment Choices
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Leveraging Data and Analytics to Make Strategic Investment Choices Presentation Transcript

  • 1. Dana HaymanVP, Marketing Strategy & Insights Madhu Ghosh VP, Analytics Infogroup Targeting Solutions Oct 16, 2012 1
  • 2. Leveraging Data and Analytics to Make Strategic Investment Choices:A Case Study in Assessing New Geographic Markets Challenge: Client Background & Key Questions Solution • Approach • Results & Deliverables • Business Impact Key Takeaways Q&A 2
  • 3. Challenge Background • Leading wholesaler of domestic and industrial supplies (B2B) • Operates in: – 6 different businesses/industries (heating, plumbing, etc.) – 200+ geographic markets (US) • Considering expansion into Current Markets and New Markets (US) Key Questions Pertaining to Strategic Planning and Investment • Which markets to pursue next? • Which business to “emphasize” in which markets? • How to assess the competitive environment in “high interest” markets? • How to create a proper foundation for market and segment-specific marketing plans? 3
  • 4. Solution: Data, Models & Practical Analysis Identify High-Value Markets via Market Value Model Phase 1 • Assess Total Market Value of 942 CBSA’s Total • Rank markets Market Value Model • Visualize results – Grids & heat maps to show high opportunity locations • Select a subset (311) of current and new CBSA’s for Phase 2 analysis Assess Industry-Specific Market Value via Industry-level Models Phase 2 Industry- • Assess Market Value relevant to 6 business units for all 311 CBSA’s Specific Value • Rank 311 CBSA’s within each industry/BU Models • Determine high-interest new markets (n=4) Phase 3 Produce Assessments of Competitors & Prospects for High-Interest Markets Market • Leverage Infogroup Data Assessments • Provide Reporting Package and Visuals Phase 4 Initiate Custom Analysis and Planning Analysis & • Corporate Level  Market  Store and Customer Planning 4
  • 5. Phase 1: Built Total Market Value Model Prepare & Build Model & Apply Aggregate Spend & Aggregate Data to Total Business Pool Validate Results Collected customer data Split Sample: Calculated Total Market Value from client - Model Build = Sum Est. Annual Spend - Validation across all customers & Aggregated transactional prospects in a CBSA data (invoices, $, timing, Built model to estimate etc.) at customer level Annual Spend or “Total Calculated Share of Customers Determine Annual Revenue Potential Revenue” per = Current / Total Customers in for each Customer customer or prospect a CBSA Appended Infogroup data Applied to subset of Validated Twice: incl. prospects, competitors 13.5MM Business DB based 1. Actual Customer Data and firmagraphics (SIC, etc.) on SIC matching criteria 2. Third Party Sources 5
  • 6. Phase 1: Visualizing Results (942 CBSA’s) Bubble Size = High-Value Markets Current Revenue Already Capturing Decent Revenue Very Small Share of Customers Market Value Lots of Low-Value New Markets Low-Value Markets Selected 311 Low Current Revenue markets to include High Share of Customersin Phase 2 (industry- specific valuation) Share of Customers 6
  • 7. Phase 1: Identified 45 High-Value Markets…311 Total Selected247 Current Markets > $200mm < $200mm MARKET VALUE 64 New Markets Rev > $500k Rev < $500k NEW MARKETS 4 60 Market Value CURRENT MARKETS 41 206 Identified the 45 highest-value markets (above the red line) Share of Customers 7
  • 8. …including 4 High-Interest New Markets > $200mm < $200mm MARKET VALUE Rev > $500k Rev < $500k NEW MARKETS 4 60 Market Value CURRENT Identified 4 MARKETS 41 206 “High Interest” New Markets Identified the 45 highest-value markets Market A (above the red line) Market B Market C Market D Share of Customers 8
  • 9. Phase 1: Ranking Methodology (Sidebar)“High Interest” new markets were selected based on considerations beyond just “market value”Share of Customers & External Factors (e.g., construction activity) played role in “Final Ranking” Market Final Rank CBSA Market Value (Based on External Description Value* Rank Considerations) Market A 1 $ 900 MM 1 Market B 4 $ 510 MM 2 Market C 5 $ 470MM 3 Market D 7 $ 450MM 4 Market E 15 $ 200MM 5 Market F 12 $ 220 MM 6 Market G 17 $ 180 MM 7 Market H 2 $ 800 MM 8 Market I 19 $ 150 MM 9 Market J 3 $ 650 MM 10 * The numbers are illustrative 9
  • 10. Phase 1: Heat Map (Value) of all 311 CBSAs 10
  • 11. Phase 2: Built Six Industry-Specific Models 311 CBSA’s from Phase 1 Built 6 Industry-Specific Models to Estimate Market Values at Industry Level Produced Market Values and Rankings for 6 Industries in all 311 Markets 11
  • 12. Phase 2: Produced Look-Up Tables Industry-level market valuations helped client understand industry-specific opportunities within each market Market A Overall Industry A Industry B Industry C Industry D Industry E Industry F Rank 1 1 20 16 7 3 2 Market Value $ 130,000,000 $ 14,000,000 $ 31,182,000 $ 21,023,000 $ 9,819,000 $ 21,274,000 $ 32,573,000 Actual Revenue $ 1,025,000 $ 532,000 $ - $ 85,000 $ 78,000 $ 91,000 $ 237,000 Opportunity $ 129,137,000 $ 13,756,000 $ 31,182,000 $ 20,937,000 $ 9,741,000 $ 21,183,000 $ 32,335,000 Market B Overall Industry A Industry B Industry C Industry D Industry E Industry F Rank 2 15 4 13 7 7 9 Market Value Actual Revenue Opportunity Market C Overall Industry A Industry B Industry C Industry D Industry E Industry F Rank 3 16 17 10 1 16 5 Market Value Actual Revenue Opportunity Etc. for all 311 Markets 12
  • 13. Phase 3: Produced Market Assessments 4 High-Interest New Markets Leveraged Infogroup B2B data assets to “paint a picture” of each CBSA (Included 7pp Market Profile for Each) 2 Areas of Focus Prospect Competitive Pool Environment 13
  • 14. Phase 3: Example Market Profile (p. 1 of 7) Market A Market B Included a Picture of the Market Skyline Here Market D Prospects # Competitors Local Regional National Total Market C > $20K 900 > $7.5 MM 35 10 10 55 $10K - $20K 1,200 $2.5 – $7.5 MM 50 5 15 70 < $10K 450 < $2.5 MM 80 10 20 110 Total 2,550 Total 165 25 45 235 Note: Bubble Size = # Prospects Heat Map of Prospects by Zip Heat Map of Competitors by Zip 0 50 0 10Rank out of 4 Featured Markets:Overall Market Value = $___ MMTargeted Market Value = $___ MMMarket Value/Prospect Rank = __# Prospects Rank = ___# Competitors Rank = ___ Note: The numbers are illustrative 14
  • 15. Phase 3: Example Market Profile (p. 2 of 7) Top Client Customers: • • • • • Top Client Prospects: • • • • • Top Competitors: • • • • • 15
  • 16. Phase 4: Analysis & Planning Markets w/ High Growth Opportunity Corporate Other View Market A Market B Market C Markets Analysis on the Customer Base 1. Revenue Model: YOY Trends on Key KPI’s 2. YOY Frameworks: Assess Health of Customer Base and Key Dynamics 3. Custom Analysis: Leading to Targeting Frameworks, Opportunity Identification and segment-specific marketing plans 16
  • 17. Phase 4: Revenue Model Provides a simple way to Quickly Understand Business Performance and Assess Key Revenue Drivers / Dynamics Customers with Purchases in Year Revenue & Key Drivers 2010 2011 Delta # Customers ##,000 ##,000 -3% # Invoices ###,000 ###,000 3% # Invoices / Customer ## ## 4% Revenue / Customer $##,000 $##,000 9% Revenue / Invoice $### $### 6% Revenue $### MM $### MM 10 % 17
  • 18. Phase 4: YOY Frameworks PURCHASES IN 2011 0 LOW HIGH NEW & NEW & 0 LOST REACTIVATED REACTIVATED PURCHASES IN 2010 (Low Value) (High Value) LAPSED CONSISTENTLY VALUE LOW INCREASING (Low Value) LOW VALUE LAPSED VALUE BEST HIGH (High Value) DECLINING CUSTOMER 18
  • 19. Phase 4: YOY Frameworks How many exist? PURCHASES IN 2011 Great resource 0 LOW HIGH How much was spent to get NEW & NEW & these new & reactivated 0 LOST REACTIVATED REACTIVATED PURCHASES IN 2010 customers in 2011? (Low Value) (High Value) Opportunity for Welcome/ Welcome back programs LAPSED CONSISTENTLY VALUE LOW INCREASING (Low Value) LOW VALUE LAPSED VALUE BEST Best Customer Program HIGH (High Value) DECLINING CUSTOMER Look alike models for acquisition Set acquisition objectives/Among which customers is attrition occurring? Custom Recognition plans & implement Why do customers leave? (Research to Incentives & quantify what’s fixable and make biz case) RetentionHow big is the “reactivation pool” on database Programs  pursue “lost” customers 19
  • 20. Phase 4: Custom Analysis FOR EXAMINATION: Who customers are: To understand where value and attrition exists in the customer base • Age & Gender • Titles & Function • SIC & # Employees • Geo / Market / City • Personas Where they came from: • DM vs. Web vs. Other • Affiliates vs. Not What they buy: • Media/Mktg/Pd Content • Multi vs. Single Product • Triers vs. Repeaters What tactics they use: • On-Deal vs. Not • Tactic-specific Combinations of above Note: Illustrative 20
  • 21. Phase 4: Custom AnalysisTo Identify Marketing Opportunities in more detailTo Understand Issues (Over/Underperformance) in the customer base, andTo provide a way to organize segment-specific marketing initiatives (Acqu, Loyalty, Retention,, etc.) L-VAL / H-ATTRIT H-VAL / L-ATTRIT OTHER SIC A SIC B SICs SIC C SIC D Persona/ Segment 1 Persona/ Implications on Segment Prospect & 2 Customer Marketing Persona/ Segment and Leads to 3 Segment-Specific Marketing Plans Persona/ # Customers $ 2010 Segment $ 2011 4 % Attrition 21
  • 22. Business Impact Market & • Provided immediate implications on business expansion plans  we changed perceptions about relative attractiveness and market prioritization Industry Level Models • Provided critical input into strategic planning decisions and Results - Cross-market investment allocation - Pending store closures • Provided local area knowledge: Competitive - To facilitate and expedite “due diligence” process Assessments - To help local-area store managers understand their market - To help corporate leaders recruit new market talent (to run new stores) • Understanding key revenue dynamics/trends and drivers, the health of the Custom client’s customer base, and key issues (e.g., attrition) Analysis - At Corporate level  by BU  by Market  by Store & Planning • Leading to targeting frameworks, the identification of unique marketing opportunities and will drive customer marketing plans and initiatives - At Corporate Level  by BU  by Market  by Store 22
  • 23. Implications for Strategy & Planning • Most marketing organizations have a process for strategy and planning. Infogroup’s follows: MARKETING STRATEGY AND PLANNING PROCESS More Strategic More Tactical Identify & What to How to Sell Where to Create/ Set Allocate Prioritize Sell it Sell it Position Objectives $$$ Opportunities (Products) (Tactics) (Channels) Content Which customers What should How much What, Which Which How should and prospects we try to should we specifically, tactics channels we maximize represent the achieve with be willing to should we should should we relevancy? brand’s best each customer? invest? sell? we use? leverage? marketing (can we afford) opportunities? • We have been traditionally thinking about marketing opportunities in the context of prospect and customer base – i.e., Who to acquire? Drive loyalty/customer value? Retain? Reactivate? • Market value methodologies like the one presented today have enhanced our perspective and approach to Opportunity Identification – i.e., we can now size opportunities at the geo market level PLUS at the customer level  producing a more robust view (that will resonate with execs who want to expand geographic footprint) • It’s achievable via Quick-Turn Analysis 23
  • 24. Prevailing Perspectives Only 33% of global executives said their strategy rests Little Differentiation on novel data & insights not available to competitors * Lack of Data 57% of business executives cite lack of data or analytical and other skills to translate data to decision making as a barrier to use data in Lack of Analytic Skills organizational decision making * (Note: 20% cite company culture as a barrier) * Source: McKinsey Quarterly Survey Report 24
  • 25. Key Takeaways  It’s really not that difficult… Little Differentiation The Data Exists Lack of Data The Tools Exists Lack of Analytic Skills The Talent Exists 25
  • 26. Key Takeaways (Continued)• Market value modeling can facilitate “strategic” discussions and inform strategic decisions – e.g., Where do we build/buy next? How do we optimize sales coverage? Manage capacity? Make acquisition decisions?• For companies that want to size geographic markets and prioritize them: – The data exists and is easily accessible – sources are not limited – The methodologies are simpler than one might expect – Simple to do for yourself, or external help is available• Consider adding Geo-Market Valuations to more common customer-level “Opportunity Assessments”  it adds a perspective that can relate to execs• Combining the Competitive Assessment with customer/prospect analysis provides a multi-dimensional, differentiated view of opportunities and barriers to entry• Custom analysis and segmentation is a logical extension of market value analysis…setting a more comprehensive backdrop for the development of customized marketing programs & initiatives 26
  • 27. Q&A Madhu Ghosh  Madhu.Ghosh@infogroup.com Dana Hayman  Dana.Hayman@infogroup.com Have More Questions? Visit Us at Booth #801 27