McKinsey Solutions, the data analytics and software unit of strategy consultancy McKinsey & Company, has agreed a partnership with Eversight, a provider of cloud-based sales and marketing services. As part of the deal, McKinsey will combined Eversight’s offerings with its existing Periscope suite, in order to provide clients cutting-edge pricing and trade promotion analytics and services.
For companies to be successful in today’s fast changing world they need to be able to quickly adapt their strategies and business models. More than ever, strategy execution needs to be living, through continually testing, measuring, monetising and reinventing services and product portfolio’s. The role of data capture and analysis herein is key – irrespective of industry. Although the ‘game changing’ impact of Big Data to economy and society is mainstream thought ware nowadays, – analysts commonly agree the ability to successfully analyse large amounts of data is a key basis of competitiveness and innovation – a few years ago McKinsey was one of the pioneers in the field.
In its 2011-report ‘Big Data: The Next Frontier for Innovation’, McKinsey quantified the value of Big Data to industries, concluding that its potential would transform economies, through either transforming the way business is done and/or through opening up entirely new market opportunities. For example, according to the consulting firm’s calculations, Big Data could generate the US healthcare sector alone more than $300 billion a year, illustrating the mind-blowing impact data analysis could have across all industries and geographies.
Against the backdrop of McKinsey’s Big Data research, the firm internally followed suit and launched a separate business unit – McKinsey Solutions – aimed at advising and supporting clients with monetising the value of data. The unit blends McKinsey’s traditional strategy, functional and industry expertise with at the time newly formed tools and software. Since its launch McKinsey Solutions has grown strongly, both in terms of its research capacity (the firm has invested significantly in a Big Data Knowledge Center in Louvain-La-Neuve, Belgium), as well as in size and offerings. As we speak, McKinsey Solutions boasts 15+ separate solutions for clients across all industries, in addition to a range of partnerships (e.g. ClickFox).
One of the key offerings of McKinsey Solutions is Periscope, a solution that optimises the effectiveness of sales efforts. It provides clients insight in key sales metrics such as pricing effectiveness, trade promotions, revenue management, ultimately helping them obtain return on sales (ROS) improvements of 2% - 7%, according to McKinsey & Company. Periscope is used globally by dozens of large retailers and consumer goods manufacturers.
To boost its Periscope portfolio, McKinsey Solutions has decided to agree a partnership with Eversight, a Palo Alto-based software firm that focuses on promotion effectiveness. Founded just a year ago, the firm has rapidly built a track record, and currently serves as a strategic partner to some of the largest CPG brands and retailers, including Unilever and BIC. The firm is in particular known for its unique test-first approach, which allows companies to at a micro-level test and refine pricing prior to launching actual changes it in the marketplace. In essence the tool enables decision-makers to no longer base their promotional plans on ‘best guesses’ but on fact-based evidence up-front.
“The Eversight solution delivers a step change in insight unique in the marketplace, allowing clients to find the best promotional offers and adapt with changing consumer behavior through ongoing micro-testing. Combining Eversight with Periscope will help organisations execute promotions with higher impact,” says Brian Elliott, CEO of Periscope. David Moran, co-founder of Eversight, adds: “We believe every single promotional offer a company puts forward should be tested before it is rolled out. Periscope's global reach, complementary suite of solutions, and distinctive expertise in supporting transformational change management programs makes them an ideal partner to deliver these capabilities to more companies, more quickly."
It is not the first time that McKinsey Solutions has added external expertise to its footprint. In 2011 it acquired Finalta, a solution for Retail Banks, and in 2012 it purchased Henry Rak Consulting Partners, a growth strategy analytics firm. Last year it acquired Lixto, and in September this year marketing operations specialist Agiliti was purchased. Going forward more acquisitions and/or partnerships can be expected, says McKinsey.