Do you know what business you are in? It seems like such a straightforward question that every business person should be able to answer it without hesitation. Yet things are changing so rapidly, I am not quite certain that all would answer correctly.
A related question has to do with where one’s profits come from. McDonalds, for example, does not make much money from hamburgers. However, they make a huge profit on the soda they sell with the food. Their main objective is thus to push soda. Similarly, most restaurants make their profit on alcoholic drinks. Good food gets the patrons in the door, but the real goal is moving the cocktails!
Data and “big data” are becoming so important that businesses are willing settle for almost breakeven on their traditional products in order to obtain the type of valuable information they can sell for a substantial profit. The fact that “data as a service” is becoming a huge business opportunity was emphasized at a recent IDC technology conference. This is part of the change that the Internet of Things is enabling. It was demonstrated that almost all industries are recognizing the value in obtaining, sharing, and selling different types of information. Among many examples provided was one about the agriculture industry, and how John Deere has expanded its offerings to include data services.
While John Deere still produces tractors and other farming equipment, their new equipment is designed for much more than physical tasks such as tilling the soil. The new Deere equipment are equipped with sophisticated sensors and other technologies that allow them to deliver, in real time, the nutrients that need to be added to the soil and to determine what seeds should be planted where. They also store and transmit data to a central control which keeps track of what is planted in which fields.
With the data from the smart tractors and predictive models that incorporate weather and other factors, farmers can predict overall crop yields. Thus, the farming equipment business has evolved into one that provides machines that have intelligence built in. Furthermore, the information generated is not only valuable to the farmers, but to the farm cooperatives whose livelihood depends on the yields of the farms. Knowing what crops will produce what amounts, and when they will do so, enables the farming ecosystem to function more efficiently.
Other industries and businesses are finding various uses for data, allowing them to expand into adjacent spaces or to provide services for existing customers or other stakeholders. Fitbit, which enables individuals to monitor their heart rates and other vital signs, has realized that the data they obtain can provide longer term benefits to the individuals collecting them. They have also recognized that this information is valuable to doctors, hospitals, insurance companies and medical researchers. With health related insights, Fitbit is developing new approaches to tap into different sources of revenue.
For marketers, similar shifts are occurring and data are becoming of increasing importance. While creative execution and campaigns still matter, crafting the right content to the right targets and knowing where to place things has become equally as important. This necessitates the collection of big data across many different physical, digital and social channels so that interactions can be understood and analyzed, and offerings customized.
In addition, with the majority of the purchase decision process for products occurring before a customer actually makes contact with an organization, today’s marketers need to develop predictive analytics so that they can identify potential opportunities as early as possible. This way they can intercept potential customers before they have made up their minds.
With the increasing availability of structured and unstructured data, no matter what industry or function one is in, data collection and analysis will play an important role. Understanding this shift is critical, as knowledge is a competitive differentiator. If you are a marketer and someone asks you what business you are in, you might want to simply tell them that you are in the business of interpreting data. Apparently, we all are!