Improved decisions with better data and analytics
One of the challenges that consumer companies face is the complex and ever-changing landscape of customers. As a result, the data necessary to make informed capital allocation decisions – or the tools and expertise for analyzing and understanding that data – can be a barrier for consumer companies. This is in fact a notion we see in the survey: insufficient data is seen as the biggest obstacle to optimal capital allocation, with 45% of consumer CFOs naming this as the primary impediment.
This may seem counterintuitive as consumer companies, unlike those in many other industries, have always been known to having access to lots of data on their operations and external information such as POS data. However, much of the data is backward looking and is not as helpful when trying to figure out what consumers may want in the future.
Consumer companies need to move past metrics such as historical sales growth on the existing portfolio and instead use information and analytics to identify new areas where growth is just beginning to bubble up. Best in class companies are using demographic, geospacial, social media and survey data, as well as in-depth consumer interviews that can spotlight the most promising future trends.
Many of the best consumer companies recognize that investing capital in building data processes leads to better capital allocation decisions, which in turn leads to better returns and more capital that can be invested in the business.