Data is a huge competitive advantage and source of growth for businesses around the world. Data analytics can provide hidden insights into the daily operations of organizations, helping them to come up with more efficient and productive ways of working, pricing risks, and predicting market trends. Effectively, data is the new gold, and organizations are increasingly recognizing how its practical, everyday uses can add significant value to their business.
According to The McKinsey Global Institute, data-driven organizations are 23 times more likely to acquire customers, six times as likely to retain them, and 19 times as likely to be profitable as a result. So how exactly can companies use data to their favor?
Driving decision-making
Data gives companies a solid foundation to make informed business decisions based on evidence and insights rather than gut feelings.
For companies to use data to gain an advantage over others, access must be democratized. This means it shouldn’t be limited solely to IT departments and business analysts. All departments of an organization need to be able to explore and interpret data to improve their decision-making and minimize risks.
Walmart’s Data Café, one of the world’s largest private clouds, is just one example of how data democratization can drive a company forward. This cutting-edge analytics hub processes huge amounts of internal and external data. The data is quickly analyzed and interrogated to produce valuable insights and answers to Walmart’s business problems. For instance, one grocery team couldn’t work out why their sales had fallen in one of their product categories, so they turned to the Data café for a data-based answer. Using the data, they quickly unearthed that it was all due to a pricing miscalculation—the product had been priced at a higher price than normal in some stores.
Personalized content
Knowing what customers want before they even know themselves means that businesses can make their marketing campaigns more personalized and therefore more successful. Companies can use data to tap into their customer base, so they can tailor their advertising to target a specific audience, and also determine how they expect this audience to react.
Take McDonald’s for example. They’ve created devices that track customer interactions, store traffic, and monitor ordering trends. Using this operational data, researchers can analyze the impact of menu changes, restaurant designs, and employee training programs, on productivity and sales. Similarly, Disney has been using what they call “MagicBands” to interpret visitor behavior at its theme parks. Holidaymakers swipe these wristbands to pay or gain access to rides and their hotel rooms, which allows Disney to analyze individual guest behavior and use it to create a more efficient and even more magical (Yes, it is possible!) customer experience.
Product and service development
Additionally, data analytics can help organizations to understand their current business processes as well as providing real-time statistics to help predict future outcomes and match market needs.
Product analysis can provide companies with loads of insights. From discovering which features of their products work the best to understanding why customers purchase their products and how they use them. These insights can even be leveraged to perform predictive analytics, a super-educated guess at how well a new product would perform in the current market.
Data metrics are also extremely handy for developing and improving business services. For example, The Royal Bank of Scotland (RBS) have already started to leverage big data to better meet their clients’ needs. They use transactional data to identify when customers may have accidentally paid twice for a financial product. For instance, someone may purchase travel insurance that’s already included with a bank account. By tracking this, RBS staff can make personalized recommendations to individual customers. Although this doesn’t directly increase RBS’s revenue, it improves their customer satisfaction and loyalty, resulting in smiles all around!
Reducing costs
Finally, it’s worth noting that data isn’t just about improving business operations and understanding the customer—it can also be used to increase revenue and create additional income.
Let’s take American Express, one of the most commonly-used banks in the US. Like RBS, it’s one step ahead of the game, using its vast data flow to redefine traditional banking. Unlike Visa and MasterCard, Amex issues its own credit cards through its banking subsidiaries, allowing it to interact with both the issuer (the customer) and the acquirer (the business). This gives the bank a strong competitive advantage. It enables them to analyze trends on customer spending, in turn, helping individual businesses evaluate how they’re doing compared to their rivals. On the one hand, this acts as an incentive for more companies to accept Amex, resulting in more transactions and more revenue for the bank. And on the other, businesses benefit from using the data to identify trends in their market. Who doesn’t love a win-win situation?
Similarly, companies can harness GPS data from our smartphones to save money through smart routing. GPS tracking is nothing new, but many of its new and advanced features can save businesses both money and time. Using this data, companies can generate the fastest and most cost-effective route for their transport needs, saving millions in fuel money, and also millions of trees.
Whatever the question, data is the answer
As you can see, data provides businesses with endless, exciting opportunities to grow and outperform their biggest, baddest enemies. You name it, data can improve it. From automating processes and targeting audiences to developing product quality and increasing revenue, there’s no limit to the value data can add to a business. Only those who invest in it and leverage it for better business outcomes will survive in today’s highly competitive business environment.