Data is King

Business analytics experts from IMARK member service providers MITS, PHOCAS and SMP discuss how the strategic use of data can enhance business decision-making and financial performance—and how they can help IMARK members exploit their company’s data.

Napolean Bonaparte once famously said that “war is 90 percent information.” Centuries later, that same adage still holds true. In today’s competitive marketplace, where more information is available faster than ever before, the assembly of robust company data and the ability to use it intelligently and strategically can help change a company’s future. Following, representatives of some of the electrical industry’s leading business analytics companies (all of whom are IMARK member service providers) discuss the importance of sound analysis and ways in which the collection and display of key company data can drive better, more-informed business decisions that result in increased sales and profitability for IMARK members.

IMARK Now: Please explain the primary benefits your company offers IMARK members.

Elizabeth Birch, vice president of customer experience, Phocas: A few primary benefits Phocas offers IMARK members include the ability to explore their data, ease of use and fast return on investment (ROI). In Phocas, because data is right behind the dashboards users are currently viewing, they can slice and dice their data any way they want, allowing them to follow their train of thought and potentially uncover an insight or answer a question they didn’t know they had. Because it’s simple for them to view the information at their fingertips, we’ve had our users consistently say they’ve found Phocas easy to use. We’ve designed our solution so that it can be used by anyone, including non-technical users. What this ease of use accomplishes for most organizations, besides high user adoption, is fast ROI. The more teams that are using Phocas in a business, the better, because they can quickly see what their investment in Phocas is doing for them.

Brian Friedle, vice president of operations, MITS: MITS offers visibility into your company through dashboards, scorecards and reporting so that you can easily identify areas to maximize your profitability, increase cash flow and improve customer engagement. While you can use our software to easily build reports and dashboards from scratch, one of the primary benefits of using the MITS platform is our 20 years of experience working with distributors; many of us at MITS also came from a distribution background. Based on our knowledge of and history in distribution, we’ve created hundreds of pre-made dashboards, scorecards and reports of likely areas you could use to increase your profitability and sales, reduce expenses and exercise margin control and inventory management and these are available to you on day one. Analytics should be more than interesting; they should point you to actions that make a positive difference in your company. The more people at your organization using an analytics tool, the more successful you can be. MITS comes with a universal license—no per user fees—so you can encourage every employee to use it, even as your company grows. You can also give access to vendors and customers by setting security permissions that only allow them to see the information you want them to see.

Joe Raventos, president, SMP: SMP provides customer relationship management (CRM), business intelligence (BI) and proactive marketing integrated to leading distribution enterprise resource planning (ERP) systems to help you grow your top-line. IMARK members can proactively manage their sales processes, execute integrated marketing, deliver self-serve dashboards and close more sales. Distributors use SMP to close more open quotes, analyze customers, sell more to existing customers, execute marketing campaigns and manage and track sales opportunities. SMP is unique because we provide a fully-integrated platform that combines CRM, analytics, business intelligence, world-class dashboards and marketing execution with tight integrations to the leading distribution ERP systems. Instead of integrating different solutions, SMP combines insights from your ERP data, sales history and more in a single cost-effective, hosted platform. The biggest difference SMP provides to IMARK members over stand-alone business intelligence is the ability to take your strategies from thought to execution. SMP doesn’t just provide a way to look at your data, we provide a very easy way to gather important insights and put them into action with sales tasks, marketing campaigns, emails and more.

IMARK Now: What are some of the most popular metrics used by distributors and how do they improve decisionmaking?

Friedle: At MITS, we believe that the real value in using analytics is not just to get access to the metrics, but to provide context. For example, suppose you track your margin percentage as a metric and you observe that it’s going down. Is this good or bad? You might use MITS Distributor Analytics to answer the following questions: Which customers and/or products fall below your company average? Is there a pattern? Which sales rep is doing the overrides to reduce margin? Which customers are trending down in margin? Did it result in more sales? The ability to pull data from multiple parts of the business onto one report and then easily filter and sort will lead to the answers to those questions in mere minutes and, likely, an adjustment in choices for your sales force.

Birch: The three most popular we’ve found are inventory, stock receipts, receiving vendor shipments on time and in full and customer buying patterns. By looking at each of these, distributors can ask and answer potentially business changing questions. With inventory, for instance, knowing stock levels can help prevent dead stock and slow-moving inventory, as well as help manage inventory turns, gross margins and ROI. Having this firm understanding also informs product mix and identifies customer buying patterns, answering questions such as: Are we selling complementary product lines? What are customers buying versus not buying? What did they stop buying? With stock receipts and receiving vendor shipments on time and in full, keeping track of inbound shipments, noting vendor performance and having the ability to fill orders all help when it comes to considering how distributors are best serving their customers. When examining this metric, distributors can ask questions such as: How are my lead times with this vendor? Do we have what customers need or are they losing orders? Finally, with customer buying patterns, being able to quickly identify customers who are increasing or decreasing product categories allows you to quickly spot opportunities to grow and retain business. The underlying theme of these metrics is that they’re data-driven, so having the ability to look at the information surrounding them and identify trends can help drive business strategy.

Raventos: Two important measures that can really improve distribution profitability are order profitability and order frequency. SMP’s visualizations let you automatically segment your customers based on buying behavior. The goal is to move all of your customers toward your best customer segment—high profit orders with high frequency; SMP makes it easy to create profiled lists based on this analysis to assign to your sales and marketing teams. You might do ‘X’ to increase lines per order, ‘Y’ to improve share of wallet or ‘Z’ to increase order frequency depending on the right strategy that matches the customer buying behavior.

IMARK Now: Without sharing names, please offer a specific example of how one of your customers used data to increase sales and/or profits.

Raventos: One of our IMARK member clients came to us seeking to develop the following capabilities:

1. Streamline sales and marketing reporting
2. Capitalize on the CRM capabilities to track sales programs and new customer sales
3. Conduct gap analysis that allows them to ensure they’re increasing market share year-over-year with each and every customer
4. Successfully execute pinpoint marketing

They started by streamlining sales scorecards for customers and reviewing what each customer is buying or not buying category-by-category and comparing it to industry norms. SMP allows the client to put those insights into action with sales tasks, emails and more so they can have intelligent conversations with customers about what they buy and how they can gain a bigger share of their business. Secondly, the client struggled with taking their existing ERP data and turning it into meaningful actions in their customer relationships. They replaced multiple systems and spreadsheets with one integrated platform that combines ERP data, sales history and marketing event results in one platform with SMP. Finally, they were able to use product and customer data analysis to execute on-target, relevant pinpoint marketing to their customers and prospects.

Birch: One of our customers uses Phocas to concentrate on its declining customers. Specifically, over the last 12 months, this distributor has managed to increase the business done with these customers by more than $133,000. They’ve also found that Phocas is great for keeping an eye on smaller accounts that often get missed, so action can be taken if spend drops off or increases suddenly. Lastly, they leverage Phocas to drill down and explore what their customers are buying.

Friedle: We have a customer who used to use a do-ityourself tool to generate reports. The problem was that it took up his time, was cumbersome and by the time the reports were done each month they were just a post-event autopsy report. After getting MITS, his teams were able to interact with their data on a daily basis and investigate anything that needed attention. For instance, by giving his sales team visibility into accounts that were trending downward in sales and the specific products that were dropping off, they were able to have timely conversations with those customers that resulted in recovering $30,000 of lost sales in a month. We have many customers who have reported to us that they made back their investment in MITS Distributor Analytics within the first 60 days.

IMARK Now: Once a distributor engages with your company, how long does it take to get set up and make use of the reports?

Birch: The end-to-end process takes six to eight weeks. This implementation is quick because we’ve had years to refine our product and solutions for different ERPs. Therefore, we have a great starting point with our solutions and our product allows us to dial it in for each of our customer’s unique needs. We spend a large portion of this implementation process performing our behind-the-scenes work and only involve the customer toward the end when we’re training them on how to use Phocas. We know our customers’ time is valuable, so we focus our efforts on streamlining this process as much as possible and ensuring that they get the most out of their investment with us.

Friedle: Once the hardware is configured, it only takes one to two weeks to install MITS. This includes collaborating with the distributor to confirm that the data in MITS matches the data in their ERP system. Following the installation and confirmation of the data’s accuracy, we do an administrative hand-off where we show you how to configure the software, add log-ins, set security and generally navigate the administrative menus. The next step is what we call our executive hand-off, although it’s open to whomever you feel should attend. We generally schedule this about two to three weeks after the administrative hand-off to give you a chance to get familiar with the software and discover what questions you’d like to ask. During this session, we’d like to hear what objectives you’re currently addressing in your company so that we can offer suggestions for how you might use MITS to help achieve them, such as key pre-made dashboards and reports that you can run immediately to further your cause. To help roll it out to the rest of your teams, we offer role-based, online training, which includes a series of short videos explaining how to navigate and use MITS, tours of applicable dashboards and how to use analytics as they go about their day. For those who want extra help, our support department is free for subscribers and based in the United States.

Raventos: Typical on-boarding takes four to six weeks and requires about 20 to 30 hours of the IMARK member’s time from beginning to end. This includes data integration, pre-built dashboards and reports, CRM customization and training. Since SMP is a hosted platform, there are no servers to configure, support, back-up or maintain. All of this is provided by SMP as part of our subscription service.

IMARK Now: What are some of the most frequent objections you hear from distributors who are slow to move forward in this area?

Friedle: There’s often concern about adoption, which is what led us to develop the on-boarding process mentioned above. Otherwise, it’s mostly about inertia–e.g., they’ve always done it the way they’ve always done it and they’re getting along just fine. The problem with that mentality is how do you find out what you don’t know?

Raventos: Some distributors have old-style company cultures. Key executives may question who will own the project, will anyone use it, should I allow my employees to have access to this information? This type of thinking puts distributors at a huge disadvantage compared to those with cultures that embrace technology and information. The biggest objection we hear when talking to distributors about business analytics is, “I get a lot of pretty charts, but I don’t know what to do with them.” That’s why we built an integrated platform that allows distributors to interact with the data and create lists, activities, tasks and campaigns inside their CRM to make that data actionable.

Birch: The first common objection regards budget when purchasing a data analytics solution, the second involves concerns around user adoption and the third involves the time commitment needed to have a successful implementation. When discussing these potential issues with our users, one question we like to ask is, “There’s a cost for Phocas up front—but how much might it cost to not know everything about your business?” We find this resonates with many as they consider the price of not being able to identify trends or patterns in their business over time or potentially missing sales opportunities. The other item we’re able to address is the level of user adoption. Because Phocas is intuitive, organizations have found that their teams are quickly able to use the solution. As a result, our customers have seen benefits, such as a 35-45 percent increase in sales through opportunities revealed.

IMARK Now: We often hear that data is king. How would you describe the current level of interest by electrical distributors in utilizing business analytics as compared to two to three years ago?

Birch: We’ve found that the interest in data analytics has increased over time because, for our customers to remain competitive, they need to analyze their data for opportunities. But they also need to do this easily, since it’s a competitive marketplace and growing margins or finding new business can mean the difference between a good or bad year. Businesses these days also want to put data into the hands of the users and move past relying on just a few experts within their organizations to do so. We’ve found that the results speak for themselves when it comes to data analytics and Phocas specifically. Our customers have found successes in their businesses, such as a 300 percent increase in reporting spend, a 70 percent decrease in report requests to IT/specialists and a 40 percent decrease in administrative costs, all because they started leveraging data analytics and business intelligence with Phocas. We’re proud and excited to help our customers see the success that data analytics can bring to their businesses and will continue designing our solution to meet their needs.

Friedle: There are more distributors interested in utilizing analytics today than there were two to three years ago and we think there are several reasons for this. For one, competing against Amazon, internet companies and large national chains is tough. Distributors need every advantage they can get because you can bet that the big dogs are using analytics to their advantage. Second, business intelligence and analytics tools have now become available to small and medium-sized distributors off the shelf in a reasonable price range. In addition, in a marketplace where it’s harder and harder for distributors to add enough value to justify their piece of the supply chain pie, analytics gives you knowledge and knowledge is power. Finally, there’s a momentum toward using analytics in distribution. If your competition is using analytics, you’re falling behind. If they’re not, you could be using analytics to gain an advantage. Either way, more and more distributors are getting on board.

Raventos: Several times per year we conduct distribution industry focus groups to survey the market on trends in CRM, sales management and business analytics and two things are clear from our research. First, more and more distributors are interested in business analytics today than several years ago. Second, when we compared high-growth companies to the rest of the survey participants, we found that high-growth companies were about twice as likely to have their BI solution integrated to CRM than their low-growth counterparts.