Analytics Takes a Deep Dive Inside the Bottom Quarter

It’s no secret that an increasing number of lower-middle-market companies are tapping into the competitive powers of analytics. However, bottom-quarter firms may have to address some unique organizational issues before they are able to properly implement and use analytics to their advantage. We recently caught up with Jundong Song, head of marketing intelligence for 89 Degrees, a marketing solutions provider deploying SAS analytics for a roster of bottom-quarter firms.

MME: When it comes to company size, how far down the corporate food chain do we see the adoption of analytics today? There must be a practical cutoff, where the costs of technology or competitive dynamics or available talent makes such IT investment just not practical or smart …

Song: I really do not think of a hard cutoff line between who can and who cannot adopt analytics, by company size or other criteria. It is truly a matter of choice about how to reach business decisions and run a business. What makes a difference is whether you are analytically minded, although acting on gut feeling is still inevitable.

Yes, you need IT investment — servers, software, storage, networking, and security management. In today’s digital and networked world, almost certainly you already have those in place with underutilized capacity and just need to add a bit analytic flavor instead of building a whole enterprise solution from the scratch.

Data such as POS transactions, email opens and click throughs, website clickstreams, etc., are already sitting somewhere. Plus, you can always look outside for those things as a service — and analytics over the cloud is also emerging. The trend is favorable — each of those building blocks is getting much less expensive. Ten years ago, we had to budget over a million dollars to supporting data-intensive retail marketing analytics and were interested in only those opportunities with a half-million or bigger budget. With the same amount, you can have much richer functionalities and more than 10 times the processing capacity today. And that trend will continue.

This certainly makes analytics affordable even for the bottom quarter of the middle market you defined. Taking retail verticals as example, on average, companies spend about 5 to 10 percent of their revenues on marketing. Those who adopt analytics spend 8 percent of their marketing budget and have two or more analytic personnel, an increasing trend. But you do not have to follow their suit. When you are open to outsourcing, there will be someone willing to listen and meet your database needs and help you leapfrog if you have a $100k. Fifty thousand dollars can accomplish decent and advanced analytic research such as customer segmentation and targeting recommendations, but we do urge companies to have a sustainable annual plan. Analytics is about learning and experimenting. It takes time to see results, especially if you are aiming at a long shoot — building an analytically oriented workforce and organization. Taking even just 1 to 2 percent of your marketing budget and picking your focus can get you funded for a decent start. Plus, data and analytics’ value goes beyond marketing and can benefit the whole enterprise.

MME: What do the small, but innovative adopters of analytics have in common?

Song: Analytics-minded leadership. A leader’s power to know imposes more demand on facts and speaks value of knowledge. Business leaders do not and cannot make decisions relying solely on analytics, but an analytics-minded leader leads and manages by weighing more on expertise and example over position and power, which fosters learning and innovations that always are bottom-up.

Plus, learning as a culture. Being curious to ask why and motivated to answer with evidences is common for organizations adopting analytics, which leads to constant and continuous learning as habit of mind. Data volumes and emerging data sources mandate learning. Emerging media, channels, and technologies mandate learning. Problem-solving orientation is a must of employee quality. Learning from the history of others, coding and memorizing what was learned, and applying that learning to solving emerging business problems are commonly found among analytics professionals and their analytically oriented organizations.

When decisions are more facts-based, decision-making is easier and can be made lower down on the corporate ladder. This makes an organization flatter. While big companies are forced to evolve, smaller companies have an advantage without that much pain of change.

MME: What kind of impact are analytics having on corporate organizations? Are they flatter? Is decision-making more decentralized?

Song: Obviously, analytics makes both people and corporate smarter. Evidences come from a continuous increase of worker productivity in the U.S., while the unemployment rate stays high.

Smarter and more innovative organizations down-delegate decision-making with confidence due to a smarter and motivated workforce. This leads to a flatter structure. Those reporting dot lines and matrices speak to the fact that we are reporting into each other and we have to collaborate across functions. Traditional corporate governing finds it out of favor and fit, conflicting with a workforce of more and more analytics-minded professionals aspiring for achievement and influence. Corporate leaders find out that top-down style works less effectively and not always without unwelcome consequences. Smaller and newly started companies have an advantage of agility and fresh start.

When an organization gets analytically oriented and decision is more fact-based, the valuation of employees is easier to have be performance-focused. And managers feel more confident in a more and more remotely stationed workforce that is self-selected into the profession and self-motivated to value and strive for achievement. Managers trust that these people are doing the right things when not watched. And they usually do deliver more and better and put in more efforts when trusted.

MME: Are analytics always about competitive advantage? When are they not?

Song: No, it is not, though analytics offers a way to gain an edge in competition, especially a potential leapfrog for those small and new companies.

Companies can take analytics as an enterprise strategy to compete and align the organization accordingly with the right management and employee talents, technologies, process, and culture. This is the top of the 89 Degrees PACE road map where, an organization has achieved enterprise intelligence, and learning is instituted as an enterprise asset and culture. Companies who achieved this have also transferred their business strategies into customer-centric from product-centric.

Few achieve that. Most are somewhere on the road map toward that — program optimization, channel optimization, and customer optimization. Asking potential lift and ROI via analysis and testing-differentiated targeting strategies for different customer segments prior to program launch or new initiatives is not unique and does not warrant a competitive advantage. When one click is what it takes to lose a sale and a customer, analytics is just one of the warranted competencies needed to do business in an era of big data and mass intelligence. Plus, the answers are pretty much in the data already generated or recorded by machines. It becomes a matter not of whether you want to compete on analytics but of how long you can afford not to be analytic.