Closing the Data Analytics Gap

Understanding the power and potential of proper data analytics.

Understanding the power and potential of proper data analytics is becoming increasingly important for distributors looking to get a leg up on the competition or simply keep up with those who are already putting analytics to their advantage. At MDM’s Analytics Summit 2018, Sept. 18-20 in Denver, a range of industry experts will share practical applications for data analytics implementation. In this blog, two of our speakers discuss why closing the analytics gap is crucial for your business’s success. 

While smaller shops may be able to get away with less sophisticated analytics programs, anyone in the $20 million and greater revenue range has “got to be on top of the game with regard to analytics,” says Al Bates, principal at Distribution Performance Project and formerly of the leading financial performance benchmark service for more than 40 distribution associations across three decades. 

“I don’t want to predict their demise (for those not invested in analytics) but I think they will begin to slowly be marginalized. Less sales growth. Less gross margin. More expenses than their competition,” Bates says. 

There’s also another type of gap in analytics – inside the company. Bates, who will be presenting “Benchmarking profitability: The analytics that really matter,” at the Analytics Summit, says that although upper management may have access to and rely on data analytics, that knowledge doesn’t get filtered down throughout the organization. 

“I’ve got sales managers who know that sales is all I’ve got to do and don’t care about anything else,” Bates says. “I think the challenge is, how do I get the business to begin to move to using data more effectively to understand where we’re going?”

Analytics Quality vs. Quantity

The quality of analytics affects two components of a company’s operations: profitability and growth, says Charley Hale, chairman of Liquid Technologies and former CEO of FCX Performance. “Clearly, better analytics and understanding pricing is critical,” he adds. “I’m still amazed when I look at a lot of distribution businesses that don’t have any kind of strategic pricing approach or pricing analytics.” 

The industry has evolved from basic, transactional data such as understanding what a customer is buying and what the margin on the product is, to applying strategy to that data to make pricing more effective, Hale says. It’s critical for distributors to have the capability to understand what customers are buying across a range of product offerings, know where the “holes” are and how to attack them, he adds.

For example, for a lot of distributors, business is concentrated in a sales territory where the focus is on the needs of the top 10 customers. Sales people are “not doing much work beneath that,” Hale says. Using data to understand where potential or neglected customers are and how to access them is a helpful initial step says Hale, who will be presenting “A growth-by-analytics success story” at the Analytics Summit.


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