There is a saying that has been circulating in the corporate world in recent years that data is the new oil of the 21st century. And yes, it is true: the data-driven culture has established itself as an enriching source of information capable of directing managers to impressive results and offering the customers meaningful experiences based on data analysis.
Big Data is revolutionizing many industries and we see unique applications in service customization, more strategic decisions, product innovation and ROI maximization.
This post was created especially for those of you who want to advance your business using data as a basis for your strategies and the information generated as a potential feature of improvements. Do you want to know more? Continue reading!
What is the role of data-driven in the culture of the company?
The main role of data-driven is to filter information from a huge set of data and transform it into knowledge relevant to the business. It is not about using a super innovative tool but taking a different look at the results perspectives of the company.
It is essential to understand that all actions from an enterprise are connected to each other. That’s why, seeking knowledge through data is to rely on consolidated information about everything that has happened in order to set a more precise future scenario.
Through data-driven culture and the correct transformation of data into relevant information, managers achieve greater dependability to make decisions about the direction of the business. Deliberations on launching a campaign or a new product, for example, will not be made only based on feeling.
Managing a business gained a new format after data-driven culture hit the market. This concept promised to provide entrepreneurs with all necessary support to make better decisions, replacing the old assumption habits. The main contributions are:
- better understand a problem;
- solve problems faster and with more agility;
- find innovative solutions;
- get to know your business and customers well.
No wonder the organizations that have grown the most in recent years have the data-driven culture in their core business. A study by Google and the Boston Consulting Group (BCG) showed that companies that achieve high levels in data collection and analysis can have a 30% reduction in the costs and a 20% increase in revenue.
A well known example is Alibaba.com. The Chinese giant has three e-commerce platforms: mobile paying platform, video streaming service and news portal. In 2017, the brand consolidated itself as the 12th in market capitalization. How did they get that? If you said ‘through data’, you got it right.
Today, it uses recommendation algorithms to extract information about its customers and still applies this knowledge in the personalization and segmentation of ads to its marketplace partners. With this, it is leveraging the sales volume.
What are the advantages of the data-driven culture?
The main benefit of organizations that have a data-based mindset is the possibility of doing predictive and prescriptive analysis: with them you sell more, with more quality and the company grows faster.
The results of these studies provide a real and safe idea of the time and effort needed for the strategies to generate the expected results. data-driven culture helps answer some questions such as:
- Which customer profile is more likely to consume my product?
- How to prospect clients more efficiently?
- What makes my competitors a threat to my business?
- What are the opportunities the market offers to my business?
- How to innovate in my processes, products and services?
We will present three concrete benefits of how the use of data can help your business.
Agility in decision making
Nowadays, most companies are managed only based on intuition – or according to the American expression, HIPPOS (highest paid person opinion). This expression is a reference to the hippopotamus (hippo), a big and heavy animal that has little agility.
However, it has already been proven that companies that put data as a central point in their management and use insights from information to base their decisions and strategies are 30% more efficient, according to a study by Google and BCG.
The current market dynamics requires a more agile, accurate and collaborative mindset, and only brands that prepare for these changes will survive. At a time when data is considered the new oil, decisions cannot be made only based on intuition and unilaterally.
Incentive to innovation
A data-driven culture enables more innovation power. By supporting decisions and strategies in information collected and analyzed in a timely manner, companies find more opportunities and design actions that drive the brand to a more promising future.
The results of the study ‘Here and now: the need for an Analytics platform’ indicate that 72% of the organizations claim to get valuable insights from their data and 60% said they became more innovative after adopting analytics tools in their strategies.
According to Harvard Business Review, all businesses have the potential and capability to become smarter. However, it is necessary to keep in mind that good ideas can come from any professional, regardless of its position in the company.
At NASA, for example, leaders have asked for more help from their employees to develop innovative ideas, which resulted in nearly 300 recommendations. It is worth mentioning that this practice also encourages people’s engagement.
More tailored to customer’s needs
A successful company with good revenue is the one that sells its products and services in significant quantities, right? Among several strategies available to increase the conversion rate, the most effective one is, without any doubt, to offer the right product to the right person.
When you have relevant information about your customer in your hands, it is possible to segment and group profiles into different categories. This prevents a customer with no kids from receiving an offer for diapers, for example.
Knowing exactly who your customer is and what he really wants also allows you to create more personalized offers, which improve their experience with your brand. Besides, satisfied customers grow the investment in your company.
In Singapore, McDonald’s made three analyses of its business and customers, from the data they generate. They asked: what were the stores with more and less foot traffic? How long did a customer wait to receive its order? Where were the customers interested in delivery at that exact moment?
By crossing all this information in real time, they optimized their marketing campaigns only to display delivery ads to customers in places where delivery could be fast. The result of this strategy was impressive: a 58% increase in marketing ROI, 9% increase in sales and a jump in customer satisfaction.
What are the challenges of implementing a data-driven culture?
The study by Google and BCG measured the level of maturity of some of the largest Brazilian companies in relation to data use. The objective of the research was to map how they cross data and use technology to improve results. The companies were divided into four stages of maturity:
- nascent: companies that create campaigns mainly using third party data, with limited link to sales;
- emerging: organizations that create marketing campaigns using first party data;
- connected: companies that use first party data and third party data integrated across channels with demonstrated link to ROI or sales proxies;
- multi-moment: companies with dynamic execution optimized toward single-customer business outcomes across channels.
From the interviewed institutions, 61% are still in the nascent and emerging stages and only 2% are in the multi-moment stage. To understand the reason so few organizations have reached the highest stage of maturity in data use, it is necessary to understand what the main challenges of implementing a data culture in a company are. Here they are:
To treat data oriented as a mere project
The creation of a data-driven culture requires profound changes in the mindset of the company. Firstly, data and technology alone are not able to increase the success of a business. A change in behavior and mindset of the leadership and employees is required.
Another point is that projects don’t change cultures or create behaviors: they simply complement the established habits. To orchestrate changes in an efficient way, it is necessary to understand data as a key part of the culture and have the support of managers, as well as the agility and commitment of all your team.
Make the Digital Transformation
Moments of crisis, like the one we are currently living with the COVID-19 pandemic, show the need for companies to reinvent themselves and accelerate Digital Transformation, a cultural revolution that affects all hierarchical levels of the organization.
In order to achieve this, it is necessary to review the vision and strategy of the business, seeking to create an environment with data-driven processes and goals, collaborative, agile, and open to continuous development and innovation.
The success of digital transformation requires the collaboration of all areas of the company, from HR to IT, passing by the sales team and product team, in order to reduce the silos and create collaborative interaction routines between all the employees.
Build a capable team
A very big challenge is the lack of skilled labor in data analytics. Most organizations, used to the traditional model, see the technology department only as a support. Because of that, many do not hire specialized professionals, such as scientists and data analysts, which makes it difficult to maintain a data-driven culture.
A simple way of getting around this situation is to choose strategic partners. There are companies in the market specialized in providing services focused on digital transformation and data analytics. Besides, this option is usually much cheaper than building an internal team with the same performance.
Integrate all teams
As we already pointed out, data-driven culture involves the participation of everybody in the company. The IT area, mainly, needs to be integrated with all other departments, especially sales and marketing.
For this strategy to succeed, it is fundamental that the business is fully integrated and that technology professionals are seen as strategic partners. After all, one of the bases of data analytics is exactly the use of modern tools.
What are the pillars of data-driven culture?
The development of a data-driven culture should be based on five pillars: people, processes, assets, data and technology. Next, we are going to explain a little more about each one of them.
People
For transformation to really happen, it is essential to have qualified professionals. They have very specific profiles, such as the Chief Data Officer – CDO.
A Gartner survey showed that data executives are causing a positive impact in the business and enabling digital transformation. For the director of the survey, Valerie Logan, ‘by 2021, the CDO office will be seen as a critical role, like IT, business operations, HR and finance’.
However, leaders are not enough: it is also essential to have the support of other skilled professionals. In this scenario, one of the most sought-after professions is data scientist, an expert who acts at the intersection of mathematics, business and information systems.
Processes
The operations and processes of a data-driven company are different from traditional organizations. The main difference is that in a data-driven company the data are not isolated; they are worked in an integrated way to the routine. In practice, that means that information is not saved on the individual computers of each employee but made available for everyone in the cloud.
A practical example: instead of presenting a sales report only to the commercial manager, it can be stored in the cloud and shared with the marketing team and sales department.
This way, besides streamlining everyone’s work, it is possible to promote collective intelligence to solve problems with more efficiency and agility. With this, there is no accumulation of work in queues and the process becomes automatic, agile and in real time.
Assets
Assets mean the digital properties of a company. The world evolved and your brand also needs to evolve to stay relevant in the market. Users no longer like waiting for a website to load, nor when a company does not have a website optimized for different platforms.
For the dissatisfaction of customers, about 75% of the mobile sites of Brazilian brands take more than 20 seconds to load. This directly affects the results and quality of the data collected – if the user leaves your site or uninstalls your app, you will not have data.
Another example of the success of this strategy is Walmart. The company noticed that each second less waiting for their site to load generated a 2% increase in the conversion rate. Because of that, they updated their platform and reduced 4 seconds of loading time. This resulted in an increase of 8% in the conversions.
To identify what the possibilities of improving your site are, use speed testing tools. The Speed Scorecard, for example, allows you to compare the time of loading of your site with the one of your competitor’s, using data based on the experience of real users.
Data
It is imperative organizations have a robust, transparent, and secure data policy that provides users with clear actions on how to manage the information that is collected and stored.
That said, the first step is to collect all the information you already have about your customers – they are the most important resource in the beginning of your journey towards the data-driven model. If this data is stored off-line, it is important to transfer it to the digital environment.
The magic happens when you start crossing your customer’s information between online strategies (results from your website, most visited pages, most searched products) and offline (market research and statistics), combining channels to obtain more intelligence and track the buyer on his journey.
Technology
Finally, the last pillar is technology. Everyday tools that optimize processes of any business are developed. Cloud Computing, for example, allows all information in a company to be accessible to all employees anywhere, any time. With this technology, all data is accessible in a fast, efficient, and easy way.
Another simple example of technology is Google My Business, a platform that allows you to have data from the entire customer journey, since 60% of the time he goes through digital even when the purchase happens in a physical store.
Millions of people use Google every day to search for information before visiting a store or closing a deal, and it is Google My Business that provides these answers. It is a 100% free tool that provides correct information to help the customer make the best decision.
Which companies have a data-driven culture?
We listed four successful case studies for you to be inspired. Check them out!
Spotify
In 2016, the streaming platform noticed that the millions of data generated daily by its users could deeply change the way people relate to music. In this way, Spotify began analyzing user data and identifying patterns over time.
Today, the app provides personalized service for each user based on their musical preferences, favorite singers, most listened songs among other information. Besides, this information provides a deeper view of the listening trends, audience market, and a lot more.
Netflix
A great example of successful data analytics is Netflix. It adopts analytical culture as part of its daily routine, in which subscriber’s information is the essence. The streaming platform guides all its performance and market positioning based on data.
In addition, it uses this data to create the scripts of its original series, ensuring the productions will deliver value to the users. After all, the better the customer experience, the easier it is to convince him to renew his subscription for another month and advertise the service to other people.
Nike
One of the largest companies of sporting goods in the world, Nike is also one of the first companies to use data analysis. The company found a strategic partner and created software that informs the speed, distance travelled by amateur runners and heart beats – all this connected to social networks.
The strategy collaborated to enrich the company’s database about its persona, enabling the development of new products, more customized campaigns and with more probability for success.
Amazon
Amazon is one of the companies that grew the most in recent years. Since the beginning of its online sales, it invests in cutting edge technology and in analytical tools to better understand its audience. In order to do that, it uses advanced algorithms that cross different information about its customers according to their searches on the internet.
With the analysis of this data, it began to refer products to customers even before they searched for them. The result was so impressive that it contributed to Amazon to become the most valuable organization in the world, debunking Microsoft.
As you can see, data-driven culture opens a horizon of possibilities for companies around the world. We know that profound transformations are not always easy and take some time, but it does not take huge efforts to begin your journey towards this new business conception. It is important to begin as soon as possible.
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