In the Brothers Grimm fairy-tale Rumpelstiltskin, a little manikin transforms straw into gold. In a similar transformation, although hopefully without the early demise that came to Rumpelstiltskin, businesses are spinning data into gold. Instead of letting information languish in dusty old vaults around the business, organisations are getting smarter with their data, making it work harder and realising its inherent value – that it is a catalyst to knowledge and insight.
Businesses collate, store, standardise and protect data. They build on the data they have to hand, and transform it into meaningful, actionable information. But innovative businesses aren’t just leaving it there: they are using data as a springboard to transform and grow their organisations by creating new revenue streams. Some are doing this in such a successful way that an entire economy has built up, based on their business models. Today’s ‘gig economy’ is evidence of the growing success of companies such as Uber and Airbnb, which essentially provide access to services. Data flows through their organisations: for Uber, it’s data on journeys and locations, on drivers and on passengers, on fares, payment and cities. For Airbnb, it’s data on properties, owners, travellers and localities. This data is a goldmine for organisations wanting to get closer to their customers – and a revenue stream for Uber and Airbnb.
Collating information on how, when, where, why and with whom we move through the physical world has immense opportunity and huge potential. IDC forecasts that even by the end of this year, revenue growth from data-based products will be double that of the rest of the product or service portfolios for one-third of all Fortune 500 companies1. Google and Facebook are two other businesses driving growth as a result of generating revenue from their data, sharing user information with advertisers. It’s a very successful business model: in fact, in 2016 Google generated digital ad revenues of $62.59 billion, whilst Facebook generated $26.8 billion.
Of course, you don’t have to be Facebook, Google, Airbnb or Uber to generate revenue from data. Successful businesses are now taking a closer look at the information they have to hand. They are using this to strengthen the relationships they have with their customers and create new revenue streams in the following ways:
· Using data to generate predictive analytics and forecast buyer behaviour: analysing purchasing data with predictive modelling software enables businesses to identify trends and patterns, and create a clear picture of a consumer behaviour. Highly personalised marketing campaigns can then be executed with greater chance of success as businesses are engaging with customers when and how they want to be engaged with. This insight can be integrated into CRM and CIM systems.
· Enriching data and join the dots, linking and connecting data and breaking down silos: businesses can develop a ‘single customer view’ of a customer by bringing together disparate data sets, eliminating errors, and using data to develop an accurate view of a customer and his or her connections.
· Adding context, with insights such as location analytics: adding the ‘where?’ to data provides context and generates opportunities for business to reach the customers they seek. And once they’ve found them, they build loyalty and drive engagement with relevant offers and campaigns.
· Enhancing customer lifetime value through data: a recent Pitney Bowes study found that fewer than half the respondents felt they were using the data to understand their Customers’ Lifetime Value to their business. Measuring CLV would help them to use data as a tool for futureproofing and safeguarding their business, for identifying trends, predicting behaviours, measuring the customer experience and generating hyper-personalised customer engagement strategies.
· Using APIs: and a study from CA technologies reveals 88 per cent of businesses surveyed are using APIs, and 33 per cent driving revenue through APIs2. Expedia and Salesforce are prime examples of success: 90 per cent of Expedia’s revenues and 50 per cent of Salesforce’s revenues are generated via APIs, according to reports3.
Gartner, Inc calls the monetising of data ‘infonomics’. The global analyst firm states, “Monetising information is part of a growing demand for infonomics, or giving economic significance to information. In fact, we estimate that 80 per cent of successful CDOs will have value creation or revenue generation as their Number 1 priority through 2021, up from less than 50 per cent in 2016”4 .
Here are five key takeaways for spinning data into gold:
1. Consider how you’ll capture the data, where it currently sits and how you’ll access it. Who else needs access? From where? It might be that functions you hadn’t considered would benefit from accessing the data: understanding more detail on buyer behaviours could influence the timing and content of personalised marketing campaigns, for example.
2. Make sure you collect the right kind of data for how it will be used – again, the GDPR is clamping down here.
3. Ensure you can demonstrate that you are in control of data, demonstrating ownership, accountability and transparency to your customers, with 360 degree visibility. The GDPR is tightening the rules around data. You may need Privacy Impact Assessments, an Information Risk Policy and a Data Sharing Policy. And you’ll need to demonstrate how you seek, record and manage consent.
4. Maintain your data: every 30 minutes, 120 business addresses and 75 phone numbers change, 20 CEOs leave their jobs and 30 new businesses are formed5. Marketing automation tools help businesses stay on top of this change and enable real-time updates
5. Ensure you have the tools in place to extract the intelligence you need – and the structure, and culture, in place to put your learnings into practice.
Andy Berry, VP EMEA Software Solutions, Pitney Bowes
Image Credit: Flickr / janneke staaks