Predicting The Future of Channel Data Management in 2015

We came across a post on “Big Data” by Bernard Marr (Smart Data Collective, December 9, 2014), entitled “The 6 Things Everyone Needs to Know About the Big Data Economy.” In his post, Marr talks about companies, large and small, and how big data will affect them in the future. So, thinking ahead to 2015, we wondered how his ideas would apply to the future of channel data management.

Four of Marr’s major points follow in quotes, followed in turn by our thoughts on how they apply to Channel Data Management (CDM).

“Big data is not a fad.”

Once upon a time big data was out of reach for most companies. The cost of data storage, and the ability to mine and analyze huge volumes of data, was simply prohibitive. Moreover, for those companies that operated through a multi-tier distribution system, data from the channel was even more difficult to come by. Channel managers in sales, operations, finance, and marketing relied on anecdotal information or gut instinct to tell them what was going on downstream in the channel. Or, they devised internal reporting systems to gain a glimpse of downstream channel activity. It became evident as time went on that to remain competitive and profitable, manufacturers and vendors needed to get a better handle on channel sales and inventory data. The dramatic decline in the cost of data storage, plus the advent of tools to analyze the data, has made this possible. There’s no going back. Big Data is NOT a fad, especially in the channel.

“More and more data is becoming available to us every second.”

The “Knowledge-Doubling Curve” is attributed to Buckminster Fuller. He calculated that up until 1900, the amount of human knowledge doubled each century. A more recent estimate calculates that human knowledge on average is doubling every 13 months. The pace is exponential. Within our century, the doubling of knowledge could occur every 12 hours. That’s a huge amount of information to process. Needless to say, not all of it can be processed, or should. In the channel, as elsewhere in business, the key is to know what data to process, hence the importance of Key Performance Indicators (KPIs). Channel Data Management provides the tools to measure and analyze all the KPIs relative to sales and inventory.

“Big data will affect every industry and every part of life.”

Even before “big data” became a buzzword, direct marketers used database marketing to target the best prospects for their products or services. The formula is called “RFM analysis” — Recency, Frequency, and Monetary. Knowing how recently someone purchased something, how often they purchased it, and how much they spent provided great insight into who was likely to purchase again–a “best” customer or prospect. This principle is still valid and in use today. It applies not only to direct marketers, but also to channel marketers. In the past, however, vendors had a hard time knowing who was buying what, how often, and how much they were paying at the far end of the channel. Big data analysis using CDM is now making this knowledge possible, with profound implications for improved business efficiency and growth potential.

“We can now analyze everything.”

As it applies to the channel, transactions that took place between distributors and end-customers, for example, used to be invisible to vendors. Or, at the very least, reliable and accurate information about those transactions was difficult to acquire. That’s not the case any longer. Using CDM, data about sales transactions and inventory is available at every stage in the channel. There are literally dozens if not hundreds of transactions that can now be measured. As noted above, the key involves knowing what to measure (KPIs) that will provide the greatest insight into the business to help it meet its goals.

In Summary

Perhaps one of the most telling observations about the future role of big data is revealed in the trend among companies to realign themselves around data, analytics, and digital. This trend is described in a recent article, “How to Hire Data-Driven Leaders” (Interview with Tuck Rickards of Russell Reynolds by Michael Fitzgerald of MIT Sloan Management Review, December 18, 2014). Rickards describes a technology shift that is driving companies toward data integration, and creating a new C-level member, the Chief Data Officer (CDO).

Big data is now in the C-suite, and here to stay.

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