How do data analysts help companies generate revenue in the company?
Today I am going to tell you a story of one of our company’s customer, we call him K here.
K’s company has a subsidiary, sales performance and profitability have been very poor for a long time, and even had a deficit in 2014. However, this subsidiary is an important part of the company’s strategy. The only way is to improve the business model of this company. Then the question is how to do in detail?
K found the financial data of the subsidiary and carefully analyzed: Which product was made to make money? Which customer can we make money from? Which sales people made money? Then he got a big discovery: less than 30 of the 49 products were profitable; less than 20% of the lower-reaches companies brought profits to the subsidiary; and only 57% of the salespeople who created more profits for the company.
Therefore, K reflected this conclusion to the superior official, and immediately decided to have a revolution. It was carried out from three perspectives: product, customer and salesperson for a period of two years.
Product reform
K has made a contribution ranking based on the gross profit margin, cutting off 20% of the low-margin products, at the same time, taking into account the comprehensive gross profit margin of bundle sale product. For example, customers choose to purchase products because of A, but customers need to buy B at the same time. Although the gross profit of B products is not high, if customers do not purchase B products, customers will encounter difficulties in purchasing high-margin A products. In this case, the B product belongs to bundle sale and must be retained.
The result of the reform was that the number of products in 2015 was reduced from 49 to 32, and 2016 was reduced to 28, and the sales of high-margin products increased by 4.9%.
Customer reform
The strategy of customer reform is to adopt different sales invests. For customers with different profit contributions, they will be automatically ranked according to the profit rate. Top 30% will be KA. The last 20%, in addition to the market strategy, we will reduce sales invest for most of these customers.
The effect of the reform was significant. The sales volume of KA customers increased from 43% in 2014 to 54% in 2015, accounting for 11% of incremental profit contribution.
After the customer reform, product reform, and cost control dimensions were optimized and adjusted, the gross profit increased by 8.65 million compared with the same period of the previous year, the gross profit margin increased by 8.79%, and the incremental profit contribution ratio was 62%.
Sales reform
The focus of sales reform is to adjust the way of distributing profits. Calculation rules change from “sales/return commission system” to “profit/loss commission and incremental sharing system”. The so-called profit/loss commission, that is, the cost of sales staff must include the cost of the product, the cost of sales and the cost of the company’s finance, management, and market. The so-called incremental sharing system means that the commission is not a fixed value, but a gradient change. The higher the net profit, the higher the overall average commission rate.
The effect of the reform: sales volume increased by 13.5 million in 2016, sales expense ratio decreased by 4.55%, and profit in 2016 was 9.16 million, an increase of 4.57 million over 2015. The increase in profit was due to the increase in sales volume, and the profit for the two years was 15.32 million.
In general, although this project takes a long time, the results are excellent. In terms of financial indicators, in 2015, sales increased by 5.5 million, but profits increased by 6.16 million. That is to say, under this data-driven management method, sales increased, profits increased, and cost reduction also brought 660,000 profits.
Summary: How does a data analyst help a company generate revenue?
Data analysis should be concentrated, and it must be started from the company’s outstanding problems. The aim is always to reduce costs and increase efficiency, and to spend costs on the cutting edge.
Finally, everyone is welcome to express their different opinions in the comments.
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