By Robert Holston, Global Consumer Products & Retail Analytics Leader, EY
Consumer products (CP) companies are heavily investing in data and commercial analytics to pursue a competitive advantage in the industry. Commercial analytics refers to the analytics of the commercial teams – namely, pricing analysis, trade spend optimization, forecasting, commercial investment and marketing optimization, and assortment. It supports activities across planning, retail partner collaboration, and execution. Executives understand the importance of turning those insights into action, but as yet they have not been able to fully realize its benefits. The pertinent questions industries face these days are: why isn’t analytics delivering more value and why is the ROI on data still so low?
We have found that many companies in the CP sector are neither prioritizing on their investment for today’s challenges nor are they changing their working practices to create a competitive advantage. Many engage in a macro-level analysis of consumer behavior, which will not give them any useful insights, let alone help to influence them. Essentially, we believe there are three reasons why consumer products companies are not yet getting their expected ROI from commercial analytics and data:
- Incorrect prioritization of the investment areas
- Unsophisticated execution that doesn’t provide relevant, personalized offers and trusted experiences to consumers
- Lack of omnichannels to activate and engage consumers, and deliver an integrated consumer experience
Right insights to the right people
To help enhance market performance, CP companies should synthesize new data sources, apply advanced analytics and use those analytics for decision-making. As one of the information experts in an organization, the CIO can help achieve this. CP CIOs can work on these five essential steps to help transform the way in which their organizations use commercial analytics and data:
- Integrate data and insight: CIOs can encourage the right investments to combine structured and unstructured data from various sources. While classic point-of-sale data is fine for reporting market share, syndicated data users are realizing the cost-savings benefits that can be used to build new execution capabilities, driving data investment ROI..
- Scale analysis and insight development: To help derive real value from analytics, CIOs should consider creating a consistent analytics approach and capability that can grow across the organization. Setting up a common analytics “language” in the organization will help promote clarity that can drive adoption and accountability. .
- Create insights while you sleep: CIOs can help organizations identify changes in market sentiment and consumer behavior, and even predict them in advance. Invest in commercial analytics that are “always on”— always looking for and identifying opportunities for immediate action. “Calling up the data” every month or quarter may not yield the real value of commercial analytics.
- Translate insight into action: Organizations should consider creating a central commercial analytics team that can address common business issues and CIOs would be well-placed to assist in this initiative. Organizations often underinvest in the skills they need to move from insights to real-world commercial decisions. Investing in training and knowledge management to support these teams will give a core commercial analytics capability that combines data expertise with a detailed awareness of all the decision points.
- Build analytics for consumption: It’s often in the gap between insight and action that the battle for consumer spends is won or lost. CIOs can encourage investments in commercial analytics to help deliver the right insights to the right people in the way that works best for them. Decision-makers must be able to access analytics-driven insights anywhere and anytime.
Almost all automated processes require a human to make a business decision, but organizations without behavioral barriers can be more likely to achieve full value from analytics investments. Every new initiative requires a trusted leader to drive the firm from chaos and uncertainty — to realizing its true long-term value. CIOs’ capabilities can help transform the ability of CP organizations to create, consume and scale commercial analytics in ways that will help unlock growth and improve their business performance.