Behavior With Big Data: Your Customer is Going Digital

Behavior with Big Data: Your Customer is Going Digital

Companies that have grown during the last recession and continue to grow exhibit the following strengths:

  • Behavior with big data with the customer going digital
  • Enhancement of operational efficiency
  • Optimization of the supply chain
  • Innovation

Behavior with big data

Although many companies would argue that they understand their customers, companies who grow profitably also do the following:

  • Invest significantly more time and money in understanding their customers
  • Target specific customer segments without inhibitions
  • Market their products in a sophisticated manner
  • Structure their entire organization around providing the products / services their customers seek

A fast-growing online grocery retailer in the UK, with over £500m in gross sales, has relatively easy access to vast quantities of data about its customers and their buying habits. What distinguishes it from its peers is what it does with this data. It thoroughly analyses customers’ responses to marketing campaigns, their buying habits, and the way in which they use the online store and applies this data to ensure that marketing is highly personalized and timed to create regular orders.

On the basis of a more focused research, the company identified a customer desire to interact through a variety of interfaces and, in response, created iPhone, Android and iPad applications. These new interfaces have complemented, rather than changed, services that customers already appreciate, like text messages, informing them of the timely delivery of their purchases.

There’s nothing new in the idea that companies should invest in understanding their customers. What’s important, particularly in a competitive market place, where switching costs are often low, is that they keep trying to do so and that they build an organization around what they learn.

Is your organization ready for growth?

  • Do you really understand your customers and potential customers in terms of the impact of the different marketing approaches?
  • Is your marketing sophisticated enough to respond to the different needs and buying habits of your targeted customer segments?
  • Do you really understand what your customers appreciate about you and where you could improve?
  • Do your products and services continue to meet the needs of your customers?

Operational efficiency

As companies grow, back-office processes tend to emerge and mutate as different people put them in to practice. Companies struggle to take a step back to analyze what they could be doing more effectively. Clumsy, non-standardized processes are, of course, inefficient for any organization but they’re a particular hindrance for growing companies – they are expensive to scale up, complicated to apply to new markets or new customers, and almost impossible to integrate with new acquisitions.

With net sales of almost $80bn in 2010, a leading consumer product company provides an example of how even well-established companies can ease the path of growth by focusing on back-office processes. In its quest to maintain a scalable organization, it recognized the need to simplify and standardize processes and felt this was best achieved by consolidating all back-office functions into one unit.

Over time, it developed this model even further and entered into outsourcing partnerships for non-strategic elements of its IT infrastructure, finance and accounting, HR, and facilities management. Consolidating services allowed it to eliminate duplication and achieve economies of scale. The benefits of having standardized and centralized business services and an integrated IT platform were highlighted when a competitor was acquired. Instead of having to blend numerous systems from the bought company with multiple, intertwined systems, the acquisition’s systems were simply moved on to the central platform.

This example is just an indication of what can be achieved by investing time and resources in simplifying and standardizing back-office processes.

Is your organization ready for growth?

  • Are your back-office processes as efficient and cost-effective as they could be?
  • Where will the pinch points appear in these processes as revenues increase?
  • Have you explored what the best practices look like with respect to these processes?
  • Do you have plans in place to simplify, standardize and, where appropriate, automate and / or consolidate key processes?

Optimize the supply chain

For any company that makes or sells products, the supply chain is vital to its growth. Ineffective supply chains add complexity and cost, alienate customers, are slow to respond to change, and make expansion to new geographies or customer groups extremely difficult to orchestrate.

A multinational information technology corporation provides an excellent example of reconfiguring the supply chain to reflect changes in products and customer needs. The company, historically focused on producing highly customized desktops and laptops, has recently seen a shift to notebooks and handheld devices, a trend toward commoditization and reduced customization, and globalization in terms of increased demand from developing countries and global corporations. The supply chain was not aligned with these trends and it endured two challenging years. Its revenue grew by 16% in 2011, once it recognized the need for and implemented a new supply chain model.

Its new supply chain now contains three individual supply chains to service different customer segments:

  • The first, its historical model, services online individuals and provides low volumes of numerous configurations with low forecast accuracy.
  • A second supply chain serves corporate customers who require high levels of customization but order large numbers in each format.
  • A third supply chain serves retail stores where choice is limited and there is reasonable forecast accuracy.

The supply chains use different forms of transport where appropriate but share warehousing and logistics nodes across the US. This reconfiguration has had a significant impact in terms of reducing costs and growing sales through improved forecast accuracy. It paves the way for future growth in terms of having in place the appropriate supply chain for each part of the business.

The requirements of the supply chain vary by industry and company but all companies with growth aspirations have one thing in common – the need for an efficient and effective supply chain that can handle increased volumes and changes in products, suppliers and customers.

Is your organization ready for growth?

  • Do you understand what is required of your supply chain to meet the needs of different customer segments?
  • Do you understand where your supply chain is likely to fail when volumes increase and / or there are changes in products, suppliers and customers?
  • Do you have plans in place to make your supply chain future-proof?
  • Have you thought creatively about how your supply chain could be more cost-effective and / or better customer needs more effectively?

Innovation is imperative

No company exists in a vacuum; each needs to purchase products or services from other organizations. However, organizations looking to grow successfully need to consider when and with whom they should move beyond a relationship focused on the purchase order.

Many high-growth organizations have made growth possible by building a different kind of relationship with their key suppliers. These more sophisticated relationships, often defined by the term partnership, demand trust, sharing of information and a joint commitment to outcomes that benefit both organizations.

A large multinational invested in internet search, cloud computing and advertising technologies is recognized for its ability to develop partnerships that enable growth. Between 2008 and 2010, net income grew from $0.4bn to $2.5bn and much of this growth can be attributed to its proactive approach to partnership. For example, to develop its smartphones, it licensed its technology widely and continues to work with partners to develop an ecosystem of user applications, operating software, handset hardware and telecommunication services. Its smartphones have quickly surpassed competitor phones in terms of sales. Another example is its partnership agreement with printer manufacturer, allowing users to print directly from apps running on smartphones, tablets or PCs.

A third partnership with a company with retail presence, security infrastructure and brand recognition allows merchants to interact with customers to increase sales and customer loyalty.

For most companies, growth demands a willingness to acknowledge the strengths of other organizations and an ability to work as a partner across organizational boundaries. Partnerships allow growing organizations to quickly access different skills and new markets and respond in a flexible way to changes in the environment.

Is your organization ready for growth?

  • Are you looking at existing suppliers and identifying opportunities for a more sophisticated, partnership-based relationship?
  • Are you scanning the environment to identify potential partners who bring key skills and / or access to key markets
  • Are the relevant people within your organization able to build partnerships?
  • Does your organization support a long-term partnership perspective rather than reward short?

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  • Vignesh C

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