Monetizing Data: Milking the New Cash Cow
It is often said that, data sets and skill sets are available with some considerable amount of effort put in, but the right mindset to blend these and make magic is very hard to procure. To identify, invent and integrate opportunities with your data sets, you need the right partners and right thought process to effectively take this forward. Data, as is widely believed, is the new oil and this new oil is trapped in old servers and forgotten SQL databases by many organizations, and needs some serious mining — to derive positive benefits.
*This post was initially published in Wired on Feb 13, 2014*
Cash cows — a widely acclaimed and most sought after business terminology — was derived from an Indian mythological story of a proverbial cow that yielded everything a human desired. This holy and benevolent cow was called the Kamadhenu (desire-granter in English) and was derived out of the mythical exercise of churning the Kshirasagar (Ocean of Milk in English). In other words, the proverbial cash cow was a succinct essence derived from the ocean of milk, who could grant any human desire.
Drawing parallels in the world of business, one would realize that the “cash cow” today is an organization’s rich and diverse data, and the “ocean of milk” would be their customer universe. The data sets derived from this customer universe is, not only a representation of their customers’ behavior but also a source of insight and new avenue of revenue, which any organization would desire. To understand how data can transform into a cash cow, let’s understand how data can be looked at using a growth-share matrix. But before we get started on this, let’s look at why this hullaballoo about monetizing data!
Why Should You Monetize Your Data?
In the current business world of shrinking revenues, saturated opportunities and increased regulations — the glimmer of hope and the ace in the hole is “data.” During this renaissance of data analytics and decision sciences, those who possess good quality of data can accomplish wondrous wonders that would put Hercules’ wonders to shame. With data becoming the new currency, customers will become products and products will become customers. How?
Customer data will no longer be relevant only to the organization’s marketing or financial departments, which analyze customer purchase and usage behavior, but will go beyond and be relevant to businesses outside. This will be tangential to a company’s existing domain, thanks to granular data captured about customers’ patterns in usage, preferences and behavior. Ergo, any organization’s customer behavior data will very nicely complement another organization’s information about the same customers — thus yielding a 360-degree view of the customer.
Case in point are telecom clients who are trying to monetize their customers’ mobile phone usage data — by letting banks and retail outlets integrate the mobile usage data with their existing customer transaction databases. This helps the service provider better understand customer location and purchase preferences, and thus design better offers and promotional campaigns.
Why are Telecom providers monetizing data?
Who Is Doing It Already?
Vindication and validation are key elements that drive a lot of organizations to pursue the unbeaten path of novelty – in this case, monetizing data. Telecom giants, retailers, credit card companies, online search engines and weather aggregators are some of the key players in this area and have demonstrated considerable benefits by making a more viable product out of their customer’s behavioral data.
Who is monetizing data effectively?
But this should not stop every organization from pursuing the potential of monetizing data. There have been many innovative businesses that have identified potential in their data – for example smart home appliances that have been installed monitor the entire utility usage and then monetize this customer-utility usage data by allowing the utility providers design/market better services. Another example to cite would be on how weather aggregators have used so-far misconstrued irrelevant historical weather data to magically predict which pitcher would be most effective on a given day in MLB (Major League Baseball) or how many oranges you are most likely to buy on a rainy day.
The opportunities and potential of one organization using its data to both serve itself and also help other organizations serve their customers better is limitless. A proactive effort is needed from the data and business teams to milk this cash cow called data to its fullest potential.
What Are the Risks?
As with any endeavor with promised riches, there are associated risks. Organizations need to be extremely aware and sensitive to sharing and using customer usage information. The privacy terms and conditions need to be clearly spelled out and data should be used for analysis only post mutual consent. A better way to do this would be to reward or incentivize customers to proactively share their data. For example, Google’s Screenwise trends provide a cash voucher to anyone willing to share their browsing behavior voluntarily. Innovative ways of enabling data sharing can also be implemented by providing mobile apps that would serve as customer assistants to keep track of their activities – think, Walgreens mobile apps.
How do you start now?
For those who are signed up and want to take a shot at monetizing their data sources, here are five simple steps to get this rolling.
Identify the opportunities and potential areas where your data can provide insights
Invent new ways of capturing data if your identification process yields no fruitful results
Integrate your data sources with aligned and external businesses to derive 360-degree insights
Ideate on how more information can be derived from existing data & also with more collaborations
Innovate by leveraging newer technological trends to finely capture more granular data
Emphasis needs to be laid on the “Identify” stage, because it is the most critical and incipient stage that leads on to greener pastures of transforming your data into a cash cow. It has two components:
i) Identifying Business Use Cases
ii) Identifying Data Elements
Luckily, both these problems can be solved by one single solution – called the “Structured problem solving” approach. This approach will help evolve a DNA for the problem at hand and enable easier identification of opportunities and business value from monetizing data sources.
Where Are You and Where Do You Want to Be?
The famed growth-share matrix has four quadrants — Cash cows, dogs, stars and question marks. Let’s see where your organization’s data belongs and how you should migrate your data from a less desirable quadrant to making it the new cash cow of your business.
My Data is a Question-Mark:
Understand who your closest businesses are and how they can benefit from your customers’ information. A discovery-driven reverse-engineered approach of finding the princess whom the shoe fits might lead you to some unexplored existing data sources or at least drive you to invent new ways of gathering necessary data. At the end of the day, you have always got to start somewhere.
My Data is a Dog:
You have been using your data for your pet analyses and are very content with the results. But it is time to look beyond using data as mere fodder for your analyses and more as revenue generating products. If you can neatly tie them up and provide packaged sanitized data, there is a voracious market out there, which will let you treat your pet data like a fat rich cash-cow.
My Data is a Star:
Good for you, that your data is a star. You use your data not only for analyses but also to integrate it with third-party data to derive a holistic picture of your customer. You have got your data working magic for your customers – but it is time to make it scalable and identify avenues, where another non-competing organization would also derive benefits from your data. Then, not only will your products and services be working for you, but so will your data.
My Data is a Cash Cow:
If your data is helping you out with analyses, identifying gaps and problem areas and also serves as an elixir of information for other non-competing organizations, then you have arrived and achieved the objective of making your data as a cash cow. Congrats!
Looking at Data from a Growth-Share Perspective
It is often said that, data sets and skill sets are available with some considerable amount of effort put in, but the right mindset to blend these and make magic is very hard to procure. To identify, invent and integrate opportunities with your data sets, you need the right partners and right thought process to effectively take this forward. Data, as is widely believed, is the new oil and this new oil is trapped in old servers and forgotten SQL databases by many organizations, and needs some serious mining — to derive positive benefits.