The ROI of sales analytics

  • Richard Thelwell
  • October 8, 2014

Business Intelligence projects aren’t cheap. And because a major financial benefit of Business Intelligence comes through sales analytics, the ROI of Business Intelligence quickly centres on the ROI of sales analytics.

So what is the ROI of sales analytics? One answer, of course, is to look at Apparently, a massive 20% of the firm’s revenues come through its sales analytics-driven recommendation engine, which powers its well known ‘customers who bought this also bought that’ recommendations. So at Amazon, at least, the ROI of sales analytics is well understood.

But is Amazon’s ROI replicable in other businesses? Specifically, in your business? Because clearly, not every business has a popular consumer-facing website retailing millions of items.

The answer? Yes. That’s because the ROI of sales analytics applies to just about any business engaged in sales—whether these are sales to consumers, sales to other businesses, sales to the public sector.

Let’s take a look.

The ROI of sales analytics: customer profitability.

Who are your most profitable customers? Who are your least profitable customers? In both cases, it’s not necessarily those customers who you think are the most—or least—profitable.

Yet sales analytics tells you precisely who they are—and the ROI of sales analytics in respect of customer profitability comes through being able to take action accordingly.

Run the analyses, in short, and you can quickly find that the margins that your sales people are accepting in order to retain your very largest customers are in fact pushing those customers well down the profitability table.

Moreover, sales analytics can also highlight instances where customers are less profitable due to concessions made on packaging or shipping charges, or special deals in terms of delivery frequency, or minimum order size. Taking firm action here can quickly boost profitability.

And your most profitable customers? Often, they’re those loyal ordinary unregarded repeat-purchasers who don’t get offered special terms, or don’t stand out due to their volume of business. But what are you doing to retain them?

The ROI of sales analytics: Affinity Analysis and Basket Analysis.

Here, the focus of sales analytics isn’t so much on boosting profitability, but instead, on boosting revenues.

The starting point: those Amazon style ‘Customers who bought this are likely to want to buy that’ analyses.
Time and again, sales analytics has been shown to enable businesses to sell more products to existing customers, increase transaction sizes in respect of new customers, and improve the targeting of sales promotion activity.

Better still, Affinity Analysis and Basket Analysis is applicable to all types of trading activity—business-to-business as well as business-to-consumer.

In short, whether it’s service contracts, spare parts pricing, ‘special bundles’, or targeted marketing promotions, the ROI of sales analytics comes from a better understanding of buyer behaviour—and then using that understanding to increase revenues.

The ROI of sales analytics: salesforce effectiveness.

Who are your best salespeople? Ask most sales managers, and the answer given will usually be based upon achieved sales volumes.

But savvy businesses will also want to measure salespeople in other, more informative ways. Such as? Try these.

  • How discounts given—and margins achieved—differ from salesperson to salesperson.
  • How average customer order size differs by salesperson.
  • How customer ‘churn’ and customer loyalty differ by salesperson.
  • How the time taken to convert a lead to an order differs by salesperson.

The ROI of sales analytics: the bottom line.

Convinced of the ROI of sales analytics? We’re not surprised. No wonder, in short, that so many businesses see the hard cash the ROI of sales analytics as the best foundation for justifying an enterprise-wide Business Intelligence project.

And with cloud-based Business Intelligence, the ROI of sales analytics can be flowing to the bottom line in weeks and months, not the multi-year timescale of traditional Business Intelligence projects.

And, purchased as a subscription-based service, rather than as an upfront capital expenditure investment, the ROI of sales analytics has never been more accessible.

Find out more about the ROI of sales analytics in business intelligence systems by downloading our free E-Book below.