Analytics

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Competing on Analytics by T. Davenoprt

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Analytics

  1. 1. Analytics
  2. 2. <ul><li>“ In God we trust; everyone else bring data” </li></ul><ul><li>Barry Beracha </li></ul><ul><li>CEO, Sara Lee </li></ul>
  3. 3. Supply Chain <ul><li>Stimulate and optimize supply chain flows </li></ul><ul><li>Reduce inventory and stock outs </li></ul><ul><li>Examples </li></ul><ul><li>Dell </li></ul><ul><li>Walmart </li></ul><ul><li>Amazon </li></ul>
  4. 4. Customer Selection, Loyalty & Service <ul><li>Identify customers with the greatest profit potential </li></ul><ul><li>Increase likelihood that they will want the offering </li></ul><ul><li>Retain </li></ul><ul><li>Examples </li></ul><ul><li>Harrah’s </li></ul><ul><li>Capital One </li></ul><ul><li>Barclays </li></ul>
  5. 5. Human Capital <ul><li>Select the best employees for particular tasks </li></ul><ul><li>Set compensation levels </li></ul><ul><li>Examples </li></ul><ul><li>New England Patriots </li></ul><ul><li>Oakland A’s </li></ul><ul><li>Boston Red Sox </li></ul>
  6. 6. Product Quality <ul><li>Detect problems early </li></ul><ul><li>Minimize problems </li></ul><ul><li>Examples </li></ul><ul><li>Honda </li></ul><ul><li>Intel </li></ul>
  7. 7. Financial Performance <ul><li>Determine drivers of financial performance </li></ul><ul><li>Understand the impact of non financial factors </li></ul><ul><li>Examples </li></ul><ul><li>MCI </li></ul><ul><li>Verizon </li></ul>
  8. 8. Research & Development <ul><li>Improve quality and efficiency </li></ul><ul><li>Improve safety </li></ul><ul><li>Examples </li></ul><ul><li>Novartis </li></ul><ul><li>Amazon </li></ul><ul><li>Yahoo </li></ul>
  9. 9. Best practices <ul><li>Champion it from the top </li></ul><ul><li>Centralize the initiative. P&G </li></ul><ul><li>Focus efforts. Harrah’s – customer loyalty </li></ul><ul><li>Establish an analytics culture </li></ul><ul><li>Hire the right people </li></ul><ul><li>Use the right technology. Dell </li></ul>
  10. 10. Analytical Applications <ul><li>CHAID </li></ul><ul><li>Conjoint analysis </li></ul><ul><li>Lifetime value analysis </li></ul><ul><li>Multiple regression analysis </li></ul><ul><li>Price optimization </li></ul><ul><li>Time series experiments </li></ul>
  11. 11. Real Time Analytics at Harrah’s <ul><li>Alerts to customer’s losing continuously </li></ul><ul><li>Offers transmitted to smartphones </li></ul><ul><li>Getting rid of excess inventory via timely offers </li></ul><ul><li>Set pricing for slots, hotel rooms </li></ul><ul><li>Optimize customer flow </li></ul>
  12. 12. Advertising <ul><li>Econometric analysis of time series data </li></ul><ul><li>Dell build a database of 1.5 million ads over 7 years </li></ul><ul><li>Online ads are easier to track </li></ul><ul><li>Google provides as much analytics and metrics it can provide </li></ul>
  13. 13. Retention and Cross-selling <ul><li>DnB NOR uses ‘triggers’ to send customized offers </li></ul><ul><li>Based on history, chooses effective channels </li></ul><ul><li>Achieved 40 to 50% cross-selling </li></ul><ul><li>Halved marketing budget </li></ul><ul><li>Increased customer satisfaction </li></ul>
  14. 14. <ul><li>Tesco uses customer data to slot customer lifestyles </li></ul><ul><li>Uses that to generate 7 million variations of coupons </li></ul><ul><li>Tesco’s redemption rate is 20% as opposed to industry rate of 2% </li></ul><ul><li>Tesco is the world’s largest online grocer </li></ul>
  15. 15. Skimming the Cream off the Garbage <ul><li>CapitalOne employs its own proprietary consumer creditworthiness tool to sift through perceived high risk customers </li></ul><ul><li>Progressive Insurance also uses similar methodologies </li></ul>
  16. 16. Price Optimization <ul><li>JCPenny used price optimization software to increase gross margins </li></ul><ul><li>Operating profits grew at double digit rates </li></ul><ul><li>Inventory turnover increased by 10% </li></ul><ul><li>Amazon priced its DVDs more to customers who spend more </li></ul><ul><li>Marriott has improved its revenue opportunity from 83% to 91% </li></ul><ul><li>Applies optimization to catering and conference facilities </li></ul>
  17. 17. Price Optimization <ul><li>Dell used forecasting systems to predict a downturn in 2000 and 2001 </li></ul><ul><li>Sales came down by 2.3% in 2001 </li></ul><ul><li>Compared to HP – 32%, Compaq – 36% and Gateway – 62% </li></ul><ul><li>In 2006, 77% of B2B businesses were moving towards PO software </li></ul>
  18. 18. Brand management <ul><li>In 1999, Samsung sold 14 product categories in 200 countries for a total 476 product-category combinations and uses analytics to make budget allocations </li></ul><ul><li>Budnet (Anheuser Busch) – sales rep give data on display, inventory levels, pricing and promotion. </li></ul><ul><li>Gallo edge helps retailers optimize profit per shelf </li></ul>
  19. 19. Converting Customer Interaction into Sales <ul><li>Capital One health Care, uses doctor’s personal information to make an effective sales pitch. </li></ul><ul><li>Best Buy uses a few stores as laboratories </li></ul><ul><li>Analyzed ‘ frequent returners’ </li></ul><ul><li>Trains employees to understand financial metrics </li></ul><ul><li>Harrah’s optimizes range and configuration of gambling games </li></ul>
  20. 20. Customer Life Cycle management <ul><li>Predictive tools help Best Buy increase subsequent sales </li></ul><ul><li>Sprint uses 25 models to determine best ways to maximize customer loyalty </li></ul><ul><li>Uses retention agents to solve issues with unpaid bills </li></ul>
  21. 21. Customize <ul><li>O2 predicts and presents content to match consumer’s tastes </li></ul><ul><li>97% of their customers have opted for this feature </li></ul><ul><li>O2 has 50% of UK’s mobile internet traffic </li></ul>
  22. 22. Connecting Customers to Suppliers <ul><li>Walmart has over 600 terabytes of sales and inventory data on a single platform </li></ul><ul><li>17,400 suppliers in 80 countries use Retail Link </li></ul><ul><li>Allows Walmart to stock up on Strawberry pop tarts just before a hurricane </li></ul><ul><li>Amazon recruited Gang Yu to make a proprietary inventory model </li></ul>
  23. 23. <ul><li>CEMEX increased market share in Mexico by reducing delivery times by route planning which factors in weather, traffic conditions, labor, etc. </li></ul>

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