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Randy MacLean, President — WayPoint Analytics

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In the Age of Analytics, companies that don't analyze deeply are preyed upon by those that do. Adopting analytics gives insight into market changes so you're in sync with what customers want right now, rather than yesterday. Companies feeling sales and market pressures are frequently just falling behind, and "going back to basics" compounds the problem. Profit analytics is the way forward.

In the age of analytics, companies that don't analyze deeply are preyed upon by those that do. Here's why this is important and what you can do about it.

Over the years, computer systems have really changed the landscape. Companies have more control over what's going on in their businesses and are much better at managing inventory, collecting AR, managing deliveries, etc.

In the 90s, Jeff Bezos, a numbers guy, had a vision that he could make a more efficient company and could change the way that world does business. And he did, with Amazon. Meanwhile, Fortune 500 companies have whole departments full of analysts that are dedicated to number crunching and understanding details of how their business operates.

About ten years ago customer and profit analytics appeared and what a difference that has made. It's revealed tremendous opportunities in profit because companies are at their core still pretty darned inefficient.

Why does this matter? Because profit analytics exposes things you don't know about where money is being made and being lost right now. Without this, many of the day-to-day decisions that drive operations are not the best, or too often are flat wrong. This frequently leads to poor results and executives being surprised that they aren't doing as well as they should be.

Why does this matter? If a competitor is making better decisions than you are, they'll take your profits.

Here's some interesting facts about what's really going on in business right now. A balance of money-losing to money-making sales in business right now is greater than 60%. That means more than 60% of all sales are losing money. With those kinds of numbers, the only reason that companies have a bottom line is because they make more on the 40% that are profitable than they lose on the 60% that are not.

Also, our research confirms what Jonathan Burns at MIT has been saying for some time, and that is that 40% of customers are unprofitable by any measure. On their face, these numbers seem ghastly, but underlying them is tremendous opportunity. A very small improvement in any of these things will generate enormous amounts of money on the bottom line, and that's exactly what our clients are seeing.

Typically, companies that get in control of these things can double or triple their bottom line in a year or eighteen months. It's the shifting of the balance between the money-making and the money-losing sales, the money-making and the money-losing customers that really yields the gains.

The gains come out of the business you're already doing, so you don't have to do more business in order to make more money. Much of the gains come from trading customers with your competition, pulling in the good and giving up the bad, which means that the profit gains come at the expense of the competition.

The take away is: your competitors are very likely adopting profit analytics and will use them to take your best accounts. Whoever's first wins, because it's very difficult to reverse the process. So, head them off by becoming an analytics driven company before they do.

If you'd like to know more about the sophisticated analytics that help our clients out perform well just about everyone visit our website at http://www.WayPointAnalytics.net.

Audio file: wp-tips_10.mp3