Can BI get your business back in the black?
Seeking lost trades
Published: 15 June 2009 09:00 GMT by Jesper Thorlund
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Business intelligence is often touted as a way to boost profits. But how? Here Jesper Thorlund explains his innovative technique of turning lost trades into future deals.
Let's begin with a real life example that I observed as a BI consultant a few years ago.
A visionary sales director dealing with capital markets had a big problem. The markets division had a yearly bottom line of several hundred million dollars. His position involved handling hundreds of large corporate customers, and he employed 25 sales managers to do the job.
He had a distinct feeling that he was losing a lot of his business and customers to competitors. But he didn't know the extent of the problem, or even which specific customers, sales managers, products, currencies or maturities were causing the problem.
He was justifiably frustrated and knew it was important for the survival of his section to get the right information. He realised he had a major problem that had to be fixed - one way or the other.
As the BI consultant called in to help him, I too had a problem. I had to define the discipline and develop the necessary system components to find something that was not just lost but invisible, and then put this new information into action and capitalise on it.
Finally, after years of research I solved this problem of locating and converting what I call 'lost trades' to 'future won trades', using the SAS/IntrNet server. I even wrote a book about it.
Lost trades mean lost business - and you cannot examine and manage what you cannot see or measure. Taking this point further, I contend that a business doesn't really know its market if it doesn't know its lost trades - so how do you get started?
Initially you have to decide to use the knowledge of lost trades to improve future performance. Making a strategic decision to change your workflow and your daily sales work - starting by converting your lost trades to future won trades - is now critical to the success of an organisation; however the management of sales leads is often very haphazard. You may find, for example, you're spending a great deal of time and money acquiring sales leads only to fail to maximise on their potential.
After strategy contemplation it is time to move forward by starting to capture your lost trades (or leads) effectively. Registering lost trades should be as natural as capturing an actual customer trade. Start capturing your lost trades in an Excel spreadsheet posted on the company intranet or by using a relational database and a web interface.
Although using Excel spreadsheets should be a popular method for handling lost enquiries and storing this information, many who use it on a daily basis are unhappy with its performance. In order to move business forward, sales organisations should - on sight - find a solution to modernise and streamline their daily processes in a way. Believe me: the value of this lost trade database will only grow over time.
When your lost trade database is up and running, start benchmarking your losses versus your actual trades. To drive business forward, retain customers and create sales, it is essential to understand what business you did not have - your lost trades - and compare it the business you did have, and visualising long-run loosing trends, using appropriate metrics.
Using this 'two ledger' approach will give salespeople detailed analysis of what needs to be done, will give you a detailed insight into the strengths and weaknesses of your team's performance, and help you make informed business decisions.
The next move is to extract knowledge of lost business data to create new business opportunities. Use the information supplied by the graphs of long run losing trends to create knowledge about which of your customers are about to leave, which products are underperforming and which competitors are stealing your business to identify future areas to improve upon. Use this knowledge to take action to get back in black.
Finally, start taking action based on your new knowledge to maximise your sales revenue and even reach for higher sales targets. It's easier to maximise existing opportunities if you have an accurate record of all enquiries from customers - both your actual trades and your lost trade. You will use these as sales leads that have reached a positive conclusion, retaining customers and cross-selling or up-selling.
If you manage these opportunities effectively, you'll see what a difference it can make to your profits.
For more information on my theories about handling lost business see my website or check out my newly published book The Lost-Trade System.
Jesper Thorlund is an economist, BI advisor and systems developer. He has been working with business intelligence and data warehouse solutions for more than 12 years as a consultant in major financial and governmental organisations. He publishes and lectures on the strategic use of business intelligence and founded Lost Trade Systems, a BI research company, which specialises in bringing new insights and value to businesses by working methodically with lost trades. He authored The Lost-Trade System, published by Strategic Book Publishing, New York, and co-authored the bestselling book Business Intelligence, From Strategy to Data Sources (2008), available as Business Analytics in English by SAS Press, October 2009.
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