Data is going to be a key component when it comes to future business success, and that future is rapidly arriving. By the time we ring in the New Year again, data will be the cornerstone of businesses looking to thrive going forward. Unquestionably, we find ourselves living in a time with more technology than our ancestors could have ever dreamed of. The amount of data today’s marketers have access to is simply staggering compared to what was available to businesses in the past.
So why is data so important? What makes data the make-or-break element of sailing a business venture into the land of profits and wealth? Let’s take a look:
Data Gives Customers What They Want
The best way to keep yourself in business is to provide the products, services and experiences your customers are looking for on a consistent basis. People want to feel special. They want to be catered to on an individual level – as if they’re more than just another account in your book of business. Unsurprisingly, many startups are taking this paradigm to heart and finding ways to customize their product or service to indulge their clients in a way that serves their desires (while still making good business sense).
Netflix, for example, uses machine-learning algorithms to determine what each of its 65+ million subscribers will probably want to watch next. To generate this type of big data, the streaming goliath’s computers analyze the ratings a viewer gives previously-watched productions. It then makes use of the results to predict (with scary accuracy) other shows and films the viewer will enjoy watching.
Making recommendations on this scale may be beyond the scope of possibility for your startup, but you may still be able to harness the principle in some way, shape or form. Your database of customers and their past purchases can provide a wealth of information you can use to predict what these same buyers might be interested in purchasing next. If you can queue up cross-sells and upsells based on this data, you stand to increase revenue substantially.
Data Stays With the Times
We live in a world that changes with each and every 140 character (or less) statement. We interact with other through apps like Instagram; commenting, celebrating, and critiquing each other’s lives. We discuss everything from what we chose for dinner to major life decisions about changing jobs and pursuing further education. Lives change more rapidly than they ever have before, thus forcing businesses to follow suit.
Running a business today is more challenging, and more rewarding than at any other time in history. Big data allows you to know more about your customers – both current and potential – in less time, thanks to advances in data harvesting and engineering. What pleased your customers today may not tomorrow, and the only way you can adapt fast enough to keep them is by harnessing data to work for you.
Data is Where the Profits Are
Big data can mean big profits when it’s used correctly. Uber, as an example, takes advantage of regression analysis technology to reap greater profits from its riders based on a variety of factors. With this big data tool in its arsenal, it can determine which parts of each territory will be busy at specific times, how long each customized route will take, and what a reasonable number of drivers are necessary to accommodate the scenario.
The company has also used data to design a way to derive when it’s appropriate to apply a “surge charge” to a customer’s account, based upon the difficulty or time needed to complete a route. This allows the company’s drivers to still be well paid for a shorter route that takes longer to complete due to factors such as heavy traffic, inclement weather conditions, or other unforeseen issues. In this way, data is allowing Uber to maximize profit based on external conditions.
Applying big data principles to pricing can be a major boon to both small and large businesses. Over-pricing is an obvious concern, but even pricing too low can affect your business’s profits. According to Laura Willett, a small business consultant and faculty member in the finance department at Bentley College in Waltham, Mass. “Many businesses mistakenly under price their products attempting to convince the consumer that their product is the least expensive alternative hoping to drive up volume; but more often than not it is simply perceived as ‘cheap.”
Harnessing the power of big data – whether your numbers are generated via past sales data or through website split testing – can help you determine the optimum pricing ranges for your audience and your products. Although you’ll face an investment of both time and money executing these analyses, you’ll more than recoup your costs in the form of recovered profits.
Data Doesn’t Lie to You
People may lie, biased surveys may lie, and your personal predictions may lie. Let’s say that, you decide not to use data to evaluate your product prices – instead, you decide to survey prospective customers. You ask 20 people, “What would you pay for this product?” and, unsurprisingly, their estimates all come back low. Nobody wants to tell you what they’d actually be willing to pay, given that it’s in their best interests to get you to set the price lower.
Data, on the other hand, does not lie. Numbers have no attachment or bias whatsoever. In light of this fact, it’s a safe bet data will always render the most accurate and precise information to you. Having accurate, up-to-date data allows you to edge out competition that’s still using old methods, such as voluntary customer surveys or forecasting done by human hands.
You Must Embrace Data or You’ll Be Left Behind
Every day, new techniques are being developed to help you research your client base and evaluate the opportunities you have for conducting business in the future. Some business leaders and entrepreneurs are hesitant to embrace the changes big data is bringing to business, but they’re the ones that will not survive the future of the market. Instead, follow the lead of companies like Heineken, which is experimenting with never-before-seen data techniques that take something as trivial as drinking beer to a whole new level.
Data is here to stay. Certainly, it’s your choice whether or not to use data in your business. However, it’s clear the future of major profits and sales are going to be found by the companies that find new ways to use big data to their advantage. So how can you use data to modernize your business and customize each experience with a client to an individual level of satisfaction? The answer to this question is the key to your business’s survival next year.