Data is the 21st century’s currency and yet the value of the coin depends greatly on how organisations mine, sift, interpret and act on the massive amounts of information hitting them from all angles.
With the arrival, some years ago now, of what we now know as big data, there is a fast-growing need to make sense of potential insights that flood into data pots. By cross-referencing this information in a fast and efficient way, businesses can paint the clearest picture of who their customers are and what motivates them.
In turn, crystallised information helps organisations make future strategy decisions, create more relevant products and services, and safeguard themselves from future risks.
“The explosion of data made available by the increasingly connected world is bringing unprecedented change to businesses,” says Roy Jubraj, managing director for digital and innovation at Accenture.
Connected data is concerned with the end-to-end customer journey, across multiple channels and devices
“By 2020, over 50 billion devices are expected to be connected to the internet. With billions of sensors and devices plugged into the connected world, organisations are starting to use connected data to do three things: run themselves more effectively, future-proof their business and reform the relationship with their customers.”
End-to-end customer journey
To connect data sets, organisations take a step back and look at the entire customer journey or cycle, taking into consideration touchpoints in a colossal ecosystem of devices, websites, social interactions and content.
By combining these sets, it’s possible to understand more about how people interact with the business at every step of the way.
“Connected data is concerned with the end-to-end customer journey, across multiple channels and devices,” explains Jason Ryan, founding partner of customer marketing agency Brilliant Noise.
“It draws data from multiple sources to give a more holistic view of customer behaviour and customer interactions with a business. These data sources might have once remained siloed either by technology or organisational barriers, with the resulting business value of connecting them remaining unrealised.”
Learning about the people you want to sell to is nothing new. Many decades ago business development executives were researching the stories behind their sales leads to understand what made them tick and what needs they could fulfil.
But the digital era has created a system in which this process can be automated and carried out on an industrial scale. Fifty years ago, salespeople would save their energy for their biggest spending prospects, now it’s cost effective to make discoveries about people who spend sparingly too.
Little nuggets of information
Jon Cano-Lopez, chief executive of independent data communications firm REaD Group, says: “Knowing your customers inside out has always been vital to success in business. This principle applies whether you are dealing with one person or one thousand people.
“The availability of data today allows modern businesses to understand vast customer bases on this granular level, giving them those little nuggets of information that enable them to create profitable relationships with consumers.”
So what kind of data is now being collected? “Transactional, lifestyle and behavioural data represent the three core data sets that are most commonly recorded and used for insight.
“Transactional data is information relating to what people spend, where they spend it, how often and how much. Lifestyle data refers to who people are, where they live, what their interests are and what’s important to them. Behavioural data relates to people’s activity, both online and offline, what they do and via which channels.”
Over the years the amount of data available has increased, so organisations must adapt and evolve to keep up with the information flow. They have adopted new systems of data capture and new analytical software, as well as new inducements for customers to part with their secrets.
Nils Mork-Ulnes, head of data and strategy at experience design business Beyond, points to the example of the supermarket loyalty card, which was one of the earliest successful innovations to capture data in the emerging digital age.
“As such, the value exchange offered to the customer was ‘if I can track your purchases, you will receive points you can cash in for rewards’. This revolutionised how supermarkets planned, merchandised and marketed – they went from operating in the dark to being able to target the customers most likely to buy any given product they wanted to sell more of,” he says.
“Over the years, they have augmented these databases with demographic, psychographic, behavioural and other data sources from a variety of third parties to enrich their understanding. And as consumers spend more and more of their time online and on smartphones, adding new digital data is becoming a key need.
“But you need to do that across all the channels consumers now use and you have to ask for permission to collect data in new ways. For instance, what is the digital equivalent of a store loyalty card? Once you crack those problems, the potential to create new value for customers increases manifold because you have so many new touchpoints and ways to create value from data.”
The cost of mining data
Clearly, supermarkets are big-budget behemoths that can and must invest heavily in mining and cross-referencing data to the nth degree. A supermarket outlet, its layout, customer approach, offers and incentives are the manifestation of intensive research.
But just how much must a business invest to get the best results? Is it possible to achieve laser-like focus without spending the tea and biscuits money?
“It can be very expensive, both practically in terms of the teams of people and tools required to mine sometimes highly complex data, but also in terms of the delays incurred by looking for perfection in data-led decision-making,” says Ian Webster, chief customer officer at Big Data for Humans.
“Sometimes it’s cheaper and faster to run a quick real-world test to validate an idea prompted by one source of data, than to try and merge data sets together,” he says.
To get ahead in connected data there are a few essential rules to follow. John Smits, chief data officer at EMC, points out that not all data is created equal and smaller businesses in particular should zero in on the information that matters the most.
Mr Ryan at Brilliant Noise also believes preparation is key. It’s important, he says, to set objectives before you start work. Just collecting vast sets of data with no clear plan of what it’s for won’t get you very far.
Meanwhile, Accenture’s Mr Jubraj points out that it’s important to act on data once you have recorded and deciphered it. Too many firms, it seems, begin with good intentions only to leave killer insights gathering dust on a virtual shelf.
“Leverage the data to better understand customers. Use it to drive new propositions or partnerships,” he says. “This will likely improve customer service and create new opportunities for growth. Use data to completely shift the traditional business model from selling to providing a valuable end-to-end service.”
Mr Mork-Ulness at Beyond adds: “One big problem with the way much corporate data is stored in centralised data warehouses is that the data is separate from the action. Decision-makers have to request data from analysts, which takes time and the data is often stale by the time it gets to them.
“It is key to get decision-makers as close to the data as possible, and that everyone has the mentality that data is part of a continuous improvement and testing mindset.”
Data drives insight and insight is power, but organisations have to create the right structures at every stage in the process to ensure information flows, is collected appropriately and, once it is sufficiently crunched, is acted upon by business leaders.
A failure of any part of the system renders the whole thing useless, leaving you with an unusable jumble of words and numbers.