Demand Analytics Improve Profitability of Companies, Finds Study

Companies with leading demand analytics (DA) capabilities are seeing improved profitability and are demonstrating higher commercial performance levels than competitors.

A global study conducted by management consultancy Strategy&, part of the PwC network of firms, in collaboration with INSEAD eLab, highlights that 70% of the leading companies who are significantly investing on a yearly basis to develop their capabilities are seeing considerable impact - 26% say it helped to turn around a business and improve profitability.

Additionally, 84% of the early adopters reported that they better understood what drives demand in their business and saw improved profitability.

The study also shows that on average companies that are leaders in DA capabilities are 38% more likely to be leaders in commercial performance.

This link between DA capabilities and commercial performance is widely recognized by the executives surveyed with 80% of leaders in commercial performance saying that DA is very important in driving business performance.

The key enablers of DA capabilities are not tools and technology – the most important enablers are: data availability and quality, creating clear processes for applying analytics, expertise, and focused analytics resources.

“The digitization of business has created massively more data," notes James Walker, Partner in Strategy&’s London office and co-author of the study.

"This represents both a challenge and an opportunity for companies and executives often do not know where to start."

"Our research found a clear positive correlation - companies who are taking the time to understand and invest in their Demand Analytics capabilities are clearly seeing greater commercial performance”.

Walker notes that businesses with these leading demand analytics capabilities have put distinct enablers in place – for example, data availability, creating clear processes for applying analytics, expertise, and focused analytics resources.

"Interestingly, we also found that investing in people and processes seems to matter more than investing in tools or technology - which is where companies often first look to spend their development budget.”

The study also revealed that on an industry level the relevance of DA is particularly evident in consumer & retail, and financial. It also found that while enablers are critical for a leading DA capability they vary per industry.

But across the board; data, expertise and governance remain crucial. Additionally, the study found a link between DA and performance not only to be relevant in developed economies but also holding true for emerging markets.

 

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