While a capitalist society has left our middle class in deep hurt, a similar trend is becoming evident in the corporate sphere. As we enter the age of the customized user experience, we’re finding that customers are being spoiled, and industry leaders are investing heavily in data-driven enhanced user experiences. As a result, the expectations demanded by your average customer are growing larger. This new ecosystem heavily rewards winners, at the expense of everyone else.
A Business Development Bank of Canada study shows that mid-sized companies have been on the steady decline since 2006 with manufacturing taking the hardest hit, so one may ask, what exactly is fueling this change?
A Data Revolution
In 1965 Gordon E. Moore predicted that the components in an integrated circuit will double on a yearly basis. Moore’s law held true until 1975 when he revised his prediction of the rate of growth to double on a bi-yearly basis. Moore’s prediction proved to be accurate for the following decades leading up to today, setting the groundwork for research and development. So what is the point of this history lesson? while Gordon Moore made his prediction for integrated circuits, the theory proved to be accurate for the digital universe as a whole and it’s fueling a much larger change in the ways in which corporations compete.
International Data Corporation (IDC) estimates that the total volume of digital data is doubling every two years, highlighted by a 10-fold increase in volume between 2013 and 2020 from 4.4 trillion to 44 trillion gigabytes. This growth is driven by consumers, and 85% of this data is stored by organizations, yet the success factors around generating growth using this data are still heavily dependent on the business use of information.
Outlined below are 6 ways where this growth in information can be transformed into a growth in revenue and profitability.
- 1 – Capture the Value That is Otherwise Hidden In 2013, only 22 percent of digital data was usable and less than 5 percent was analyzed (McKinsey). In this data lies great wealth – from information, to business insights – and it is eagerly waiting to be tapped into. The amount of data analyzed is expected to rise to 35 percent by the year 2020 – and big companies have been the quickest to act. What does this mean for you? It does not stop at storing your data, you must address Storage, Usability, and Accessibility.
- 2 – Employ New Scientific Methods The recent introduction of Data Science and Machine learning to organizational data has paved the road for new analytical methods which can translate millions of records into distilled storytelling insights in a matter of minutes. “I’ll get back to you later” is being pushed to side and replaced with “This is what my dashboards are telling me…”
- 3 – Discover New Streams of Revenue and Profit With the employment of data-driven-solutions, organizations are quickly tapping into new streams of profits including reduced operating costs, reduced logistical costs and increased revenues through access to a larger customer base, as well as new communication streams between corporations and consumers established through social media. You can now tap into the collective psyche of your consumer base, and prescribe just the right products and services.
- 4 – Digitize Company to Customer Relationships It probably comes as no surprise that digital marketing has made major headway into the corporate sphere. Data driven marketing has provided organizations with the enhanced ability to customize offers, pricing, branding, and advertising on demand, all while increasing response rates and minimizing churn – what marketers like to call “Hitting the sweet spot”. Know your customers, and work towards creating a customized sales and marketing experience.
- 5 – Don’t let your expertise fade away An aging workforce in the US and Canada means that experts are leaving, and valuable knowledge is quickly leaving with them. Forward thinking organizations are quickly capturing method, and automating decision making; ensuring that while industry veterans approach retirement their valuable knowledge stays within their organization.
- 6 – Find what has worked, and invest The good ol’ trial and error method still works, and it works well. Experiment, Analyze, Implement, Repeat. With data driven solutions, the data which was once statistically sufficient to conduct a quarterly experiment can now be gathered in less than a week of operations. While the method has remained the same, the cycle has become much shorter. This has become most evident in transaction heavy industries – sales and retail – where becoming data-driven is producing an increased operational margin of more than 60 percent (MGI). Companies which pioneered in the employment of data-driven-solutions were quick to react, invest and re-invent and the rewards were plentiful (Think Google, Uber, Amazon, and Walmart.) By creating a rapidly evolving feedback loop they can quickly pivot, and adjust; leaving small, and mid-sized companies in the dust.
Bringing It All Together
Many organizations find themselves in a position where they lack the sophistication to adequately compete in a data driven world, with small to mid-sized companies taking the hardest hit. While most companies have more access to data than ever before, they still have not figured out a way to fully utilize it to generate revenue. Organizations can better utilize their information to offset this trend, and generate revenue by employing data-driven techniques.