The use of market intelligence can lead to significant advantages for firms that use it correctly. Nucleus Research ran a study that saw a 13x ROI on each dollar spent on analytics. McKinsey found that firms using analytics grew sales 186% faster than their competitors, and when Deloitte surveyed senior executives at U.S. firms, they found that 84% of respondents reported improved competitive positioning when employing an analytics strategy. Market intelligence has arrived, and the research shows that it can play a key role in the success or failure of your firm.
So, what is it exactly? At its core, market intelligence is the information relevant to a company’s markets, gathered and analyzed specifically for the purpose of accurate and confident decision-making in determining strategy. It is the combination of multiple sources of information to paint a broad picture of your firm’s existing market, customers, challenges, competition, and growth potential.
Market Intelligence differs from traditional market research in that market research is typically something that is done in an ad-hoc manner while market intelligence is an ongoing project that should inform the decisions your entire team makes. This distinction is important due to the impact this can have on your organization. When market intelligence is distributed correctly throughout your firm, it empowers employees at all levels to think strategically and keeps everyone on the same page.
Revenue growth, risk reduction, expense management
The capabilities of a properly implemented market intelligence strategy are vast but should always be tied back to increasing top line growth, reducing risk, or managing costs. These are the three core benefits from any MI strategy.
We have identified some higher order benefits made available through MI. This is by no means an exhaustive list as MI strategies can (and should) be tailored to meet your exact business needs. Of these, the ones we’ve seen most commonly implemented are market growth monitoring, opportunity detection, and customer risk monitoring.
The growth trajectory of the markets you serve can be critical to your sale’s teams ability to hit their targets. If you are monitoring these then your sales managers will be able to more efficiently provision sales and marketing resources towards high growth areas and away from slower moving segments and industries. A word of caution though, this is an area that should be considered in conjunction with the market profitability capability as a slower growing market where participants spend significantly more on related services could be a better sales target than a fast growing but strapped for capital industry.
New sales or product opportunities can be detected early on through dedicating a section of your MI dashboard to markets and industries that are adjacent to your currently served markets. This lets your sales team quickly spot areas that are underserved that your product or service may be a good fit for.
Knowing where, when, and how to enter markets is an incredibly complex task that is made easier by understanding the lay of the land upfront. Here sentiment tracking and analysis can play a key role by providing near real-time feedback to your rollout teams that allow them to respond to market shifts effectively.
When developing a new market you are attempting to expand the dollars spent on a specific product or service. This area relies heavily on educating and convincing companies and individuals to shift their spending habits to align with your product or service. MI can play a significant role here as you can use it to stay informed on the effectiveness of your campaigns.
A common revenue risk-reduction strategy is to diversify your customer base across geography, size of firm, and industry. Most firms make the mistake of equally weighting their diversification strategy which is essentially a “hope and pray” approach. MI aids in this area by informing what the true weights should be for this strategy.
MI can be used with large clients to track their end markets and their growth and alert you to potential revenue turbulence. This lets you proactively manage the accounts and make adjustments as necessary.
This capability is related to the opportunity detection capability except here you are monitoring the profitability and cost structure of participants in a particular (or multiple) market. This allows you to intelligently set pricing and payment terms based on what the average market participant typically spends.
Many firms employ a form of supply chain monitoring to gain visibility and to identify improvement areas. When applied here, market intelligence adds an additional layer of visibility where you not only understand how your logistics operate, but you gain full end-to-end visibility into the markets your key suppliers and logistics partners operate in. This allows you to make more informed decisions when interacting with them. By employing this strategy, you are also better able to spot and take advantage of new opportunities to improve your supply chain.
Similarly to the supply chain opportunities, here you will monitor your distribution partners and their markets. The insights gained here allow you to better anticipate market shifts that could impact how your product gets to your end users. The quicker you see these shifts, the quicker your team can adapt and take advantage of opportunities while avoiding risks.
It requires some effort but the payoffs are tremendous
Setting the correct goals and expectations is the bedrock of generating useful insights from your market intelligence project. Careful thought should be put into the design and execution of your research plan to ensure clear and measurable outcomes. At this stage, try to be very careful not to allow your biases to affect the design of the research.
What external factors impact your business? The answer to this question can quickly balloon out of proportion so be sure to set a scope from the beginning of how many degrees out you feel it’s appropriate to measure.
Once you have the scope set, then you should be able to narrow down the markets that most impact your business.
To measure the health of markets different metrics are used by different industries so be sure to research what the standard industry metrics are for a given industry. You can then compare these standard metrics to your business and examine how they have historically impacted your firm. Many times, a strong correlation won’t be visible when compared to your firm’s total revenue so be sure to check this against the appropriate business units. Another thing to control for when checking these correlations is the changing structure of your firm and the resources available to revenue generation.
After completing this process, you should be left with a group of market metrics for various markets that impact your business.
There are many ways you can source the data for your project and we have listed a few of the most common below. Since very few companies operate exactly like the standard firm in their industry, some data may not be available through traditional sources. This is typically where the primary data generation services of a research firm come into play but it is possible to do this with internal resources if they are available.
Surveys Interviews Focus Groups Social Media Public Data Sets Competitor Sources Private Data Sets Industry Sources
A first-pass analysis before MI data is distributed throughout the firm is critical to the efficiency of the project. This is where key trends and insights are distilled, and the messaging is crafted. It is important to identify your audience at this stage and adjust your messaging accordingly.
Compiling the analysis and data in a way that is easily usable to individual functional groups is critical. Data visualization plays a big role here as graphics are able to better communicate complex data than lengthy reports. It is also common for firms to create multiple dashboards out of the data that are tailored to specific functional groups.
We are a big believer in distributing market intelligence throughout your firm as it empowers strategic thinking throughout the organization. This can have multiple benefits as front-line employees begin to make decisions that more regularly align with the corporate goals. Distribution should occur through channels that are easy for employees to access whenever necessary. Most of the information gathered is specifically useful to your firm and is comprised of primarily public (or readily accessible) data sources, it is advised that accessibility and usability be prioritized over access controls.
We have found that dashboards are the most effective way to communicate this type of information. They allow for updates to be pushed simultaneously to all users, they are always readily available, and they communicate the information in an easy to understand graphical way.
It is important to include an explanation of the data to users to ensure everyone is on the same page when it comes to interpreting it. This education component is often overlooked but it is simple to implement and vastly reduces miscommunication errors.
Once gathered, the data should NOT remain static. Markets are constantly evolving, and new data and events are occurring continuously. Setting update intervals from the beginning helps ensure your market intelligence program remains applicable.
Keeping track of changes in the metrics and alerting users is another key task that should be set up from the start. This is where continued trend analysis can deliver on the promises of the project.