Originally published on MKTGInsight, part of the Direct Marketing Club of New York (DMCNY) on July 21st, 2020
The need for an effective data strategy has never been stronger. Faced with years of increasing competitive pressure from diversified businesses like Amazon, and now an unprecedented economic downturn, more businesses are looking to emulate what has allowed Target and Best Buy to successfully fight back. Strengthened by their existing data strategies that helped build stronger and more informed customer relationships before Covid-19 hit, they are now doubling down on their data strategies to take advantage of new opportunities while their competitors struggle to adapt.
Data strategies have been the driving force behind the growth and continued dominance of Amazon, Walmart, Netflix, Facebook, Google, eBay, and Alibaba but the way they use data does not require armies of data scientists. Many data-driven tools under the guise of A.I. are just old school business rules or model scoring that have been automated and are supported by purpose-built data frameworks. New lipstick, same pig. The key difference is where, when, and how their data assets are applied to achieve their business goals which are all driven by their data strategy.
Why Your Company Needs A Data Strategy
Data, data, data. It is everywhere and constantly used to influence our decision making, yet we rarely get a glimpse behind the curtain. And even then, only when some legal or moral line has been crossed that makes the news cycle. Decades of irresponsible data breaches by businesses and governments alike have led to a slow but inevitable march towards national data privacy legislation in the United States. Coupled with increasing expectations of dynamic customer experiences, increased regulation of 3rd party data suppliers, and of course revenue growth expectations by investors, ignoring untapped data opportunities is no longer an option.
“If your company has a ‘data lake’ but you have no means to audit it, and no roadmap to use it, you do not have a data strategy. What you have is a pile of risk with no upside.”
– Keith Scheer CEO & Co-Founder of DataJet Software
So, What Is A Data Strategy?
A data strategy is a comprehensive plan of action designed to help a business achieve its goals by effectively using their internal and external data assets and technologies to achieve focused outcomes. Effective data strategies are based on each business’s unique needs, risks, data source mix, interaction channels, and opportunities to create an actionable plan with short- and long-term benefits to the business. Most data strategies cover:
– Governance: Data Collection, Storage, Security, Privacy, Consent, and Legal Compliance
– Quality: Data Hygiene, Verification, and Validation
– Diversification: Data Sourcing and Risk Mitigation
– Integration: Siloed Data and Channels
– Knowledge: Identity Resolution and 360° View of the Customer
– Building: Monetizing and Creating New Data Assets
– Execution: Applying Data to the Customer Experience and Journeys
– Optimizing: New Metrics and Automated Insights
– Automation: Across the Technology and Data Ecosystem
Together these elements build the foundation to support key business metrics, customer insights, and new data attributes to power everything from A.I. and personalized content, to the next most likely product and projected lifetime value. Businesses that fully embrace their data strategy treat it much like they would technology development, with roadmaps and other traditional development processes that help bring the vision to life.
Is Data Privacy Part of Your Brand Promise?
National data privacy legislation is coming to the United States with 75% of U.S. adults wanting more regulation of what businesses can do with their personal information, although given how 2020 is playing out this will be a 2021 event at the earliest. Despite most consumers being oblivious to the inner workings of things like machine learning, increased invasiveness associated with digital fingerprinting, Covid-19 contact tracing, and China’s very Orwellian Social Scoring and non-consensual DNA database programs are building awareness and fear in the United States that should eventually force the Congress to enact data privacy legislation that protects consumers, while hopefully not crippling businesses by blocking legitimate data uses.
Until then, how your business navigates the differing legislative requirements across the 50 states, and each country around the world, is not something that can be ignored and needs to be part of your data strategy.
Are You Creating Quality Customer Experiences?
Customers continue to hunt for brands that provide them with quality customer experiences and it is directly reflected in their brand loyalty. According to a pre-Covid-19 consumer study by PWC, 73% said customer experience was a key factor in their buying decisions with 54% stating most companies needed to improve their customer experience. 32% said they would leave a brand “they love” after a single bad experience. Brands need to make their first impression a good one. Now that we are living in a Covid-19 world, the dynamics of a customer experience are changing but not the fundamentals and there continues to be a strong upside for brands that provide quality customer experiences.
Pre-Covid-19, customers reported they were willing to pay a 16% price premium, and 63% were more willing to share their information, when provided with a quality customer experience. As we have seen in 2020, where and how the customer experience takes place has shifted online with major increases in demand for delivery services and online buying with curb-side pickup. Using data to identify and support the shopping experience a customer wants is now table stakes for retail, dining, grocery, and other industries that have historically relied on physical locations.
“Too many brands confuse discounting with relationship building. A mutual value exchange and two-way dialogue is necessary to create a genuine customer experience.”
– David Eldridge CEO of 3radical
Do You Have A Back Up Data Supplier?
Following the lead of Vermont, California enacted legislation in 2019 that empowers consumers to opt-out of the sale of their data by 3rd party brokers such as Acxiom and Infogroup. Google, Facebook, and others are addressing this risk by creating and fortifying their “walled gardens” and capturing this data through zero and first party means. By requiring 3rd party brokers to register with the state and to provide information about how to opt-out, this has opened the door for 12% of the U.S. Population (40 million people) to effectively opt-out. These are generally high margin parts of these businesses so they are not going to disappear, but as their audience reach decreases it will force marketers to look elsewhere to fill in the growing data gaps this will cause.
Having identified this growing need, multi-source data providers like Speedeon Data and engagement sciences (a.k.a. Gamification) innovators like 3radical are already providing brands with new and creative ways to source permission based data that are yielding impressive results in customer acquisition, activation, and retention applications.
Are Your Investors Satisfied?
With over half of businesses that invested in cloud services saying their investments have failed to live up to expectations, decision makers are being forced to justify their multi-million dollar decisions. As they are learning, the root cause in most cases was not the cloud service but was due to a failure to integrate with other systems that housed critical data or were necessary to act on that data. Even when those gaps are closed, businesses will then need to turn their data into actionable insights and integrate their data into all relevant consumer touch points to live up to the full promise of the cloud services. Doing so will lead to stronger and longer lasting relationships between brands and customers which can be demonstrated through increased revenue and lifetime value, validating the technology investment decisions.
While many businesses struggle to survive the current economic, social, and political upheavals, others are thriving. Businesses across many industries are proving there are opportunities to be had during this moment of crisis, and the common theme is their use of data to build and maintain revenue generating customer relationships. How will your company use its data to thrive in these uncertain times?
If you need help turning your Big Data assets into actionable data, read more on our Data Strategy Services click here or email us at firstname.lastname@example.org.