A long time ago, I listened to a motivational speech on how to stand out from the crowd by Beth Austin, a successful multi-level marketer, that had the title “Be Different.” Since then, I have always wondered how some companies differentiate and stand out better than others by leveraging their IT resources and data when almost all companies pretty much have the same ERP and CRM systems supplied by the same popular vendors!
I concluded that the type and quality of data these companies collect, the way they integrate and leverage the data, and their people and processes make all the difference. In this blog, I want to explore how this is different to what other companies do, and why it is key for success.
In a similar vein, an article by Bill Franks holds the notion that when analytics become table stakes, data is more differentiating than analytics, evidenced by venture capitalists’ view.
Differentiate with data
Although there are lots of similarities on what kind of data has been collected by companies in the past, and which systems and vendors they worked with, I still strongly believe that data has been, still is and always will be a differentiator. Why? Because, while the metadata in the retail transactional history, bank account activity, and call detail records may be common for all companies, the market basket transactions of a customer with unique brand, quantity and pricing composition in them are all private data of the company and not publicly available. When you combine that with whole bouquet of digital data that customers provide in their digital interactions, they represent “fingerprints” of the customer which is exclusively available to the company that owns the customer. Same is true for credit card transaction details and who called who and when information in the telecommunication network usage data. Having this exclusive information is a huge potential that allows companies to not only understand their customers better, but enables them to improve their offering, internal processes, logistics etc. to differentiate from competition.
Differentiate with analytics
Having access to certain data is only one part. Orchestrating different analytic algorithms in smart ways will help differentiate a company in much the same way as a composer who orchestrates multiple instruments to produce music that stands out.
Almost all companies run predictive analytics by using logistic regression, random forest and ensemble model algorithms. These methods are generally good at identifying a specific customer and its probability for churn. However, many companies miss taking the next step, and don’t leverage the “fingerprints” of their customers further, for instance by running multi-genre analytics to retain customers. Here is a simple, but relevant example:
Every mobile service provider holds detailed information on its customer, such as when a customer’s contract is due for renewal. This information is exclusive to the service provider, and its ultimate weapon to compete against other operators. Used along with publicly available competitors’ price plans or other information additional analytics will help to optimise and personalize the providers offer that aligns with the customer’s specific needs. Can there be a better way for agility in customer retention?
Differentiate with organisation and people
How a company differentiates itself from competitors also involves effectiveness of people. This includes people from all levels of the organization, including executives and senior level management in setting the right goals and measures.
Sometime ago I read an interesting paper by John Hauser, professor of marketing at the Massachusetts Institute of Technology Sloan School of Management. The paper titled, “Metrics: You Are What You Measure!” emphasises the need and importance of choosing the right metrics. I agree, metrics influence the behaviour of the entire organisation, including actions they choose to take and decisions related to future strategies. Below, you can read a short excerpt of the paper highlighting the link between metrics and organisational behaviour:
“If a firm measures a, b, c but not x, y and z then, managers begin to pay more attention to a, b and c. Soon those managers who do well on a, b and c are promoted or given more responsibilities. Increased pay and bonus follow. Recognising these rewards, managers start asking their employees to make decisions and take actions that improve the metrics. (Often, they don’t even need to ask!). Soon the entire organisation is focused on ways to improve the metrics. The firm gains core strengths in producing a, b, and c. The firm becomes what it measures.”
This statement can be applied to data and analytics, too. If a company shies away from a proper data management, analytics and investment strategy, they will be deprived of long-term value for the organisation from such investments as growth asset. This way they can avoid the pitfalls in cost-focused organisations who consider data and analytics as an overhead and a necessary cost but one that does not add value.
Differentiate with process
In “Competitive Advantage: Creating and sustaining superior performance,” Michael Porter describes his value chain model by emphasising that an organisation’s capabilities to perform are not confined to those it owns, and that an organisation is strongly influenced by resources outside of the company. Those resources are an integral part of the chain between product or service design, through production and marketing to the use of the product or service by consumers.
In this age of digital transformation, it is even more true and reinforces the need for infusing insights from data and analytics into the ERP and CRM systems in an agile manner by performing end-to-end integration of the organisation’s systems and business processes to enable front-line staff to make decisions (enabled by analytical insights / results delivered by data scientists) to achieve the organisation’s strategic capabilities.
So, coming back to the statement “Be Different!” by Beth Austin: Yes, Beth is damn right! Being different in leveraging your data, analytics, people and processes with collecting, combining and leveraging information, that is exclusive to you, will be a big step for staying competitive and therefore, successful in future!
At Teradata this simply means: Helping our customers to differentiate.
More information on www.teradata.com