The Five Keys to Organic Growth: How to Drive Profitable Relationships with Predictive Analytics

white paper | 2008
The FiveKeys
to Organic
Growth
How to Drive Profitable
Relationships with
Predictive Analytics
The Five Keys to Organic Growth: How to Drive Profitable Relationships with Predictive Analytics
The Five Keys to Organic Growth
How to Drive Profitable Relationships
with Predictive Analytics
Executive Overview
hen it comes to organic growth, is your data available and then incorporating that dataorganization acting like a true predictive using a predictive analytic strategy will add towenterprise? Are you driving better decisions understanding how customers behave andthrough the widespread use of insights gathered where profits can be best earned.from data? Do the actions you take today direct-ly achieve your organization's goals tomorrow?Increasingly, organizations in virtually every Which of these initiatives should youindustry around the globe, are realizing the choose?benefits of using data to modify their interac- Initiative A Initiative Btions across customer touch points to better Customer Investment $10 $20align with future objectives. By incorporating Profit $5 $6predictive analytics, these organizations have ROI 50% 30% harnessed the power of data-driven insights to Source: Peppers & Rogers Groupmake improved decisions, so that they can suc-cessfully meet their business goals.In a landscape that demands growth, the Here you have two possible marketing issue becomes predicting how and where it will initiatives: A and B. You spend $10 per customerbe achieved. Growth, at its most basic level, on Initiative A, and you generate a $5 profit comes from customers, and organic growth is per customer, plus the $10 back, so your ROI is defined by Investopedia as "the growth rate 50 percent. Initiative B, on the other hand,that a company can achieve by increasing out- requires you to invest $20 per customer and youput and enhancing sales" (this excludes any get a $6 profit, netting only a 30 percent ROI profits or growth required from takeovers, (see table above).acquisitions, and mergers). Collecting the best The question is, which of these initiatives
In Brief
Written for senior executives, this white paper:Makes the case for using predictive Describes five ways to Explains two different methodsanalytics to drive organic growth achieve organic growth for measuring financial return
©2008 Carlson Marketing Worldwide. Peppers & Rogers Group is a division of Carlson Marketing Worldwide. All rights protected and reserved. 2The Five Keys to Organic Growth: How to Drive Profitable Relationships with Predictive Analytics
should you choose? If you follow the ROI generate greater value for your organization.strategy, obviously Initiative A generates more By using advanced predictive analytics, return on your investment. But what if you only companies are able to use information on pasthave one customer? What if your whole events and present circumstances to project futurebusiness operates on a single customer? Then actions. They're capitalizing on a combination ofInitiative B generates a $6 profit, whereas Initiative attitudinal and behavioral information gatheredA only generates a $5 profit. So you'll make more from both structured and unstructured data for amoney with Initiative B. complete view of their customers, employees,Consider this: Would your answer be different if patients, students or citizens. Then they're using "The Pareto principle,you only had a million customers? No. Your that insight to direct, optimize and automate their or the 80/20 rule, hasanswer would be the same. You'd still choose decision making. The result is successful achieve- long established thatInitiative B as long as your ROI is sufficient to cover ment of specific organizational goals, whether it's roughly 20 percent the cost of borrowing. "In most cases, you want to an increase in cross-sell revenue generation, of your customers choose the initiative that actually creates the most a decrease in marketing costs, a reduction in may be generating 80 percent of yourorganic growth for your business," Don Peppers, fraudulent behavior or an increase in promotional profit or value. "founding pa... [download for more]