Practical application of data analytics

As Mr. Strategy, I get paid for helping clients think critically about their business value creation processes for profitable and sustainable business models. It

As Mr. Strategy, I get paid for helping clients think critically about their business value creation processes for profitable and sustainable business models. It takes a brilliant prospect to realize that they need help. You cannot have all the answers internally. And that is how we get called in.

As strategy experts, we love data. Data analytics provides the context of the business. One of the questions which data analytics answers is what did the old or current strategy achieve? Someone could give you a 50-page document trying to answer that question. However, with data, you need not more than 5 pages. On a single dashboard, you can visualize the key products and services, market segments, and cumulative annual growth rates for each revenue line, and the contribution per product clearly showing the breakeven point. With such information, you can know which channel to discontinue or expand, which customer segment is most profitable and which products and services are the cash cows. And of course, which specific customers to retain and which ones to let go!

Data analysis provides technical insights to make winning choices. At the end of the day, the strategy does not and cannot guarantee success. However, it can increase your odds of success. This is best achieved with data analysis.

Lets get practical.

You are on my team. And we have just landed a consulting project to guide a telecom company on increasing the average revenue per user (ARPU). During the initial client discussions, you get to learn that their major challenge is customer retention in the SME data business line. You get to learn that over 15% of the SMEs data customers leave upon expiry of their first contracts and it is becoming very difficult to acquire new customers. Since voice service clientele is price sensitive and it is highly saturated, the growth in the data business which drives all other telecom products ecosystem cannot be left to decline. To win, the telecom company must attract new customers for data, while retaining the existing ones. When a customer does not renew upon contract expiry, it is called a churn. The higher the churn rate, the more expensive the business operations become because it is expensive to attract new customers.

You get briefed by the marketing team that the company has put in a good budget to prevent churn. And a special retention offer has already been designed. You are asked to help review the plan in place and recommend a more precise, step by step of how the telecom company could use data science to decide which customers should be offered the special retention offer before the expiration of their contracts.

How would you go about it?

At Summit Consulting Ltd, we help provide visibility into your data so that your decisions are informed with insights instead of opinion or hearsay. Instead of offering special gifts to merely customers who have been with the business for a long period, you offer to customers who have a weighted contribution to the company that is high. In other words, reward customers who deserve to be rewarded because they have made a difference in your business. You need to optimize the impact of your offers.

For example, around this time of the year, companies will be sending holiday gifts. What is the basis for gifting? Now is the time to consult your data to determine the best customers who deserve to receive your gift.

Make data-driven decisions. That is the leading source of distinctive competence.

Copyright Mustapha B Mugisa, 2020. All rights reserved.

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