1. Establish Your Data Vision
We often hear leaders say: “We’d like to be more data driven,” or “We have a lot of data – it must be valuable!”. In our experience, these sentiments alone are too vague to form the foundation of a tangible data strategy. Invest time upfront to develop a clear vision for your data program.
For growth stage companies, data strategies are often oriented around one or more of the following objectives:
Operational excellence: Do your data provide insights that might improve staffing or inform scheduling decisions? Is there information that is relevant to your supply chain logistics? Or, could add efficiencies to your product delivery process? Data can be a powerful tool in managing costs, improving gross margins and driving operational excellence.
Revenue growth: Do your data offer information about customer characteristics or segmentation? Many successful data programs support new customer acquisition, conversion, retention, and growth of existing markets. Data can help you identify your most profitable customer acquisition channels. It can highlight the characteristics of prospects that are most likely to convert and identify those that may remain over the long-term. This information can, in turn, inform plans to target new markets and/or customer segments.
Customer insights: Sharing data with your customers – in the form of aggregated usage charts, benchmarks or raw data provided via API – can help make your value prop more clear and, ultimately, strengthen your customer relationships. This is particularly true for B2B companies – though we have seen several consumer businesses find creative ways to engage customers with data as well.
Algorithmic products: Data can support dynamic, personalized product experiences. Recommendations (suggestions about which movie to watch next, which accessories match an outfit, etc.), price predictions, credit or fraud scores, and personalized discounts are all widely known examples of machine learning-based algorithmic products.
Data monetization: Do you have unique data that other businesses value? For some businesses, the data itself is the product, while in others, data can become an additional product line offered to new types of customers. Consider whether there is unique data generated in the regular course your business, or whether there is data to be captured through proprietary methods. Successful data monetization requires both a customer set that will value the data and the underlying technology and processes to reliably deliver high-quality data feeds in a timely manner.
It is important to note that these categories refer to “offensive” (revenue generation or profitability improvement) rather than “defensive” (harm-reduction) objectives, reflecting a shift in understanding the role data plays in organizations today. We encourage companies to consider each of the above as you craft your data strategy. If more than one resonates with your company’s goals, rank order them based on potential impact on your business. Remember: the first component of a well-crafted data strategy is a clear vision; this approach may help bring that vision into focus.