‘Data is the new oil’- a British mathematician said this often-repeated phrase back in 2006. The comparison is not far-fetched, as data has become one of the most sought after and competed for assets in the world. Massive amounts of data are collected by different businesses every second. From customer purchasing habits, browsing times on a website or at a shelf and product usage habits to location data of a customer, product feedback and scrolling patterns, data are generated and collected from every action we take. And this data keeps growing. 90% of digital data globally has been created in the last couple of years alone, and this will only increase. However, data alone cannot be of use to any organisation.
Data and analytics
All the massive data gathered by organisations requires analysis. Traditional computing methods did not allow for quick analysis of such large amounts of data. However, with the advent of new technologies, such as cloud computing, organisations can now process data quickly. Data analytics has also become more meaningful with the help of these technologies, and vast amounts of data can now be made more sense of.
With products and services that come enabled with internet connectivity, various kinds of data can be collected and instantly analysed. This data from the customers includes purchasing and search behaviour, personal preferences and details, methods of communication, social media usage patterns and location information. Once Machine Learning algorithms have analysed all this data, the services offered by an organisation can be adjusted to suit individual needs. The services provided to the customers can thus be tailor-made.
It is thus the analytical results of data that an organisation can use for different purposes. Therefore, data analytics are the digital processes that use data and insights from different channels. This data is ultimately used to generate value for the customers in today’s data-rich business environment.
Therefore, like oil, data can be refined through analytics and turned into a highly valuable asset. And this has never been as true as it is today. Data has become one of the essential commodities for businesses worldwide. Organisations can use the data to gain a competitive edge in their business by understanding the environment in which they function.
Organisations around the world increasingly recognise the importance of data. For example, according to a survey conducted last year, 81% of respondents in China believed that data analytics is either extremely important or very important to sustain a competitive business. In North America, 34% had a similar opinion.
Innovation-driven by data has been predicted to be one of the most significant ways that would help to improve social welfare and hasten economic growth in the 21st century. Data gathered through greater interactions between business and customer is helping to bring the two together. This is leading to more accessible and customer-friendly business environments.
The high value placed on data is also reflected in the increasing investments in data analytics. Two years ago, the global market for Big Data and business analytics was valued at $168.8 billion, and it’s expected to grow to $215.7 billion by the end of 2021. More than half of the spending in Big Data analytics is likely to go towards services. IT services are projected to make up around $85 billion. Business services will account for the rest.
So, how can data help your business to gain a competitive advantage? We give you five ways in which this can be done:
Data helps find the right customer
Many businesses waste resources by targeting the wrong group of people. Basically, sales teams try to woo customers who do not require their services. This leads to a wastage of resources and time. Finding the right customer for your business is therefore important. Data and analytics can help your business by attracting the right kind of customer.
The right customers – who need your solution or service – help your business stay profitable by providing large-scale data resources. This data forms the raw material for deriving greater insights through data analytics. This data can include the user’s behaviour and preferences. This user-generated content, created by the customers themselves, becomes a repository for the business to glean useful information. It can ultimately help the business in multiple ways, by allowing it to design the right kind of marketing campaigns, target the right group of people and deliver its service through the right kind of channels.
Personalised data resource allocation mechanisms can also allow a business to understand the customer’s needs better. It also reduces the effort required from a customer to have a service delivered to them through predictive and proactive executive frameworks. Such frameworks can be put in place only through data and analytics.
Swifter and better decision-making
Data can be a massive tool for any business if used correctly. One of the most important advantages that it equips an organisation with is better and quicker decision-making. This is achieved in multiple ways. One of them is by helping to deliver the right data to the right people at the right time. For example, relevant data from one’s feedback and the customer service department can be quickly diverted to the design and production section to convey the faults in a product. After analysing customer preferences, a product can then be designed more suited to the customer needs. All this requires the right information to reach the right people within one’s organisation — data analytics help to organise all this information for dispatching to the relevant personnel.
Another way that data helps in decision-making is by helping one’s business to understand what the customer is looking for. Businesses gather a lot of data from the customers and the markets. This data-driven analytics can help businesses understand exactly what one’s customers need, when they need it and how to deliver it best. This data can also help the business to understand the kind of product and service they need to supply and how to market the product. It can also be used to track current developments and forecast the future.
Data-driven analytics can also help struggling businesses to understand the reasons for slow or stunted growth. Once the problem is identified, data can also help the business find the best remedial measures to recover growth.
Helps get closer to the customer
Businesses are increasingly moving towards platform economies. These are business, economic projects and activities carried out digitally and facilitated by platforms. Online platforms are one of the essential components of such a platform economy. These online platforms are constructed with the help of a large scale of personal data resources. Still, they can also run and function optimally only through a consistent data supply. This is especially true for businesses dependent on greater and constant personal data connectedness with their customers. This requires a ceaseless gathering of data. It also calls for sifting through enormous amounts of data, all of which can only be managed through better data analytics set-ups. Once a business begins to work this data comprehensively, the business can deliver better services to the customer. Data and analytics can also help an organisation identify a niche and narrow market segment and enable them to predict and foresee changes in the markets, thus allowing the firm to be a leader in markets where no one else has ventured before. Niche market needs can be met this way.
Helps in creating synergy within business
Better coordination between the different departments of an organisation can also help fulfil the company’s potential. This is possible when the company is functioning at an optimum standard. Data analytics also helps in achieving this by compartmentalising work. As data is gathered from the market and customers, analytics help the company devise executive frameworks. This means allotting the right work to the right department. Once this balance is achieved, businesses can generate a larger supply with higher efficiency. As hassles between multiple stakeholders are removed, data and analytics can help deliver quicker and better.
A well-coordinated data analytics module can also help generate more consumer demand. This is achieved through a better understanding of the target group of one’s service. Greater interactivity is also reached, as the consumer becomes the content or service supplier by making the data available. This two-way process achieved through data helps to attain a synergy characteristic of a successful and dynamic business operation.
By keeping track of customer feedback on a product or service, data and analytics can also help an organisation follow up on its services. By gathering data from customers using a product, their usage habits and their responses & reactions, data analytics can help a business understand the customers’ needs better. By providing solutions to problems that arise with a product, the organisation can also keep in touch with the customer and instil a sense of accessibility. This also helps to create a friendly image of one’s brand and can help in generating customer loyalty and good word of mouth.
Helps develop long-term strategies and create value
Creating a long-term strategy for data and analytics can allow
one’s business to stay ahead of the competition. This can be developed through data. Data can help the keen-eyed to predict the future. By having an analytical framework ready for the data one gathers, one’s business can have a tool for keeping customers happy and acquiring new ones. It can also help avoid pitfalls and predict errors. Resources can thus be saved and faults avoided.
Data is associated with value creation in a dynamic process. On the one hand, promoting value creation has picked up pace in recent years due to increased data-driven analytics. On the other hand, data has also acquired significance due to customers’ greater value with a brand. Customers have also expected a minimum standard of a technology-friendly approach from services. As such, they expect spontaneous value from the businesses they interact with. This two-way communication process also produces a large volume of data through various pathways. These include using RFID tags to analyse customer store movement, real-life, real-time and large-scale assortment optimisation, analysing data from customer purchase records over a large volume of product categories and gathering & analysing data from the customers’ shopping behaviour with an in-store mobile phone & connected apps.
All this data can be used to generate value for customers
According to the Marketing Science Institute, understanding the customers’ 360-degree preferences has become a highly valued priority for businesses worldwide. This is because it helps generate value for customers. While data has made generating value easier, it also allows the business to maintain it in a data-driven competitive business environment.
Business organisations and brands use their valuable and identifiable resources to attain a competitive advantage by creating value for customers. However, versatile resources like the knowledge of a customer’s needs can help an organisation grow by helping it understand how to position its services to best suit the market. Data-driven analytics does this by re-combining an organisation’s resources in innovative ways to strengthen its capabilities. While an organisation’s resources can be used to set up the infrastructure for data-driven analytics, the data can be used to service the customers better. Data can also guide an organisation on how to structure the infrastructure.
Combining traditional and knowledge-based resources also enables an organisation to offer meaningful experiences and return on customers’ investments. These returns are based on current trends. Data-driven analytics also allows the delivery of personalised and individual need-based experiences.
By acting as a paver for the strategic and executive roadmaps of businesses, data and analytics help organisations achieve innovativeness and performance in the data-rich environment of the modern world.
Reprinted with permission.
The article originally appeared on SAP News (news.sap.com/india)