Every
Business is a Data Business
Whatever
you're selling, you need to be collecting better information about your
customers--so they can make your business better. This doesn't require
expensive technology, or A.I. or machine learning. It does require a plan.
Executive director, Ed Kaplan Family Institute for Innovation
and Tech Entrepreneurship, Illinois Institute of Technology
Let's get one thing straight at the start. Being in the data
business, which is absolutely essential for every business today, has nothing
to do with hiring data scientists and/or spending even more time and money on
technology than you already are. There's nothing wrong with investing in your
future, and new technologies will be an important part of that commitment, but
you don't have to spend a fortune today to start down the right path toward a
data-centric tomorrow. Because the thoughtfulness of your approach matters more
than your actual assets. What I've discovered is that success is much more
about determination--the desire to make a difference for the better for your
business-- than about dollars.
You can also forget about A.I. and machine learning for the
moment, as if anyone even knows what those terms mean these days. And please
don't start sweating about SQL queries, GOOGLE analytics or any of the other
buzzwords and jargon that you hear floating around. The most important thing to
know is what's really important for your business to succeed and no one knows
that better than you. Tracking and capturing the right information in a timely
fashion and then communicating that info effectively throughout your whole
organization is crucial. Silos, secrecy, and a reluctance to share are remnants
of a long-gone era when only those "in the know" were supposed to
know what was going on. Today, the more people who know, the merrier and the
more likely you'll have a responsive and responsible business. Remember that
sharing data is ultimately like exchanging ideas or lighting the next candle
from your own. Sharing doesn't diminish the power and value of the original; it
simply increases the illumination for all.
Some of the best tracking systems I've seen for identifying
systemic production and service problems, as opposed to one-off mistakes, are
nothing more than collection buckets where repeated instances of specific and
persistent customer complaints are sorted and aggregated. A framing store in my
neighborhood keeps track of returned frames (sorted by the cause for the
return) in simple folders and when a folder has half a dozen return tickets for
the same concern, they know they have a problem that needs looking into and not
just some random mistakes. This simple system lets problems be identified,
quantified, prioritized and then addressed in an organized and timely fashion.
Not a keyboard or a computer anywhere in sight. These programs are more about
attention and time than about elaborate solutions or costly computer-generated
algorithms and outcomes.
So, sit back and take a deep breath because, for the moment, all
we're talking about is how you can do a better job of keeping score. And you
can do that in a million different ways - expensive and fancy or quick, cheap,
and easy. Most entrepreneurs prefer the latter. Especially because, in a time
of constant change, deep and highly specific tech investments (especially those
with a limited ability to flex) can be a real albatross and an impediment to
your agility and ability to meet the uncertain challenges certain to be coming
down the road. McDonald's, on the other hand, clearly decided to go big and
just spent $300 million to buy Dynamic Yield, an
Israeli data tech startup, to help manage and make sense out of all of its
customer data.
For now, it's mainly about paying careful attention to and then
attending to the things that matter most to your business and to your
customers. And that starts with the old cliché: "what gets measured is
what gets done." When I talk about "being in the data business,"
all I really mean is that you've got to develop systems that allow your team to
define the metrics that are critical to determining whether and how well you're
satisfying your customers' needs and desires. Growing sales and happy customers
cure a world of potential problems and even serious shortcomings. But the
measurements need to be practical and realistic and not feel-good factoids that don't lead to improvements.
To get started, you need to focus on the three main parts of the
process: data collection; data measurement and the integration of the data
results back into the business. Frankly, if you don't turn the data into facts
and effectively share and communicate those facts to your team (at every
level), the entire value and utility of the information you've gathered and
analyzed will be lost.
Data Collection
The easiest and probably most accurate method of collecting
customer data is direct from the customer. In some contexts (focus groups,
political polls and opinion surveys) consumers who self-report may alter,
enhance, mischaracterize or otherwise simply lie about their personal choices,
attributes, demographics, etc. But in the world of e-commerce, where getting
the correct selections is critical (and where "fit" is the most
important factor), questionnaires, profiles, and other collection methods
result in reasonably accurate baseline descriptions of the customer's needs.
Newer methods, including a variety of gamified choice tools, are faster and
easier and, as a result, generate far greater volumes of data and choices. No
one has been smarter about gamification than Stitch
Fix whose Tinder-like game feature called Style Shuffle is used
by the vast majority of its 3 million customers to rate clothing choices every
day. It has generated more than 1 billion customer ratings in just over a year.
The second level of aggregating customer data is from third
party sources who are paid to append additional demographics, web activity and
sometimes even purchase histories to existing in-house customer files.
And the final primary source of data input comes from tracking
and capturing all of the customers' online activity and other interactions with
the company. Note that customer feedback (and satisfaction metrics) are not
ordinarily regarded as an initial data source since these inputs are primarily
gathered after initial customer activities and transactions occur and so they
are accumulated more in the measurement phase.
Data Measurement
As consumers in general and customers in particular continually
get smarter and better informed, they will demand more and more information
about your products and services: what do they do, what ingredients do
they contain (hopefully not corn syrup if you're a beer merchant), and whether
there are known side effects. They'll demand to know where they're made and how
they're manufactured. Too many businesses today don't know the answers to many
of these questions and concerns and they aren't prepared to respond to their
customers' inquiries. FAQ pages on websites don't get the job done and they're
just as useless as the indecipherable and illegible labels stuck on product
packaging.
Step one in the measurement process is to know everything
possible about your own products and operations and to have that data readily
available and accessible. If you're selling clothes, you need to know every
detail and dimension; if you're offering consumables, every chemical and
component ingredient is now part of the equation; and if you're doing your
manufacturing elsewhere, all those elements of the production and supply chain
are now on the table as well.
Step two is to build multiple channels and simple ways to elicit
and encourage constant feedback from your customers - happy and unhappy - from
Day One and to develop two-way and interactive communications with them so that
they know that they are being heard. Help them be part of the process of making
your business better and more responsive to their needs. Just to be clear -
again from a technology standpoint - the more this part of the chain of
connection and engagement is automated, the less successful and valuable it
will be to you.
Step three is to use the feedback to augment and empower your
team to more effectively interact with and serve your customers. Every business
ultimately is a people business and customer care cannot be turned into a
mechanical process or a tool without losing the human connection and engagement
elements that bring your business together and bind your customers to you. Only
in intelligent one-on-one conversations (which can then certainly be documented
and aggregated for other purposes) can you learn the true concerns, behavior
drivers, decision points and other emotional parts of the purchasing process
directly from your buyers.
Data Integration
Once the particular insights and ongoing guidance drawn from the
collected and evaluated data are turned into actionable information, the real
payoff comes from incorporating them into the day-to-day operations and
especially into the company's efforts to project and anticipate the future
requirements of its customers. There are basically four different areas where
immediate actions can return rapid results:
(a) decreasing friction in the purchase process and speeding up
customer transactions, which will drive higher "take" rates and
increases in average transaction revenues;
(b) offering the "best" of your customers bundles,
discounts, particularized incentives and other extras, which delivers a more
personalized and customized experience, and enhances engagement;
(c) stepped-up operational efficiencies in terms of inventory
management, anticipatory restocking and repurchasing, and especially in terms
of better targeting and fine-tuning the specific offers and products suggested
to the individual customer; and
(d) using all of the data to share customer preferences, choices
and directions both internally for in-house product design and development and
externally with brand partners in order to more closely align their own
production and offerings with the needs and desires of your customers.
The ultimate goal will always be to most effectively use the
information to enhance your employees' ongoing engagement with your customers,
deepen your company's connection to those customers, improve the consistency of
customer retention and grow your share of their spend while, at the same time,
adding actual value for the customer in terms of speed, convenience, access and
better decision making.
It's not an easy task, and it's an unending one if you're really
committed, but, in the final analysis, it's all about visibility and vision -
if you can't "see" your business, it won't be your business much
longer.