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Big data can make a big difference

by The Distributor Board

Unless you are still handwriting orders and invoices, your company probably has a ton of data on your customers just waiting for someone to analyze. Since the cost of storage (hard drives, NAS devices, etc.) has plummeted to all-time lows, we all seem to be storing more and more stuff. You probably have years of customer sales, product category, market segment, and profitability data that can be merged with outside data. If you have a blog, Twitter account, LinkedIn company page or a Facebook page, you are or should be collecting data from people that interact with you through those social media venues.

If you are NOT deciphering all of this data and making some sense of it, you are missing out on some of the most robust information available about your customers. If you were to get a behind the scenes look at what Grainger and soon, AmazonSupply are doing with all of the data they are collecting, it would make your head spin. Most of you are probably thinking, "Those guys are huge and have unlimited budget for this kind of analysis, we can't do what they are doing." You would be right on all counts, except the most important one...YOU CAN do something meaningful with the data that you collect. It will take some effort, but the rewards will be well worth it.

Some of you may have heard of a relatively new term called, "Big Data." It refers to the massive amounts of data collected and the data collected on the data. Sounds crazy, but true. To give you an idea of what we are talking about, Wal-Mart captures over 1 million transactions an hour; in the USA there are an average of 294 billion e-mails sent every day; and Facebook users create an average of 90 new pieces of content every month. There are over 1 billion Facebook users. It is not just the volume of new data that is created, but also the incredible speed at which it is created. Rest assured, the amount and speed of data will not slow in the foreseeable future, but only grow exponentially.

What can a business your size do? You don't have a department of data analysts. You don't have sophisticated software algorithms to help you figure out this ever-increasing mountain of data. Harvard Business Review states that "...the most important question regarding Big Data at almost any company is: How much are your customers really worth?" Don't disregard this advice, because if your competitors are figuring this out, it won't be long before they are calling your customers their customers. Here is what Kristin Norris, VP of Finance for W.W. Grainger had to say about just one of their technologies, "Teradata's solutions have helped us become more efficient in capturing data needed to effectively run our business. We're able to analyze data on a variety of dimensions at the level of detail and speed our business users need for strategic decision-making necessary to achieve our goals."

We have some ideas that we think will help you leverage your data. There are three things that you should do.

  1. Develop a meaningful short and long-term goal or goals regarding what you would like to do with your data and how to turn it into useful information.
  2. Develop a Customer Lifetime Value (CLV) metric to help measure the customer's value beyond their own sales and profits to your company and include their buying influence on others.
  3. Develop additional value that you can provide your customers, especially your VIP customers.

Let's take a look at some potential goals that you may want to consider. First, your goals should be focused on the customer and the value that they bring to you and the value you provide to them. With that said, one goal to consider would be to improve your anticipating (forecasting) their needs. While we all know that customers can surprise us with new requirements, using the 80/20 rule, most of the time we should be prepared for what they need before they need it. Another goal to think about is how you can get connected with other people that they may know that can also use your products. This used to be called asking for a referral, but in today's connected world, you should be able to suggest who they should introduce you to based on key criteria. Some of the big guys out there are creating goals around expanding the depth and breadth of products that a single customer can buy from them. Big Data can help you better understand your customer's buying habits. This is not just what they buy from you, but what they buy from you and all of your competitors combined.

Another metric? Really? Yes, and a very important one at that. As the Harvard Business Review author, Bill Lee said, "The most forward thinking companies are adopting some form of Customer Lifetime Value (CLV) to assess the value of customers to their bottom lines." But there is more that you need to know about your customers. Are they blogging about you? Are they tweeting about you? Are they influencing others to buy from you? By properly analyzing Big Data and talking with your top customers, you should be able to uncover this hidden gem of information. Imagine what you could do with the knowledge of which customers are promoting your company to others. The data is out there and there are business intelligence (BI) tools that can help you find it. Check out Qlik Sense as one technology that can bring you knowledge from outside your four walls..

Additional value: How are you connecting your customers to people that can help their businesses? You can also treat them to special at events that you host. Know what direction they are headed and help them get there. Here is an example that comes from the software industry. knows who their best customers are by name. These are the people that are evangelizing their company. They measure what these "MVP customers" are doing and reward them with front row reserved seats at their annual conference, "Dreamforce." In addition, they keep them updated with valuable industry information that their MVPs can use as they see fit.

What special value can you provide your MVPs? How can you excite them about becoming evangelists for your business?

Distributors of all shapes and sizes need to turn data into valuable information to remain relevant in this information-rich world. Set clear goals, determine each of your customer's total CLV, and gain knowledge of and add value to your key customers. You are not too small to take your data and turn it into actionable information that will grow your customer's loyalty and increase your profits. What's next? Call The Distributor Board and let's discuss how you can use big data to make a big difference.

The Distributor Board provides Advisory Board and Consultative services to wholesale distribution companies. The Distributor Principles have owned, run, managed, and advised successful distribution companies for many years. Areas of particular specialization include Strategic Planning, Mergers & Acquisitions, Technology, Operations and Sourcing.Visit or


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