Data: The Most Valuable Commodity for Businesses
Many companies have been capturing customer data in some form or another for decades. Petabytes of data are traversing networks worldwide every day, and all of that data means big money. Here's how companies can best utilize this data to influence positive outcomes.
Image by 200degrees on Pixabay
It can be hard to realize just how much data businesses access on a daily basis and how much more they have stored. Many companies have been capturing customer data in some form or another for decades. Petabytes of data are traversing networks worldwide every day, and all of that data means big money — at least to the companies who can analyze and use it properly.
Here's how companies can best utilize this data to influence positive outcomes.
Why Data Is So Valuable
Data has become a valuable commodity, similar to commodities like oil and gold, because most companies have similar types of data available to them. But, of course, there are also many different types of data, and different data holds different value for various companies. Not every company can have the same data strategy because the verticals a business needs to explore depend on the domain expertise of that business. Still, it is possible to put a value on the data a company owns, and those who combine their area of expertise with an ability to capture, analyze, and use data are the ones who will create the most value for their organization.
Today, in the internet-focused world we live in, data is widely considered to be among the world's most valuable resources because of how much potential revenue and business value it can provide. Moreover, it's available for sale and purchase. Indeed, some of the most influential companies globally, like Google and Facebook, have made their money mainly from the valuable and often intimate data they have on each of their consumers. The revenue reported by these companies, which provide free services to individual consumers, is staggering. And if you look at Tesla, each of their connected cars generates 25 gigabytes per hour and around 300 terabytes of data per year.
Web 1.0 gave us a great mechanism with which to communicate and connect, but we couldn’t really effectively navigate through all the information in those days. Then came Web 2.0, where platform-based environments like Google, Facebook, and YouTube came onto the scene. This simplified data access and exchange between the users, but it gave too much control to those organizations. Now, Web 3.0 is becoming more mainstream across the world with the rise of cryptocurrencies and non-fungible tokens. If you look into the future, 10 years from now, the end-user will have more power and control over the data that’s generated because of his daily activities, be it on social media, over email, or in the metaverse. Understanding what data to capture and how to harness this valuable commodity can spell the difference between life and death for the modern company. The most successful companies can integrate data from social media, emails, purchasing history, and IoT devices to create a very accurate picture of a person. These companies can then align their business models and strategies with customer desires to affect their outcomes. For example, marketing teams no longer have to send thousands of mailers out to potentially uninterested customers.
Data Predicts Behavior — And That Means More Revenue
Companies collect, store, and analyze consumer data in their own databases to help them predict customer behavior. This predictive quality can be so incredibly accurate that a company can know you'll need something even before you do.
Consider, for example, the old story of Target being able to predict when its female customers were pregnant. An irate father stormed into his local Target store, demanding to know why his teenage daughter was receiving mailers advertising diapers and other baby items. Several weeks later, he went back in to apologize — he had found out his daughter was indeed pregnant.
Even though this story is almost a decade old, it perfectly illustrates why data is the most valuable commodity for businesses today. Twenty years ago, the only data most companies cared about was related to transactions. For example, they used data to answer questions like how much their profit margin was, how sales affected inventory, and what their costs related to materials and shipping were. Along the way, however, companies learned that this data, while necessary, was not the key to unlocking revenue growth.
The key was in understanding individual consumers, and with advancements in AI and computing power, that understanding is becoming ever more fine-tuned. Just like Target's amazing ability to know when a woman was pregnant based on her purchases, today's data miners can modify advertisements and deliver them across devices to the exact person who is most likely to make a purchase. As a result, personalized recommendations make sales almost assured.
Data Enables Personalized Recommendations
If you watch Netflix, you might already be aware that Netflix uses multiple types of thumbnail artwork for its content to keep you watching. Based on your previous selections, Netflix uses its carefully honed algorithms to choose the thumbnail most likely to entice you to keep watching. With its curated recommendations based on your purchase history, Amazon keeps you coming back for more in a similar way.
Powerful algorithms and predictive software generate these individualized recommendations, but they're enabled by the reams of data these companies have about each of their customers. This is the power of data and why it's simply the most valuable resource available to modern companies.
Companies that were born and raised on the internet can't take a single customer for granted. A one-second lag in webpage load times could send a customer to a competitor. Therefore, companies need to know their customers' desires and habits. They should be asking questions like, “Who is visiting my website? What are they spending the most time on? What pages are they navigating to? Where were they when they clicked off the site?” By finding these answers and collecting data at various touchpoints in the customer journey, companies will be in a better position to align themselves with what their consumers want and gain a competitive edge over the substantial worldwide competition.
Data Is the Key to Successful Business Outcomes
Data has become the single most valuable commodity in today's business world. Perhaps one of the most important considerations in understanding the value of data is that it may not always directly translate into cash, but this doesn’t make it any less valuable. Would you rather have a single sale right now, or an insight that will help you triple your sales revenue over the next year? This is the type of data insight we need to be mining for — future-fit foresight.
With the amount of business done in the virtual world, a robust data set of consumer preferences can help provide the competitive edge a company needs to predict what its customers want before they want it. When seconds count and with a world of competitors, understanding and using data correctly is the key to successful business outcomes.