Using business intelligence and analytics effectively is the crucial difference between companies that succeed and companies that fail in the modern environment. Why? Because things are changing and becoming more competitive in every sector of business, and the benefits of business intelligence and a proper use of data analytics is key to outperform competition.
For example, in regards to marketing, traditional advertising methods of spending large amounts of money on TV, radio, and print ads without measuring ROI aren’t working like they used to. Consumers have grown more and more immune to ads that aren’t targeted directly at them.
The companies that are most successful at marketing in both B2C and B2B are using data and research to craft hyper specific campaigns that reach out to targeted prospects with a curated message. Everything is being tested, and then the campaigns that succeed get more money put into them, while the others aren’t repeated.
Why Is Business Intelligence So Important?
The main use of business intelligence is to help business units, managers, top executives and other operational workers make better-informed decisions backed up with accurate data. It will ultimately help them spot new business opportunities, cut costs, or identify inefficient processes that need reengineering.
BI uses software and algorithms to extract actionable insights from a company’s data and guide their strategical decisions. BI users analyze and present data in the form of business intelligence dashboards and reports, visualizing complex information in an easier, more approachable and comprehensible way. BI can also be referred to as “descriptive analytics”, as it only shows past and current state: it doesn’t say what to do, but what is or was. The responsibility to take action still lies in the hands of the executives.
This methodology of “test, look at the data, adjust” is at the heart and soul of business intelligence. It’s all about using data to get a clearer understanding of reality, so that your company can make more strategically sound decisions (instead of relying only on gut instinct or corporate inertia).
Ultimately, business intelligence and analytics are about much more than the technology used to gather and analyze data. They’re about having the mindset of an experimenter, and being willing to let data guide a company’s decision-making process.
What Are The Benefits of Business Intelligence?
The benefits of business intelligence and analytics are plentiful and varied, but they all have one thing in common: they bring power. The power of knowledge. Whichever the unit they impact, they can transform your organization and way to do business deeply. Here is an overview of 6 main business intelligence benefits:
- Understand your customers more effectively
- Drive performance and revenue
- You can grade leads
- Identify sales trends
- Provide personalized service more easily
- Improve operational efficiency
In this post, you’re going to dive into 6 illustrations of the advantages of business intelligence, backed up with some real-world case studies along the way. By the end of this post, you’ll feel the need to double down on creating a data-driven culture at your company, and you’ll have some hard evidence you can use to persuade skeptical teammates.
Image source: Valuewalk
The Benefits of Business Intelligence: 6 Case-Studies
Here are six use-cases that illustrate different business intelligence benefits.
1) You Can Understand Your Customers More Effectively
The first benefit of business intelligence we will address here is the relationship with the customers. Renowned email marketing guru Andre Chaperon says that “the business that succeeds the most is the one that understands its customers the best”. This case study about Verastel, a German telecom provider, shows the truth of this statement and how they reaped big benefits of business analytics.
Verastel was doing well in their market, but was facing growing competition and price pressures that caused senior management to look for new ways to reduce customer churn rates. After all, it’s a lot easier to keep selling your services to an existing customer than it is to get an entire new one.
After digging into the issue, Versatel found that they needed to understand their customers’ needs and preferences more thoroughly in order to get more renewals. They had already been using manual methods to do so, but they needed to upgrade their execution. That’s where business analytics came in.
As a Nucleus Research case study states, “deploying [business analytics] has enabled Versatel to have a deeper understanding of customer preferences and behaviors so it can improve the effectiveness of its marketing.”
One big finding was that their customers really disliked having to deal with an outsourced call center for support – they just wanted to talk directly to Versatel when things weren’t going well. By eliminating their outsourced call center and putting things back in house, Versatel was able to increase their customer renewal rates. In other words, by better understanding of their customers’ needs through market research analytics, Versatel was able to keep their churn rates lowest in their industry in Germany.
Through this improved customer support, Versatel also dramatically reduced the number of complaint calls they received in general. This led to reduced call waiting times for customer support, which in turn led to increased customer satisfaction. All these are important customer KPIs that should be measured and tracked on a regular basis to improve your service and retain your clients.
To top it all off, Versatel cut external IT costs in several areas through the use of a BI platform. Since they had self-service BI tool at their disposal, Versatel didn’t have to spend as much money paying outside firms to do reports for them.
A return of their investment money and then 62% more, getting their money paid back in 1.9 years, and then reaping an average annual benefit of € 454,075.
2) Drive Performance And Revenue
McKinsey realized a case study on a fast-food chain restaurant company with thousands of outlets around the world. That company wanted to focus on its personnel and analyze deeper any data concerning their staff, to understand what drives them and what they could do to improve business performance.
After exhausting most of their traditional methods, the company was looking for other ways to improve customer experience, while at the same time tackling their high annual employee turnover, whose figure was above the average of its competitors. The top management believed that tackling this turnover would be key in improving the customer experience and that this would lead to higher revenues.
To do so, the company started by defining the goals, and find a way to translate employees’ behavior and experience into data, so as to model against actual outcomes. The goals were multiple: revenue growth, customer satisfaction and speed of service. They then proceeded to analyze three areas: the employee selection and onboarding, the daily staff management, and finally the employees’ behavior and interactions in the restaurants.
They used the data collected to build a logistic-regression and unsupervised learning models, so as to determine potential relationship between drivers and outcomes. They then started to test over a hundred hypotheses, among which many that had been championed by senior managers who strongly believed in these methods after their experience. That was a powerful experience as it confronted senior managers with evidence against what they believed was true and practiced for years.
All the insights they gleaned challenged their beliefs and experience, but the results after implementing new measures according to their findings were indisputable: customer satisfaction scores had increased by more than 100% in four months, the speed of service by 30 seconds, attrition of new hires had decreased considerably, and sales went up by 5%.
3) You Can Grade Leads (And Focus On The Best Ones)
Third of our benefits of business analytics is the leads management. The example we will take here is the Michigan State University’s University Advancement department, who faced a dilemma: they were in charge of getting donations from alumni, but their efforts felt like they lacked focus.
With tens of thousands of graduating alumni each year, and 450,000 living past alumni to choose from, how were they supposed to know which alums to focus their fundraising efforts on? A simple solution: business analytics.
As another case study from Nucleus Research states, “using an analytical model [their data analytics software] that calculates an affinity score for potential donors that is based on more than 170 different variables, and [that] provides the team with deep insight into an individual alum’s potential to give.”
While Michigan State had been using data to make decisions in the past, once they started using a business intelligence software, they were able to save themselves a lot of time and headache.
They cited their main benefits as:
- Improved Director and Associate Director productivity
- Improved visibility into donor patterns
- Improved overall user productivity
The improved Director and user productivity came from not having to waste time compiling data analytics, and instead being able to spend time acting on said analytics. The improved visibility into donor patterns came about from those very analytics, and enabled MSU to raise more money from their alumni.
Annual savings of $34,434 due to employees not having to waste time with manual analytics preparation. Other benefits of BI are summed up by the study here:
Image source: Nucleus Research
4) Identify Sales Trends
The famous Boston Celtics basketball club hopped on the analytics bandwagon too, so as to understand how their market evolves but also so as to evaluate their players.
Thanks to the data they had collected on their customers, they have been able to analyze who they are, where they sit and how much they pay. That is precious insights for the sales team who can look into the data in real time and understand what the leverages beneath it are. It helped them to quickly create promotions to sell more tickets, as well as to conduct revenue analyses based on these sales trends.
What’s more, visualizing their data helped them see how much revenue a given seat is producing during a season, and compare the different areas of the stadium. Given that the Celtics have a very complex ticket pricing structure (over a hundred different prices depending on the package, section, individuals, students, competitive games, etc), it is all the more important to understand in a glance which seat brings what, so as to make decisions on the fly for promotions.
A simple example is: if there are many low-cost seats still available for an upcoming game, the sales team can send a customized email offer to local students.
Regular “five-figure” returns from promotions based on analytics, according to Morey, senior VP of operation at the Boston Celtics. But it is just the beginning: thanks to the analysis of the fans’ sitting plan, the sales team can redraw the lines for price breaks for the next season.
The purpose is of course to make more money, but it is not just for money’s sake. The finances they get from these analytics will be reinvested in the players and their training, which means that players will get better and so will the games.
5) You Can Provide Personalized Service More Easily
The fifth benefit of business intelligence tackled in that article is the personalization of service. Santam, South Africa’s largest short term insurance policy provider, faced an issue with large levels of fraud. While the company is quite successful, with annual revenues exceeding 1.88 billion USD, they also faced large levels of insurance fraud – anywhere from 6 to 10 percent of their annual revenue number.
That’s a LOT of fraud, with no easy solution in sight. In order to solve this issue, Santam turned to data analytics so that they could automate the process of looking more closely at each claim for signs of potential fraud, while maintaining high levels of customer service.
As the case study explains, by setting up business rules that were based on already existing data, Santam has been able to create a risk score for each claim involved. Such procedure enabled Santam to automate the segmentation of these claims. This let the auditors to focus on potential fraud and cases that had a high degree of risk for Santam.
Once Santam had made back the cost of their initial “proof of concept” project with business analytics, they expanded the analytics to all of their claims. This process led to the discovery of an organized crime syndicate that was systematically committing insurance fraud against Santam. This happened within 4 months of starting to use a business analytics software.
Additionally, Santam experienced massive time savings through the use of business analytics, as their employees no longer had to spend nearly as much time processing claims.
As the case study states, “low risk cases no longer have to go through the exhaustive due diligence that previously took at least three days to perform.” Afterwards, about 50% of these claims are sped up via an enhanced categorization. 54,000 of claims ie. 15% of the total can be handled in less than an hour: 95% savings in time. A gain in productivity that led to “a reduction of 30 assessors over a three-year period, representing an annual savings of R33 million (US$ 3.66 million).”
A massive ROI of 244%, where Santam made back their investment on BI in only 3.7 months, and reaped many other business intelligence benefits.
6) Improve Operational Efficiency
The Jefferson Medical Center didn’t have a way to measure employee productivity before starting their business intelligence journey. They wanted to improve patient care while lowering the costs, and an effective measure of productivity was the key. Their only measurements were mainly financial stats, pulling data to create distributed paper reports – alas, by the time it reached any manager’s hands, the information was already two months old. Besides, some reports were “absolutely wrong”, according to Morie Mehyou, assistant VP of Information Management and Decision Support at the Jefferson center.
They thus decided to implement a BI system, that helped them pull data from their patient accounting software, payroll software, and many others to analyze the current situation. The healthcare professionals working there started then to have access to real-time reports such as which patient is in which bed, or get weekly or monthly financial reports: the situation had greatly improved.
From there, the Jefferson Medical Center decided to go a step further, and implemented an incentive program for managers, that assesses different departments based on metrics such as dollar spent per patient day, expenses, supplies used, staff hours and overtime. Monitoring all these indicators helped managers greatly in understanding the functioning of their units and spotting was working or not.
A great number of disparities and operational issues brought to the spotlight thanks to the business intelligence system implemented, that could then be addressed properly. For instance, comparing the number of combined man-hours needed for labor and delivery to the national average showed that there was an issue there, as they were way above it.
There will of course always be the debate between productivity vs. patient care, that the facility has to remain wary of; but ultimately, improving operations saves some money that can then be reinvested in healthcare programs that benefits their patients.
Business Intelligence And Analytics Lead To ROI
Business intelligence is key to monitor business trends, detect significant events and get the full picture of what is happening inside your organization thanks to data. It is important to optimize processes, increase operational efficiency, drive new revenue and improve the decision-making of the company.
We’re living in the most competitive business market in history. Technological advances and a global economy have combined to create a pressure cooker of competition, with weaker companies being swallowed up or broken down.
Given the current state of affairs, your company can’t afford not to use BI tools. Especially after we examined 6 case studies that showed the incredible ROI that is possible from using them and the many benefits of business analytics. Such business intelligence ROI can come under many forms. You need to know what’s going on in the minds of your customers, whom your next best customers will be, and how to serve them in the most effective ways. All of these areas can be answered with data – which you need BI and analytics tools to process. However be aware of any faux-pas and remember: there are some business intelligence best practices to know - and some worst practices to stay away from!
When your company has to rely on internal or external IT staff to generate data reports, it creates a huge barrier to what is most needed: a data driven corporate culture, where decisions are validated through seeing reality clearly.
If you’d like to take your first step towards using an intuitive self-service business analytics tool, you can try our 14-day free trial and test what datapine can do for you.