Why less than 0.1% of businesses benefit from their own data? And how not to be one of them
We love to say data is king, write articles about the importance of data, proudly announce how much data we have, but how many businesses do you think really “act based on their data”? How many businesses just insert Google Analytics/HotJar/AppAnnie/MixPanel, etc. to their websites and mark the job done?
Even if you wanted to really act based on your data, when you check data analytics products, you also see that almost all of them are targeting big enterprises and don’t provide meaningful benefits to SMEs & SMBs.
Why? Because one, big enterprises know the value of their own data, two, they have the resources (money, time, expertise) to really use that data, and three, they have enough data to really make a difference in their business.
Makes sense right? No, it doesn’t. The truth is that right now, most Data Analytics products are designed specifically for big enterprises because the big enterprises are their customers. This doesn’t mean that SMEs or SMBs don’t need them, on the contrary, they need it more than anyone else, because of the GAP.
The GAP is the difference between you and your bigger competitors (market leaders) power and abilities to compete, capture the market, and ultimately win the customers.
The GAP shows your chance and potential for growth. As the gap gets wider, your chance of growth gets slimmer.
The gap is one of the main reasons why SMEs & SMBs can’t grow and become big enterprises and why big enterprises last much longer than them.
Until now, Big players of any industry had the market, the competitive advantage, dictated the pricing, the trusts, and the attention of new customers and ultimately, the resources to run their competitors out of the markets.
On the other hand, the smaller players are more agile, can be more creative, can have better customer support, friendlier relationship with their customers, and can focus on one part of the market that bigger players are missing or couldn’t penetrate. That’s how they stay in the game and occasionally, if they do this good enough, even grow to one of the bigger players.
But is this assessment true today as well? No.
No matter how SMEs & SMBs try and improve their business, today, the big enterprises who use their data to improve their business will leap forward and make it much harder for their competitors to compete with them. Every day, the gap is getting much broader, making it relatively unlikely for smaller players to join the big players.
That’s why Facebook and Google tear each other apart to acquire Whatsapp, Tencent & Ant Financial (Alibaba, Alipay, etc.) acquire almost every startup with a promising future in acquiring or analyzing the customer data and so on. This is why there's always news about regulations on how to collect, keep, and analyze data, like GDPR or HIPAA. It’s not just about privacy or even public concerns, it’s about market share, competition, and growth in every industry. This is how they remain their dominance over every other possible player.
We’re not talking about just one industry, every industry long time ago understood that you don’t bring a knife into a gunfight, and believe me, data is the ultimate gun.
Why do enterprises fail at data analytics?
Big players always have much bigger & better* data in their business, so does this mean that the game is over? No, because of two main reasons:
- Shooting in the dark: Most big players collect and analyze their data, incorrectly and insufficiently.
Although they might spend a lot of money and time on their data analytics division, bringing on skilled data experts and analysts, spend more money and time on them, their end result is almost always wrong or inadequate and I mean, really, embarrassingly wrong, just awful.
So they wasted a lot of resources on marginal growth if any, and they’re blaming their team for not achieving their desired results. They either give up completely or try again, blindly.
2. Actions speak louder than words: Data reports not translating to real results, actions, or real changes.
The most important reason for doing real data analytics is to change the routines and optimize every aspect of your workflow, engagement, and ultimately your results.
But more often than not, actually, almost always, the results of hard works of data experts and magic of multiple software, comes down to a couple of page of the report that never leaves the management desk and never become anything more than just the paper that it was on it. There are a few reasons for that:
- Big enterprises are usually afraid of change, even with calculated risk. After all, they made it to big enterprises in the old ways, not on nerdy reports.
- They honestly don’t understand the results, they read it, want to implement it, but it’s way over their head. Most reports of data divisions of every company are so complicated, it’s like legal or accounting stuff for the management. So they ignore it because they don’t understand and they don’t see the benefits.
- The reports contradict the decisions and actions of the management. In this case, the default answer is that the report is wrong, not the management.
All these three reasons have something in common, for management, the results of all of the time and money they spent, is hard to understand and very unclear. So any solution that has these qualities, will not fly with most companies.
So why (almost) no one is using their data to grow, effectively?
As you might already come to this collusion, it comes down to one word: Recourses.
Bigger players have all the resources they need, money, time, data experts, software, and most important of all, the effective amount of data. But because of the problems mentioned above, they are not able to unleash their potential. As a result, they waste their resources.
Smaller players always think that 1. This is not a priority right now, we have a lot of more urgent matters at hand, and 2. We don’t have the necessary resources to compete with bigger players by using our data.
These two statements while seem to be true, are both invalid.
The truth is that you don't need resources, you need a real understanding of the current status of your business and the calculated actions necessary to grow your business (actions resulted from data analytics).
This is the first step in business intelligence (BI) and it really can be done with almost no money, time, data experts, software, or even, the effective amount of data.
The only thing you need, The most important resource that you already have but hardly pay any attention to, is your customers, and upon them, you’ll build your kingdom.
That’s where “Customer Data Platforms” come to play. With a great CDP in your business, you will be able to understand your customers and grow their satisfaction and their loyalty in every step of their customer experience lifecycle.
SMEs & SMBs should implement a CDP to the core of their business and make decisions and take actions via its results. At the same time, they shouldn’t invest too much time, money, human resources, or any other kind of resources on that, a great CDP, doesn’t need any resources to start, only customers.
How to use CDP in your business, correctly?
Customer Data Platform (CDP) is still a new phrase and most people don’t know the difference between CDP and CRMs or DMPs. Also, it is almost 100% used by big enterprises, and as mentioned, this is a mistake and SMEs & SMBs should use CDP to grow their business and close the gap.
A customer data platform (CDP) is the solution to the problem of disconnected customer data systems. A CDP is the key to delivering the right engagement for the right person at the right time and personalizing every customer touchpoint from marketing to sales to service.
In other words, CDP's main job is to understand your audience and uncover hidden patterns in customer behavior. So you can create actions based on your own data.
A great CDP has three main points:
- Simple to understand:
All of your data should be understandable to the management, business owners, and everyone else in the company without the need for translation from data experts and data analysts.
A great CDP shows everyone in the team, in simple and understandable ways, that what is the current status of your business and what are the routes to growth, by analyzing all data from their “existing customers”. In summary, the CDP provides very straightforward answers to these questions:
- Who are my best customers?
- Who am I losing as a customer? Who is about to leave?
- How to stop my customers from leaving me for our competitors? How to never lose another customer?
- How to increase customer loyalty & engagement?
- How to profit more, from each & every one of our customers?
A great CDP provides a simple answer to each of these questions and provides you with the next action: The recommendations on what you should do, as a business, to grow.
A great CDP doesn’t need anyone to operate it, doesn’t need a data team or division, doesn’t need complex reports, doesn’t need data experts or data analysts, and closes the door in the mistranslation of data by human errors.
It means you don’t have to dedicate a big HR budget to use your data in your own company.
2. Fully Automatic:
A great CDP should automatically collect, analyze, and unify data from all data sources to grow your business. This process should be fully automatic and invisible.
A great CDP doesn’t need anyone to operate it, it just connects (like a bridge) to all data sources you use, your e-commerce storefront, your CRM, your helpdesk, your payment processor, your surveys, etc. and analyzes and unifies all of these data to create “Customer Insight”.
This way, you don’t need to invest money or time or even provide enough data for the CDP to work. A great CDP grows with your business.
3. Flexible:
Every business is different and your business has different levels of growth as well. A great CDP is flexible and doesn’t put you into its box, a great CDP doesn’t have any box.
The answers to those 5 questions can not be provided by an algorithm, otherwise, those problems were solved a long time ago. Those problems are alive in every business and just like every other “alive problem”, they need solutions that are alive.
A great CDP first understands your business through your customers, and it should be so flexible to automatically create new paths for increasing customer loyalty, engagement & customer lifetime value (CLV or LTV) based on your own data and no extra resources.
A great CDP should be able to collect, calculate & analyze different behaviors, actions, and patterns that are most likely unique to every business.
This flexibility is made possible with two major principles: Behavioral Tracking & Automatic Segmentations, which are very important topics and I will go deep into them in another story.
Thank you for reading this story, I would love to hear your feedback and your experiences regarding it. If you want to contact me or ask me any questions, here is my LinkedIn, I would be happy to hear from you.
