While it often seems that in most companies data analytics is just another buzzword to be used to show a firm is trendy, but not implemented to make the firm more successful, EMC has gone down a much more interesting path. Jim Bampos leads the customer satisfaction effort at EMC and it is moving from a defensive to an offensive play due to its acquisition and use of the Big Data analytics offering from Greenplum.
This is basic Sun Tzu, an ancient general who taught that if you knew yourself and you knew your competitor, you would become unbeatable. EMC is well down the path of becoming unbeatable and you’ll likely help them get there. Let me explain.
EMC doesn’t just sell a data analytics product; it uses the service heavily. Its first implementation of it was to be able to anticipate and plan for component failures in what it built. Currently it can, for many of its products, anticipate component failures up to 6 months in advance and schedule replacements that occur just prior to the part failing. This has provided better uptime and nearly eliminated unplanned downtime where it has been implemented.
But the more interesting implementation is on customer analytics. It can now group customers, with a high degree of accuracy, into three groups. Those that are loyal and promote EMC, those that are at risk and looking to move away from EMC, and those that are locked in and would move but can’t because the switching cost is too high. In addition, it can provide a dollar value for every customer and identify which customers are making EMC money and which customers are unprofitable.
From this, EMC knows which customers not to mess with (because they are very happy), which customers to put resources on (because they are unhappy and either trapped or looking for a change), and which customers to give to competitors with blessings because they detract from the bottom line and don’t contribute to it.
It also helps the company prioritize decisions because it can take the value of a customer and increased care against the value of making product improvements, shifting resources to where they will provide the greatest return. For instance, it figured out before others that shifting customer care to Asia wasn’t saving as much in salaries as it was costing the company in customer retention and reversed the practice, and care in the U.S. remains domestic as a result.
This is a good deal of the reason why EMC is growing while many competitors are reporting revenue declines in what is a very tough market.
But how about channel? While initially channel partners were resistant to the idea of EMC polling their customers and capturing substantial information about them, this has recently changed. In exchange for access to the results, which not only include customer behavior but information on the relationship between the partnership and EMC, they are lining up to join the program. This is because they are gaining insight into their customers through systems they can’t afford and finding they can use this to competitive advantage and to improve their top and bottom lines as well. It is not only making more of them loyal to EMC, but it is making them bigger believers in data analytics and opening up opportunities to sell related offerings down market.
However, the biggest weapon is yet to come because the company is beginning to capture data on competitors’ customers. In a few months, EMC should be able to categorize the customers of competitors in much the same way they categorize EMC’s customers. So it should know which ones are loyal, which are at risk, and which feel they are trapped (locked in).
The end result will be to avoid loyal competitor accounts because they will be too costly to penetrate; focus on those accounts that are at risk because they want to move; and develop programs that allow those that are trapped to escape the trap (currently Oracle customers appear to be the most trapped), optimizing their sales resources and offerings to cannibalize competitors’ customers.
During the recent U.S. election, we saw the power of data analytics done right and the problem of not doing them well. EMC doesn’t just sell data analytics, it is demonstrating how to use this powerful tool to shift internal budgets where they will provide the greatest advantage. It is selling this demonstrated capability to its customers, which, apparently, are raving about the results.
This is a powerful advantage both in terms of competitive capability and in terms of being able to demonstrate the smart use of analytics. What is fascinating is the number of companies, once they find out what EMC is doing to monitor them, want EMC to come in and create a similar capability in their own companies.