Use Data to Unlock Growth Ahead of Your Rivals
June 19 2012 by Homayoun Hatami, Maria Valdivieso de Uster and Lareina Yee
Most sales organizations devote attention to meeting short-term sales targets. The best aggressively but systematically apply “big data” thinking to help them spot trends 10 quarters out; to dissect homogenous markets to find the micromarkets of growth that lie within; and to uncover insights about customers and their behavior. Using data in this way takes the guesswork out of selling.
McKinsey & Company’s recent book, Sales Growth: Five Proven Strategies from the World’s Sales Leaders, argues that in a world where computing power is cheap and almost inconceivable volumes of data readily available, surely it’s time for all companies to adopt this mindset.
Keeping an eye on what lies ahead sounds like common sense, but the world’s best sales organizations are much more systematic. They have teams dedicated to monitoring megatrends such as demographic shifts, environmental changes, regulatory developments, disruptive technologies, and more. Their aim is to find where growth could come from two years down the line. In fact, they typically invest 2–4 percent of their sales budget in the distant growth these trends will bring.
For success, companies need to bring together a wide variety of datasets. EMC, for example, works with cutting-edge customers, its own engineers, a business development team, and research universities. This variety is crucial, notes vice-chairman William J. Teuber, because “trends don’t appear clearly from any one source. They come into focus only when you bring a mixture of perspectives together.”
Knowledge is one thing, acting on it something else entirely. World-class sales organizations quickly translate the trends they identify into real top-line impact. As the 2008 financial crisis unfolded, South Korean automaker Hyundai could see that economic uncertainty would make consumers skittish about buying cars. It launched a programme that let customers return their cars without penalty if they lost their jobs. Hyundai became the only major car manufacturer to increase U.S. sales in 2009.
The second key to growth is to uncover the micromarkets of growth that can lie hidden beneath the
the surface. This means breaking markets into multiple discreet units, analyzing their growth potential and the level of competition that already exists, and adjusting resources accordingly. The convenience of geographic sales coverage should take a backseat to the profitability of pinpointing sales growth using all the data available.
A global chemicals and services provider increased the growth rate of new accounts from 15 to 25 percent in just one year. Its big breakthrough was adopting a granular view of the market. It went from looking at sales by region, as it had always done, to examining its share within customer industry sectors within specific US counties. This revealed that although the company had 20 percent of the overall market, it had up to 60 percent in some micro-markets, while in others, including some of the fastest-growing segments, its share was as low as 10 percent. Sales leaders acted fast. They now included forward-looking opportunity data at a much finer level of analysis when allocating resources and ensured that reps were equipped to win in the opportunity hot spots.
Portugal Telecom has wielded this micromarket hammer in Brazil. CEO Zeinal Bava explains that São Paulo city is very different from São Paulo state, “You have to walk away from the averages and map out the markets.” The crucial element of success is not to lump small markets together in terms of strategy just because they are in geographic proximity.
Finally, top sales companies find growth opportunities by using powerful analysis software to uncover hidden patterns in large data sets or from real-time information. The sheer scale and speed at which data accumulates offers incredible opportunities for those shrewd enough to capture and analyze the right data. These techniques are being applied in new ways every day to help with micro-segmentation, sentiment analysis, customizing cross-selling, and—with the rise of smartphones and other mobile data devices—location-based selling.
Big data is changing sales management in three areas. It’s speeding up the performance management cycle from monthly to daily; it’s creating new touch points and leads across both digital and traditional channels; and it’s affecting core elements of sales management, such as sales operations and training, which have to gear up for big data.
To turn data into revenue, top sales leaders harvest data from every available source: customers themselves, external providers, and advanced analytics and experimentation. Google noticed that the paid links that showed up in search results were a different shade of blue than those on Google’s e-mail program. It decided to find out which shade would maximize users’ click-through rate on the ads. A team tested 40 different shades, covering the entire spectrum of blue, on 1 percent of Google’s web pages and compared them to a control group. Users preferred a blue shade that had less green and more purple in it. The change was made across the board and Google netted an additional $200 million in revenues.
US retailer Williams-Sonoma integrates its customer databases with external data on some 60 million households, tracking metrics such as income and number of children. Targeted e-mails based on this data achieve response rates 10 to 18 times that of generic e-mail promotions, and the company is able to create different versions of its catalogs based on the preferences and behaviour of different groups of customers.
Gaining access to data from partners and other outside sources requires new kinds of relationships; no one wants to give up something of value for nothing. Procter & Gamble CEO Robert McDonald explains that in forging relationships with partners and other organizations, “data becomes part of the currency for the relationship. When we do joint business planning, getting data becomes a big part of the value for us, and it’s a big part of how we work together. We have analytic capabilities that many retailers don’t have, so often we can use the data to help them decide how to merchandise or market their business in a positive way.” In other words, a supplier’s big data capabilities will become part of its competitive advantage when building relationships with selling partners.
Bringing big data to bear in your sales organization initially requires hiring the right people. Many companies begin by dedicating a small number of analysts to dissecting markets, customers, and segments to find pockets of growth from forthcoming trends, microscopic markets, or by mining into data to find customer preferences at the individual level. They find these investments comfortably pay off as sales increase and competitors with less foresight fall behind.
Sales Growth: Five Proven Strategies from the World’s Sales Leaders (Wiley) is now available for sale at Amazon.com
HOMAYOUN HATAMI is a partner in the Paris office of McKinsey & Company and co-leads McKinsey’s global Sales & Channel practice. He has a broad range of experience working with high-tech and telecommunications clients in Europe, the U.S., and Asia to help his clients drive growth. As the convener of the Chief Marketing & Sales Officer Forum, Homayoun regularly brings together sales leaders and practitioners from the world’s most prominent companies to discuss critical issues shaping sales management. He received his Master of Science in computer science from Ecole Centrale Paris and his M.B.A. from the MIT Sloan School of Management, where he received the Seley Scholarship.
Maria Valdivieso de Uster is the Senior Knowledge Expert for McKinsey’s Global Sales & Channel Practice in the Miami office. Her expertise includes go-to-market strategy, sales force effectiveness, channel management and key account management. She focuses her work on the High-Tech, Industrial, Media and Logistics sectors. Maria sets the knowledge agenda, leads priority knowledge efforts, provides expertise to teams and clients and leads external relations efforts for the Global Sales & Channel service line. In addition to client work, Maria is also a leader for McKinsey’s sales core skills training and various other training programs.
She holds an MBA from MIT Sloan School of Management, and a BA in Economics and French from Wellesley College.
Lareina Yee is a Partner in McKinsey & Company’s San Francisco Office. Over her 11 years with McKinsey she has been a part of McKinsey’s Greater China and West Coast Offices. She is a leader of McKinsey’s Technology, Media and Telecom Practice advising Fortune 500 companies on strategy, sales and marketing. Lareina is the co-leader of McKinsey’s North American Women in Economy Initiative. She has published three papers on Unlocking the Potential of Women in the Economy. To drive from ideas to action, Lareina is a frequent speaker at conferences ranging from Stanford’s Rock Center on Corporate Governance, 4A’s Transformation to Leadership California. She also is a leader of McKinsey’s women’s recruiting and North American Women’s Program helping to drive a generation shift of women opting-in and becoming Partners. Lareina graduated Magna Cum Laude from Barnard College in 1995 and received her Masters from Columbia University, where she was a Jacob Javitz Fellow. In 1997, Lareina moved to China as a Henry Luce Scholar and taught economics in Beijing and did fieldwork in women’s reproductive health in minority townships.