Analytics and Competitive Intelligence

Competitive Intelligence has always seemed much more of an art than a science. But, leading companies (Wal-Mart, Amazon, Dell, Harrah’s, Marriott, Honda, MCI, Yahoo and the New England Patriots) have learned that swinging the exercise back toward science yields great dividends.

In many of these cases, these companies are using analytics to measure their own performance, systems, processes and personnel. For example:

“One analytics competitor that’s at the top of its game is Marriott International. Over the past 20 years, the corporation has honed to a science its system for establishing the optimal price for guest rooms (the key analytics process in hotels, known as revenue management). Today, its ambitions are far grander. Through its Total Hotel Optimization program, Marriott has expanded its quantitative expertise to areas such as conference facilities and catering, and made related tools available overt the Internet to property revenue managers and hotel owners. It has developed systems to optimize offerings to frequent customers and assess the likelihood of those customers’ defecting to competitors…. The company has even created a revenue opportunity model, which computes actual revenue as a percentage of the optimum rates that could have been charged. That figure has grown from 83% to 91% as Marriott’s revenue-management analytics has taken root throughout the enterprise. The word is out among property owners and franchisees: If you want to squeeze the most revenue from your inventory, Marriott’s approach is the ticket.” (Davenport, Thomas H. (2006), “Competing on Analytics”, Harvard Business Review, page 3)

Many of these companies are starting by turning their measurements and analytics on themselves. But, watch closely as analytics begin to be turned toward outside influences, including competitors.

Primary Intelligence is already at this point; using Win Loss and Account Retention data to power analytics. The result of these calculations is a clear and efficient path to increasing win and renewal rates at very high levels of confidence.

You can start to put these practices into place right now. Many companies perform some levels of segmentation or other analytics of revenue sources. Over the next couple of entries, I’ll address specific areas where analytics should be applied.

And, if you’re interested in this kind of stuff, let’s chat. (cdalley@primary-intel.com, 801-838-9600 x5050)