You’ve probably heard that “data is the new oil” (but you just need to know where to drill?). Or alternatively, that the growing lakes of “Big Data” hold all the answers, but they don’t necessarily tell us which questions to ask. It feels like Big Data is the cure for everything, yet far from solving our problems, it is simply adding to our confusion.
There’s no doubt that customer, transaction, behavioral, geographic and demographic data points can be valuable for analysis and forecasting. When used appropriately, and in conjunction with relevant tools, this data can even throw up new insights. And when combined with contextual and psychometric analysis can give rise to whole new data-driven businesses.
Of course, we often use simple trend analysis to reveal underlying patterns and changes in behaviour. (“If you can’t measure it, you can’t manage it”). But the core issue is, what is this data actually telling us? For example, if the busiest time for online banking is during commuting hours, what opportunities does this present? (Rather than, “how much more data can we generate from even more frequent data capture….”)
I get that companies want to know more about their customers so they can “understand” them, and anticipate their needs. Companies are putting more and more effort into analysing the data they already have, as well as tapping into even more sources of data, to create even more granular data models, all with the goal of improving customer experience. It’s just a shame that few companies have a really good single view of their customers, because often, data still sits in siloed operations and legacy business information systems.
There is also a risk, that by trying to enhance and further personalise the user experience, companies are raising their customers’ expectations to a level that cannot be fulfilled. Full customisation would ultimately mean creating products with a customer base of one. Plus customers will expect companies to really “know” them, to treat them as unique individuals with their own specific needs and preferences. Totally unrealistic, of course, because such solutions are mostly impossible to scale, and are largely unsustainable.
Next week: Startup Governance