Introduction

The use of analytics to simplify transactions and to improve

processes especially in sales and marketing, human resources and
financial analytics has been widely adopted by companies. Yet it's not as
straightforward to use empirical knowledge that informs wise and effective
business decisions.

DESIRED LEARNING OUTCOMES

Identified, Explained, and Illustrated analytics in Sales and Marketing,

Human Resource, and Financial Analytics; and
Analyzed and illustrated the application of analytics in business support
functions.

What can you say about the way Iphone company uses analytics?

iphone analytics in supply

chain decisions

Write the answer here after watching the video clip.

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 Unit 7: Analytics in Business Support Functions

1. Sales and Marketing Analytics

Sales and marketing analytics are essential to unlocking

commercially relevant insights, increasing revenue and profitability, and
improving brand perception. With the help of the right analytics, one can
uncover new markets, new audience niches, areas for future development
and much more. The best and most important sales and marketing
analytics that can help any business grow and succeed would be higher.

1) Unmet Need Analytics

Business is all about meeting the needs of customers.

Unmet need analytics is the process of uncovering whether there
are any unmet needs around your product or service or within your market
which you could meet to increase customer satisfaction and revenue.
Useful tools for unmet need analytics include; product reviews, qualitative
surveys, focus groups and interviews.
You could also use tools like Google Trends to help identify what
customers are searching for.

2) Market Size Analytics.

If you don’t understand the size and potential of your market you
can easily jump to conclusions about how viable your business proposition
is.
Market size analytics is the process of working out how large the market is
for your products and services, and whether there is sufficient growth
potential.
The size of the market is measured in terms of volume (how many units
sold), value (money spent in that market) or frequency (how often a
product or service is sold).

Useful data includes government data, trade association data,

financial data from competitors, and customer surveys.

3) Demand Forecasting

Understanding demand is essential in order to remain competitive.

Demand forecasting is an area of predictive analytics that seeks to
estimate the quantity of a product or service your consumers are likely to
buy. It goes beyond educated guesses and looks at historical sales data or
current data from test markets.

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 Analytic techniques such as time series analysis can be very useful
here.

4) Market Trend Analytics.

Every business needs to know the direction its market is heading in.
Market trend analytics is a process of establishing whether a market is
growing, stagnant or in decline and how fast that movement is occurring.
Understanding market size is important but knowing whether that market
is trending up or down is also vital.

To monitor market trends you can run business experiments or

scenario analysis to see what the market would look like and how it would
impact your business in either a growing, stagnating or growth market.
Customer surveys and focus groups can also help.

5) Non-customer Analytics.

Traditionally we’ve been told that we need to understand our

customers so that we know what they look like and can find more people
like them. And even as that makes sense, there is another group that
could be even more important – the non-customer! Non-customer
analytics is about understanding what people who are currently not your
customers think about your product, services or brand. By identifying who
is not buying from you (and why), you can expand your market to include
those individuals. If you want to know why people are not buying your
product or service, you need to ask them: interviews, questionnaires and
focus groups can help. It can be remarkably easy to get feedback from
people who are not your customers using the power of social media.

6) Competitor Analytics

Competitor analytics is important for marketing and strategic

planning by identifying who your real competitors are, and how they are
positioned in the market and in relation to your business. By
understanding their strengths and weaknesses you can identify
opportunities to exploit and threats to navigate.

There are many ways of gathering competitor data, such as

business journals and newspapers, annual reports, product brochures and
marketing activity. You could even have an employee, friend or family
member buy a product or service from your key competitors and assess
their experience.

7) Pricing Analytics

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 What if you could find out exactly how many your customers would
pay for your product ahead of time? Pricing analytics is the process that
delivers that outcome. In short, it involves analyzing price sensitivity in
market segments and is especially useful in highly competitive markets
where everything that can be done has been done.

Pricing analytics requires data mining and the development of

forecasting models and algorithms. It also often involves multiple,
concurrent business experiments that can be run quickly and easily so you
can measure what is likely to happen with each price change.

8) Marketing and Sales Channel Analytics

There are literally hundreds of possible channels and ways to

market and sell your products and services. Marketing and sales channel
analytics allows you to assess the different channels available to you and
establish which are the most effective. It is likely you will reach different
segments of your market via different channels but is it still good to know
which ones are working and which are less effective. For each of your
current marketing and sales channels and any potential as yet unused
channels you will need to set some conversion rate goals so you know
what you want that channel to deliver.

9) Brand Analytics

Brands matter. Brand analytics seeks to determine the strength of

your brand compared to your competitors. Your brand is more than just
your logo and your commercial livery – it’s the look and feel of your
products and what they represent to your customers. It’s important to
really understand how customers perceive your brand as this will impact
your decision making and strategic direction.

You can source this sort of data anywhere your customers and
potential customers are discussing your brand, such as customer service
conversations, sales conversations, online forums, blogs, review sites, and
social media.

2. HR Analytics

HR departments are generating more data than ever before but at

the same time they often struggle to turn their data into valuable insights.
Some of the most important analytics managers can use to better
understand the people-related side of their business are;

1) Capability Analytics

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 The success of the business depends on the level of expertise and
skill of workforce. Capability analytics is a talent management process
that allows manager to identify the capabilities or core competencies he
want and need in his business. Once the manager knows what those
capabilities that he can compare with the capabilities he has in place at
the moment. Here, Capabilities are not just about qualifications and skills;
they can also include capabilities that may not be formally recognized,
such as the ability to develop and maintain relationships.

2) Competency Acquisition Analytics

Talent matters, and the acquisition and management of talent is

often a critical factor in business growth. Competency acquisition analytics
is the process of assessing how well or otherwise your business acquires
the desired competencies. You need to start by identifying the core
competencies your business requires now and in the future. Then assess
the current levels of these competencies within your business and identify
any gaps. You can then monitor how effective you are at developing these
competencies in house or spotting and recruiting candidates with those
competencies. Key to effective competency acquisition analytics is
focusing on a small set of core competencies.

3) Capacity Analytics

Capacity affects revenue. Capacity analytics seeks to establish how

operationally efficient people are in a business, e.g. are people spending
too much time on admin and not enough on more profitable work, or are
individuals stretched far too thin? It also allows businesses to establish of
how much capacity they have to grow? The tricky part is establishing a
system to track capacity without creating huge administrative burdens
and without separating employees with a ‘big-brother’ approach. Big data
and sensor system can be very effective here.

4) Employee Churn Analytics

Hiring employees, training them and then integrating them into the
business costs time and money. Employee churn analytics is the process
of assessing your staff turnover rates in an attempt to predict the future
and reduce employee churn. Historical employee churn can be identified
through traditional KPIs such as the employee satisfaction index,
employee engagement level etc. Surveys and exit interviews are also
useful tools.

5) Corporate Culture Analytics

Culture is difficult to pin point and even harder to change. It is

essentially the collective (often unspoken) rules, systems and patterns of

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behavior that represent your business. Corporate culture analytics is
therefore the process of assessing and understanding more about your
corporate culture or the different cultures that exists across your
organization. This then allows you to track changes in culture you would
like to make, understand how the culture is changing, create early
warning systems to detect toxic cultures in their development and ensure
you are recruiting people that don’t clash with the corporate culture. One
way to assess culture is through the analysis of customer service
conversations, which can provide a rich vein of data to assess corporate
culture.

6) Recruitment Channel Analytics.

Employees represent the greatest cost and greatest opportunity in

most businesses. Recruitment channel analytics is the process of working
out where your best employees come from and what recruitment channels
are most effective. Recruitment channel analytics will involve some
historical assessment of employee value using KPIs such as human capital
value added and return per employee.

Surveys and entry interviews are also useful sources of data.

7) Leadership Analytics

Poor leadership, whether of a business, division or team costs

money and prevents a business from fulfilling its potential. Leadership
analytics unpacks the various dimensions of leadership performance via
data to uncover the good, the bad and the ugly. Data about leadership
performance can be gained through the use of surveys, focus groups or
employee interviews.

8) Employee Performance Analytics

Your business needs capable high performing employees to survive

and thrive. Employee performance analytics seeks to assess individual
employee performance. The resulting insights can identify who is
performing well and who may need some additional training or support in
order to raise their game. Today, we have many innovative ways of
collecting and analyzing performance, from crowd sourced performance
assessments to big data analytics.

3. Financial Analytics

In today’s data-filled world, analytics is an essential part of staying

competitive. Financial analytics help businesses understand current and
past performance, predict future performance and make smarter

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decisions. Some of the key financial analytics that any business,
regardless of size, should be using are;

1) Predictive Sales Analytics

Sales revenue is the lifeblood of any business so knowing how much

you can expect to receive has important tactical and strategic
implications. Predictive sales analytics involves figuring out how
successful your sales forecast is and improving your sales predictions in
the future. There are many ways to predict sales, such as looking for
trends in past data or using predictive techniques like correlation analysis.

2) Customer Profitability Analytics

It’s important to differentiate between the customers that make you

money and the customers that lose you money. Customer profitability
usually falls within the 80/20 rule, whereby 20% of your customers
account for 80% of your profit, and 20% of your customers account for
80% of your customer related costs. Knowing which is which is important.

By understanding the profitability of certain groups of customers

you can also analyze each group and extract useful insights. For example,
you may discover that your very best customers made their first purchase
from a particular advertisement in a particular magazine. That knowledge
can help direct your future marketing efforts.

3) Product Profitability Analytics

In order to stay competitive, businesses need to know where money

is being made and lost. Product profitability analytics is a way of
discovering profitability by individual product, rather than looking at the
business as a whole. To do this you need to assess each product and its
costs individually. This can be tricky because your products may well
share production processes or cost bases. Therefore, you need to find a
reliable and fair way to apportion costs to your various products.

Product profitability analytics helps businesses uncover profitability

insights across the product range so better decisions are made and profit
is protected and grown over time. For example, if you discover that one
product makes more profit than all the others then you may want to
promote that product more heavily.

4) Cash Flow Analytics

The day-to-day running of a business requires a certain amount of

cash to keep the lights on, wages paid, etc. Knowing how money is moving
in and out of your business is essential for gauging the health of your

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business. Cash flow analytics involves using retrospective or real-time
indicators such as the Cash Conversion Cycle and Working Capital Ratio.
You can also use tools like regression analysis to predict future cash flow.

Cash flow analytics can also support a variety of corporate functions. For
example, analytic software can help accounts receivable personnel to
increase cash flow by prioritizing which customers are contacted by
collection staff and when.

5) Value Driver Analytics

Most businesses have a sense of where they are heading and what
they are trying to achieve. Often these goals are formalized on a strategy
map that identifies the value drivers in the business. These value drivers
are the key levers that the business needs to pull in order to meet its
strategic objectives. Value driver analytics is the assessment of these
levers to ensure they actually deliver the expected outcome.

Value drivers are often based on assumptions which need to be

tested to check they are correct. For example, you may use price as one
of your value drivers and assume that price influences sales and revenue,
but you need to test that hypothesis so you can establish if you are right
or not.

6) Shareholder Value Analytics

The results and interpretation of the results by investors, analysts

and the media will determine how successful your business is on the stock
market. Shareholder value analytics is a calculation of the value of a
company made by looking at the returns the business provides to its
shareholders.
It effectively measures the financial consequences of strategy and
assesses how much value the business’s strategy is actually delivering to
the shareholders.
Shareholder value analytics should be used frequently alongside profit and
revenue analytics. To measure shareholder value analytics, you can use a
metric called

Economic Value Added (EVA). This calculates the profit of a

business when the cost of equity finance has been removed.

4. Production and Operation Analytics

Production / Operations Management is defined as, the process

which transforms the inputs/resources of an organization into final goods
(or services) through a set of defined, controlled and repeatable policies.

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Production and operations management are more similar than different: if
manufacturing products is a prime concern then it is called production
management, whereas management of services is somewhat broader in
scope and called operations management.

Aim of Production function is to add value to product or service

which will create a strong and long lasting customer relationship or
association. This can be achieved by healthy and productive association
between Marketing and Production people. Operation Management deals
with; identify the customer needs and convert that into a specific product
or service, Based on product requirement do back-ward working to identify
raw material requirements as well as engage internal and external
vendors to create supply chain for raw material and finished goods
between vendor → production facility → customers.

There is also a term called Industrial Analytics (IA), describes the

collection, analysis and usage of data generated in industrial operations
and throughout the entire product lifecycle, applicable to any company
that is manufacturing and selling physical products. It involves traditional
methods of data capture and statistical modelling.

In short, analytics help in Production and Operation functions in

following ways:

1) Production Scheduling

As Scheduling is all about arranging, controlling and optimizing

work in production process, analytics help in many ways to improve this
function. The problem like having a limited production capacity to make all
of its offerings; as well as fluctuation in demand for those offerings,
resolved by analytics. This can be done by prepare a forecasting model to
predict demand for each product and visualization of the demand forecast
via a custom application.

This will help by 90% reduction in planning time, reduced reliance

on expertise of a single individual, confidence in planning by reducing
human error or bias as well as continuous application relevance by
updating the underlying model with new data.

2) Variable Manufacturing Overhead Cost Analytics

Manufacturing overhead costs are always varying. Examples of

Overhead Costs are; accounting and legal expenses, Administrative
salaries, Depreciation, Insurance, Licenses and government fees, Rent etc.
To be profitable on any custom manufacturing project, it is required to
monitor and closely control manufacturing overhead costs.

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 Analytics help to solve the problems by a custom built real-time
cost tracking application as well as an interactive dashboard allowing
custom views of individual
& aggregate data (for cross-referencing).

This will help as; more than 3x (3 times) reduction in effort required
to accurately measure and track costs, early identification of the impact of
various factors, e.g. overtime, new employee hire, etc. on overhead, spot
the reasons for a hike in overhead costs as well as focus more cost/time
on resolving cost issues rather than identifying causes for overhead
fluctuations.

3) Supply Chain Analytics

Supply chain simply means, the sequence of processes involved in

the production and distribution of a commodity. Supply chain
management means, the management of the flow of goods and services,
involves the movement and storage of raw materials, of work-in-process
inventory, and of finished goods from point of origin to point of
consumption.

In supply chain it is required, the acquisition of market intelligence

to help minimize production costs. For that managers need to frequently
access commodities Market data and related news; compare budgets and
contract prices with that market data; forecast pricing changes; and
update cost models of products to accurately reflect cost of goods. If done
manually, this may be time/labor intensive.

So the goals would be; Make system that automatically track

market prices and commodities data of raw materials and prepare model
and forecast the cost of goods (to be sold) on a regular basis. Here,
analytics help, by an application that tracks daily market data for
commodities used in production, provide an intuitive tool that builds cost
models of finished goods, an interactive dashboard that allows the end
user to review the costs of each product based on underlying commodity
prices.

4) Transportation Cost Forecasting Analytics

Sometimes, when product ships across the country via multiple

distributions centers (DCs), and incurs different costs at different DCs at
different times it is required to conduct proactive transportation budget
planning with a high level of confidence. In short, the main objectives
should be to understand, why different distribution centers (DCs) have

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different costs? Identify which costs are most influential to each DC and
Predict aggregate transportation costs with confidence.
The said issues can be solved with the help of analytics by making an
analysis of historical data to identify key cost factors and prepare a budget
forecasting model to predict costs. This may be beneficial by Confidence in
proactive planning by eliminating human error and bias and so on.

5) Customer Segmentation Analytics

Using big data and advanced analytics, manufacturers are able to

view product quality and delivery accuracy in real-time as well as making
transactions on which suppliers receive the most time-sensitive orders.
Managing to quality metrics becomes the priority over measuring delivery
schedule performance alone.
Customer segmentation is required for scheduling manufacturing activities
and planning as per the customer demand. Here, the task of the mangers
would be to profile and segment prospective customers based on
quantitative and qualitative data as well as automate the process of
segmentation.
Analytics helps by making a high accuracy classification model that
identifies the technological adoption category of any prospective firm
based on its survey response, and quantifies the confidence of that result
as well as prepare an interactive dashboard that allows managers to
graphically view results, including the overall distribution of prospects
across categories.

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Isson, J. and Harriot, J. (2013). Win with Advanced Business Analytics. John
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Mohanty, S. (2011). Analytics in Practice. McGraw-Hill Education India.

Sonecha, N.J. (2019). Module in Business Analytics

Stubbs, E. (2011). The Value of Business Analytics: Identifying the Path to

Profitability

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