The value of data for understanding customer behaviour
Data is the new money. And, just like cash, it’s not necessarily about how much you have but how you use it which counts.
Google, for example, could be viewed as the world’s biggest bank because it holds so much behavioural currency.
Interpreting and analyzing such data will be as important in this era of Business 4.0 as holding vast amounts of it. And data analytics, driven by AI, will define the companies of the future.
In an era of mass personalization, companies will need to gain a deep understanding of the behaviours of the people they serve in order to succeed. The era of producing great products, putting them on sale and waiting for customers to buy them, is coming to an end.
The digital world is not just changing the way customers think and act but also allowing companies to gain new insights. Through social media, customers can express themselves, revealing personal goals to which retailers have never previously had access.
Consumers are also becoming more active in seeking out products they want rather than allowing themselves to be influenced by marketing. The customer is in the driving seat but is also looking for innovative new products and solutions to meet their needs.
Above all, they expect a company to be able to change the way it delivers a product or service to meet their specific needs. From the customer’s perspective, the company is there to help them achieve their goals and the product or service needs to dovetail into that journey.
That means that it is going to be virtually impossible to succeed in the world of Business 4.0 without data.
“Instead of just tailor-making, you will need to tailor-customize,” says Tata Consultancy Services futurist Goran Karlsson. “Everyone is now talking about mass customization but it’s not possible unless you know your customer or at least you know your data. Once you start to assume, you make an ass of yourself.”
Data is also dangerous, Karlsson warns. It can make existing business leaders look foolish by challenging assumptions and long-established business models. It takes courage to trust the data and change direction, but embracing such risk is the right way to deliver exponential value.
Companies often don’t realize how much they already know about their customers. Back in the 1970s, Siemens was one of the first companies to recognize the potential of data. And they realized that staying on top of what they knew about their customers would give them a significant competitive advantage.
This way of thinking led the company to develop ‘Sharenet’ – an internal knowledge sharing system. A former CEO has described how it helped the company develop a data network in Malaysia by using know-how already developed by another group company in Denmark
Karlsson says this example helps to emphasize the need for companies to create ecosystems which include entities and individuals outside their local company walls. Only by nurturing the ecosystem, adding innovation partners as things change, will companies be able to deliver growth.
The power of data scientists
As reliance on data grows, data scientists will be among the most valuable members of any company’s team. They already play a leading role in many startups like New York-based insurance company Lemonade where the firm’s first employee was a data scientist.
Lemonade’s unique pitch was highly tailored insurance products for homeowners in Manhattan who wanted to rent out their apartments, using data to understand their specific requirements. After having expanded across the US already, Lemonade recently launched in Germany. Expanding its range to cover tenants as well as landlords, the firm attributes its rapid success to its ability to match policy cover to individual needs.
Karlsson says business data has traditionally been all about hindsight – sales figures, financials and the like. In future, data will be all about foresight and it will be the most valuable commodity any company can own.
All companies will need to build up their own accounts of data if they want to remain successful.