The
Marketplace MasterTM
is a monthly email publication on professional service
marketing from Expertise Marketing, LLC.
About This Issue
This month we begin our discussion of data
mining, a practice that professional
service firms often ignore, despite its effectiveness
in client attraction and retention.
For more about data mining and other aspects
of PSF marketing, see my recent interview
with Management Consulting News.
Suzanne
Lowe
Author, Marketplace Masters: How Professional
Service Firms Compete to Win
President, Expertise Marketing, LLC
Data Mining –
Competitively Smart, or Not Worth the Effort?
Data mining is the practice of analyzing raw
data in a database to uncover past trends and
gain new perspective on critical marketing issues
such as client purchase patterns, competitor encroachment,
service-line fatigue, and more.
Although it’s been used extensively —
and effectively — by product companies,
retailers and other business sectors, data mining
is relatively new to the professional service
arena.
And even though the capabilities of today’s
contact management databases, practice management
software and accounting systems could make data
mining a competitively smart undertaking, it is
largely underused. |
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Why is Data Mining still so Underused?
The use of data mining — or lack of it —
is influenced by:
- The nature of a firm’s technology
platforms and their integration. Many firms
are taking clear steps toward the building blocks
of data mining, but have not yet invested in the foundation
of data mining – an integrated technological
infrastructure that would allow powerful analysis
of client and marketplace data.
- The firm’s size. For example,
some small firms feel they don’t need to formally
mine data in order to help them discern patterns about
their clients. Said Dick Ostop, the Vice President
of Business Development for Connecticut-based Newfield
Construction, “For local and regional contractors
like us, we already know the best clients [to pursue].
I don’t have to go to a computer.”
- The state of the profession. Don
Spetner, chief marketing officer of global executive
search firm Korn/Ferry
said, “We do conduct data mining, but it’s
at the practice level, where we cross reference multiple
points of data in order to discern opportunities.
When it comes to using data mining to achieve the
firm’s overall competitive goals, we’ve
not really embraced it, simply because our business
is very much driven by personal relationships.”
- A firm’s cultural approach to “disciplined
sharing.” Data mining requires not
just an investment in IT. Members of some firms remain
unconvinced that investing their time away from client
service will reap an appropriate ROI. And when they
don’t take time to share their knowledge, they
can choke off the collection of pertinent information.
Rob Howie, Senior Vice President of The
Balanced Scorecard Collaborative put it best:
“The technology to do data mining is the easy
part; the hard part is driving a culture of discipline
to capture the data, analyze it shrewdly and use it
to effect a competitive advantage.”
Is Data Mining Worth the Effort?
Our research shows that data mining can deliver solid
competitive results. For example, firms that practiced
data mining were two
to three times more likely to report effectiveness in
attracting and retaining clients than those that did
not practice data mining.
Korn/Ferry’s Spetner agrees: “Data mining
is definitely on our radar screen. The day is coming
when firms in our sector will use technology more astutely
to detect the nuances and shifts in their business relationships
with clients. They’ll build an integrated platform
to institutionalize their relationships.”
Our research found numerous examples of how data mining
will be practiced in the near future. For example, PSFs
will use data mining to glean clients’ readiness
for new service offerings, to sniff out clients’
emerging price sensitivities, and to gain new perspectives
on the relationship between particular client engagements
and the firm’s profit margins. And more.
Making the Investment
Data
mining is a perfect example of “digging deeper,”
a practice we discuss in Marketplace Masters.
It requires focus, effort, and commitment.
Take the confidential, web-based
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service firm differentiation assessment test for
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