In today’s hypercompetitive economy the question is not whether you know what your company is selling – it’s how well you understand what’s going on at each stage of a product’s or service’s lifecycle. You must be able to quickly discern demand trends down to the level of demographic groups in specific geographies. You must be able to calculate, for example, the real cost of a product or service or determine which are the best set of trade-offs to achieve your corporate objectives at any given time in an ever shifting marketplace and uncertain economy. You should be able to determine how best to allocate product R&D investments to meet long-term corporate goals. Moreover, many companies must deal with ongoing fragmentation of their products and services as they attempt to fine tune their offerings to address customer demands.
The good news is that it’s easier than ever to get product data and the analytical tools to work with the data are more readily available. The bad news is that the job is substantially harder. Whereas a decade ago you might have had, say, five products and 30 stock keeping units (SKUs) in a product category, today there may a dozen products comprising over 100 SKUs. This is especially true for consumer packaged goods companies. All of this fragmentation has meant an explosion of data about products and services, often coming from an array of systems and software. This has made it all the more difficult for companies to gain insight into what’s happening and why, what needs attention and what’s likely to happen that will require a response or change in direction. It’s harder to see the forest for the pine-needles and harder still to make sense of the trees. “Insight” occurs when executives and managers gain a deeper understanding of the underlying causes of a situation or the likely outcome of a course of action under consideration. It is particularly valuable in a world of data clutter because it can be difficult to discern meaning and the implications of decisions in today’s complex business environment. Managing the proliferating complexity well means having the data available and the analytics to make sense from it all.
Most companies have a surface knowledge what’s on the price list and what’s in development. Less well understood are some of the important finer points that can aid competitiveness and increase customer responsiveness.
There has been a stream of innovations over the past decade that, combined, give organizations far more powerful analytical capabilities. There is substantially more information available today about products and services – both from internal sources and third party vendors. Technologies and techniques for collecting analysis-ready data have advanced as have the analytics themselves. While specialists have a wide array of powerful tools, non-propeller heads also have a wide range of third-party analytical applications with which they can explore data sets, perform recurring analyses and set up dashboards and alerts to continuously monitor conditions. Moreover, 64-bit in-memory computing allows companies to taking advantage of the vastly expanded data sets that can be rapidly analyzed using this technology.
As my colleague recently observed, analytics that drive the sales function are necessary to allow a sales force to achieve its true potential. Product and service analytics are a complementary and distinct need since it’s difficult to structure sales incentives and compensation without a clear understanding of the profitability of what your company is selling or of the customers themselves.
If you are trying to get a handle on what your company is really selling and why, if you want to have greater visibility into product and service trends or be able to improve the accuracy of your plans and forecasts, I encourage you to participate in our latest benchmark research on product/service analytics. What you learn from the results can help you understand what’s possible and with that drive improvement in your organization.
Take Product/Service Analytics Benchmark Survey.
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Robert D. Kugel CFA