The original article appeared in the Portland Business Journal October 10, 2019. You can view the article here.
All around the clock, the wired world is giving off signals. Savvy sales and marketing teams are mining those “signals of intention” and marrying them with statistics, machine learning and artificial intelligence.
It’s the field of “predictive analytics.” And it’s getting a lot of buzz among strategists who have the job of propelling sales growth and new business models.
Allison Hartsoe, founder and CEO of Portland-based predictive analytics firm Ambition Data has helped a number of start-ups, including Dagne Dover and Xero Shoes, challenge legacy brands. Established names such as Kohler, Johnson & Johnson, Glaxo Smith Kline and others also have employed Ambition’s strategies for identifying priority customers to clear the path for more sales.
For her, the value of analytics is the insight it can give companies into where they should invest their sales efforts.
"Most companies don’t need to start with the Ferrari of data analytics, they just need to know who their customers are, how they act and what they’re looking for,” Hartsoe said. Companies that aren’t doing that are leaving sales on the table.
Hartsoe’s team computes costs of attracting and retaining specific customers over the long term. The model can also predict the revenue potential of each customer. The computation is known as “customer lifetime value,” a math formula used by many companies for decades. With deeper analytics being unlocked in big data, however, CLV in recent years has become more effective in informing sales strategy.
“One of the things I love about CLV is that it's one of the few metrics you can use to align an organization top to bottom — strategy to tactics. When companies use the data correctly, they take off.”
Hartsoe points to an industry case study that illustrated the power of taking an approach based on CLV.
The company — a pharmaceutical giant in the veterinary space — had been functioning the same way for generations. Salespeople spoke firsthand to as many customers and potential customers as possible. But with a book of business that had outgrown the reach of this high-touch approach, the company needed a new strategy.
“Salespeople were going after the groups they felt were most valuable, but this was not moving the needle. They then identified their ‘hot’ customers and pursued them. No lift. They began calling on accounts identified with CLV calculations,” Hartsoe said.
The result: A 17 percent sales increase above target and, more interestingly, margin came in 30 percent greater, Hartsoe said.
Worldwide spending on software for customer relationship management grew 15.6 percent last year to reach $48.2 billion. However, according to a report from Hubspot, 45 percent of salespeople said they either don’t need a CRM platform or that they’re not sure what one is.
A real hurdle teams have is making sense of which data are most valuable.
“There are about 7,000 tools out there that can help you, but the analytics you get aren’t necessarily meaningful to your business,” Hartsoe said.
She notes the importance of keeping in mind that any analytics-powered strategy must keep “people” front and center.
“We help organizations shape their analytics, their language to be more about people so that it’s not just about impressions, pageviews or downloads,” she said. Speaking and thinking about your market as “data” distances you from them and the stories that their analytics are telling you about how to meet their needs, Hartsoe said.
A challenge she sees companies grapple with is integrating an analytics-driven approach into their culture. Organizational structures can lead to perspectives for driving revenue that compete against each other. Couple that with frequent turnover among the sales and marketing teams and the result is an environment where predictive analytics goes by the wayside.
“We’ve watched it happen with more than a few of our clients,” Hartsoe said.
Another local expert in sales and marketing analytics says organizations have yet to begin to fully realize the potential locked up in their data.
“As far as who’s adopting a sophisticated strategy with sales analytics, we’re probably past the ‘innovators’ and are somewhere in the ‘early adopters’ stage,” said Vancouver-based Henry Schuck, CEO of ZoomInfo.
The company Schuck founded, DiscoverOrg, purchased ZoomInfo in a deal worth a reported $800 million. The combined company recently adopted the ZoomInfo name, and it boasts a database of more than 150 million contacts maintained in real-time.
“Of those using our analytics in a somewhat sophisticated way, roughly 1.2 percent have been doing it long enough to be at the mature stage,” Schuck said.
Open about analytics
An increasing number of companies have been public about their sophisticated use of analytics to guide sales and marketing strategies.
Take Nike, which in the past 18 months has acquired two firms specializing in predictive analytics. Nike has said these acquisitions are fueling its “Consumer Direct Defense” strategy. The acquisitions signal a departure from Nike’s dependence upon retailers and other third-party sellers. Nike has credited recent sales gains to its spending in digital channels, which deliver shopping experiences highly attuned to each customer.
However, mining big data isn’t exclusively the realm of deep-pocketed global category leaders. Take Craft Brew Alliance. The Portland-based brewer of brands such as Widmer Brothers, Red Hook and Kona Brewing Co., began formalizing and centralizing its analytics functions in 2016. About a year later, a four-person strategy and analytics team had formed with the charge of helping drive high-level decisions for the $200 million, publicly traded company.
Then last year, salespeople showed up with a weighty ask.
“They told us, based on marketplace data, our portfolio needed more beer in cans,” said Nathan Webb, senior manager of strategy and analytics at CBA.
CBA’s portfolio already included a minimal amount of canned beer. It was reflective of a holdover legacy mindset that craft brewers should package solely in glass bottles. Glass had always been one of the ways craft and microbrewers distinguished themselves from mass-produced brands, which used cans. On top of that, manufacturers aren’t known for making forays into new packaging on a lark.
“When you are dealing with a consumer-packaged goods company, sales teams come forward with ‘asks’ fairly frequently and, unfortunately, they can get a rap of wanting everything in order to be successful. After you’ve heard it often enough, taking them seriously can be hard, ” Webb said.
“But when they are coming to you with an analytical component like ours had, it really can solidify the request,” he said.
Webb’s team used its own analytics, industrywide sales data and data from thousands of millennials gathered via a partnership with a graduate program at Yale University.
Webb said he and his team love the challenge of not only gathering and crunching the data but communicating about it as well. “You need to work at presenting it in a way that’s digestible and at the right altitude for your audience. You cannot show up and throw up the data because it won’t help leadership make a decision. Bring too much data though, and you have analysis paralysis.”
Land the data well, Webb says, and you’ll be amazed by how much faster execution happens.
By late 2018, CBA had invested in and launched a production line dedicated for cans, and as a result of the story the data told, new products are being launched via can instead of in bottles.
Thanks to the analysis, the company acted on other hunches from the sales team: CBA brands are stocked in convenience stores, and sales there have turned out to be brisk.
“We really are trying to use analytics as a catalyst to open more doors for ourselves,” Webb said. This is especially important as the craft industry has changed dramatically in just the last four years, he said.
“To be able to move as quickly as we did in this environment, is a major competitive advantage,” Webb said.
Strategy starts with process
CBA’s story illuminates how analytics can be used to empower salespeople. Frequently, however, companies take a different approach.
“You have to look at these (analytics platforms) to see how you are motivating people, because too often they are actually demotivating. If the systems don't add value to the sales staff, then adoption becomes a big problem,” said David Steinberg, co-founder and CEO of Portland-based Adpearance, a marketing and sales optimization company. The company’s niche is automotive and capital equipment.
Steinberg advises optimizing the sales process by looking at every touch point along the continuum and asking the question “is that the best we can do?’”
The mistake, Steinberg said, is when companies think about how they can remove sales people from those touchpoints instead of empowering them with actionable data.
“The job of sales has gotten harder with customers feeling they have all the information — the key is to make your salespeople smarter,” he said.
Ultimately, it comes down to improving your processes. Making sure that every call, text, chat, email and any other contact is entered into your CRM. That way, all of your sales opportunities are captured and when the data is crunched, salespeople see the opportunities to close more transactions with more customers, Steinberg said.
“It’s incremental, not one big swoop. There’s no silver bullet solution but rather a commitment to improve all of your processes.”
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