Leveraging the power of customer data

I recently presented at our fifth Technology, Media and Telecommunications (TMT) Leaders of Tomorrow networking event. This is a unique forum where we hosted for emerging TMT leaders (drawn together from the investor, advisor and industry communities) to learn from their peers, build their expertise and network across the industry to help shape their transition to senior roles.

The particular question we addressed was around ‘leveraging customer data’. We were fortunate to hear from a subscription broadcaster and an online property portal who shared their specific insights and challenges faced around the topic.

 

The why, how and what of data

The explosion of available data and the ability to harness existing technology to make sense of this data has had a profound impact on businesses and the mergers and acquisitions (M&A) deal landscape. Businesses are now generating more data than ever before (particularly around the nature of their customers), the way customers consume services and customer behaviour. Experts estimate that the amount of available data in the digital universe is doubling every 2 years with 85% of this data coming from new data sources (the, so called, "Internet of things"). 

Technologies are advancing at a rapid pace both in terms of power but also affordability - the iPhone 5, as an example, has nearly three times the computing power of the 1985 Cray 2 supercomputer costing $17m.

Awareness of these trends is also expanding. Awareness of what it is possible to uncover and learn about customers.

All of this means that management teams and investors are demanding significant productivity gains and greater business insight from their data to use during deals processes. By learning about customer behaviour and identifying patterns businesses are better able to predict customer needs. They can then respond more quickly in a targeted and value enhancing fashion, shifting from information and value confirmation to value identification and creation.

 

Data in action

From the subscription broadcaster’s perspective, customer data has allowed them to discover that younger audiences are less likely to watch TV. In fact they’re increasingly likely to follow live events via an app or via social media. This has been borne out with Twitter having just bought the streaming rights for the NFL. Facebook is reportedly looking at similar rights as well.

To address this, broadcasters are reacting by increasing their product offering with lower cost and short term subscriptions (e.g. daily & weekly) as this is more likely to appeal to younger audiences with less disposable income.

On the other hand, our second presenter, from an online property portal, has been able to generate extra revenue by splitting website visitors into two distinct persona types – browsers and those actively looking.

The browsers typically keep an eye on the market, renovate their homes, are nosy neighbours and are interested in tracking property values. Those actively looking are either buying, selling, investing or renting.

Buyers present significant marketing opportunities to generate incremental revenue (over and above an estate agent fee). They need mortgages, conveyancers, surveyors, insurers and removal services for example. In addition to this there are a number of flow-on opportunities for third parties. People tend to move home for a reason – upsizing, downsizing or changing jobs for example. All of these represent potential additional revenue.

It’s by harvesting this data, analysing it and really getting to know and understand customer behaviour that companies can activate programmes to generate extra revenue or drive greater efficiencies.

 

Why is customer data important in M&A?

Customer data is increasingly becoming a key part of transaction processes. If you’re looking to sell your business, being able to confidently articulate what’s happened within your customer base and understanding the drivers (at the right level of detail) is a key to increased process efficiencies and enhanced business valuation. Similarly, if you’re an investor and can work with a vendor to understand the subtleties in the customer base and leverage predictive analytics and the power of benchmarking, you will likely be able to highlight opportunities to generate increased value post deal in your newly acquired business.

To take advantage of the opportunity from data and analytics in the deals process we have recognised the need to invest in the right talent (blending the critical data, analytical and commercial skills), are forming key partnerships and alliances (to co-develop and deliver the right capability and technology) and are adopting a culture of constant innovation to bring cutting edge solutions to the market.

We would love to hear from you and your experience of where you have been using data to highlight efficiencies, drive additional value or explore business risks. Please share your thoughts below or get in touch by scheduling a meeting here.

Greg Main | Financial Decisions and Analysis Director
Profile | Email | +44 (0)20 7213 2062

 

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