Provocateur:

The need for an effective data strategy has never been stronger. Faced with years of increasing competitive pressure from diversified businesses such as Amazon, and now an unprecedented economic downturn, more businesses are looking to emulate what has allowed Target and Best Buy to successfully fight back. Strengthened by their existing data strategies that helped build stronger and more informed customer relationships before COVID-19 hit, they are now doubling down on those data strategies to take advantage of new opportunities while their competitors struggle to adapt.

Data strategies have been the driving force behind the growth and continued dominance of Amazon, Walmart, Netflix, Facebook, Google, eBay, and Alibaba. But the way they use data does not require armies of data scientists. Many data-driven tools under the guise of AI are just old-school business rules or model scoring that have been automated and are supported by purpose-built data frameworks. New lipstick, same pig. The key difference is where, when, and how their data assets are applied to achieve their business goals—which are all driven by their data strategy.

Why your company needs a data strategy

Data is everywhere and continuously used to influence our decision making, yet we rarely get a glimpse behind the curtain. And even then, only when some legal or moral line has been crossed that makes the news cycle. Decades of irresponsible data breaches by businesses and governments alike have led to a slow but inevitable march towards national data privacy legislation in the United States. With increasing expectations of dynamic customer experiences, increasing regulation of third-party data suppliers, and, of course, increasing expectations by investors of revenue growth, ignoring untapped data opportunities is no longer an option.

“If your company has a ‘data lake’ but you have no means to audit it, and no roadmap to use it, you do not have a data strategy. What you have is a pile of risk with no upside.”
– Keith Scheer CEO & Cofounder of DataJet Software

So, what is a data strategy?

A data strategy is a comprehensive plan of action designed to help a business achieve its goals by effectively using its internal and external data assets and technologies to achieve focused outcomes. Effective data strategies are based on each business’s unique needs, risks, data source mix, interaction channels, and opportunities to create an actionable plan with short- and long-term benefits to the business. Most data strategies cover:

• Governance: data collection, storage, security, privacy, consent, and legal compliance
• Quality: data hygiene, verification, and validation
• Diversification: data sourcing and risk mitigation
• Integration: siloed data and channels
• Knowledge: identity resolution and 360-degree view of the customer
• Building: monetizing and creating new data assets
• Execution: applying data to the customer experience and journeys
• Optimization: new metrics and automated insights
• Automation: across the technology and data ecosystem

Together these elements build the foundation to support key business metrics, customer insights, and new data attributes to power everything from AI and personalized content to the next most likely product and projected lifetime value. Businesses that fully embrace their data strategy treat it much like they would technology development, with roadmaps and processes that help bring the vision to life.

Is data privacy part of your brand promise?

National data privacy legislation is coming to the United States—with 75% of U.S. adults wanting more regulation of what businesses can do with their personal information. But given how 2020 is playing out, this will be a 2021 event at the earliest.

The increased invasiveness associated with digital fingerprinting, COVID-19 contact tracing, China’s very Orwellian Social Scoring, and non-consensual DNA database programs are building awareness and fear in the United States that should eventually force Congress to enact data privacy legislation that protects consumers, while hopefully not crippling businesses by blocking legitimate data uses.

Until then, how your business navigates the differing legislative requirements across the 50 states, and each country around the world, is not something that can be ignored. It needs to be part of your data strategy.

Are you creating quality customer experiences?

Customers continue to hunt for brands that provide them with quality customer experiences. This is directly reflected in their brand loyalty. According to a pre-COVID-19 consumer study by PWC, 73% of consumers polled said customer experience was a key factor in their buying decisions, with 54% stating most companies needed to improve their customer experience. And 32% said they would leave a brand “they love” after a single bad experience.

Brands need to make their first impression a good one. Now that we are living in a COVID-19 world, the dynamics of customer experience are changing, but not the fundamentals. There continues to be a strong upside for brands that provide quality customer experiences.

Pre-COVID-19, customers reported they were willing to pay a 16% price premium and 63% were more willing to share their information when provided with a quality customer experience. As we have seen in 2020, where and how the customer experience takes place has shifted online with major increases in demand for delivery services and online buying with curb-side pickup. Using data to identify and support the shopping experience a customer wants is now table stakes for retail, dining, grocery, and other industries that have historically relied on physical locations.

“Too many brands confuse discounting with relationship building. A mutual value exchange and two-way dialogue [are] necessary to create a genuine customer experience.”
– David Eldridge CEO of 3radical

Do you have a back-up data supplier?

Following the lead of Vermont, California enacted legislation in 2019 that empowers consumers to opt-out of the sale of their data by third-party brokers such as Acxiom and Infogroup. Google, Facebook, and others are addressing this risk by creating and fortifying their “walled gardens” and capturing this data through zero and first-party means.

Requiring third-party brokers to register with the state and provide information about how to opt-out, has opened the door for 12% of the U.S. population (40 million people) to effectively opt-out of receiving marketing communications. As actions such as this cause audience reach to decrease, it will force marketers to look elsewhere to fill in the growing data gaps.

Having identified this growing need, multi-source data providers such as Speedeon Data and engagement sciences (a.k.a. gamification) firm such as 3radical are already providing brands with new and creative ways to source permission-based data that are yielding impressive results in customer acquisition, activation, and retention applications.

Are your investors satisfied?

With over half of businesses that invested in cloud services saying their investments have failed to live up to expectations, decision-makers are being forced to justify their multimillion-dollar decisions. As they are learning, the root cause in most cases was not the cloud service, but instead, a failure to integrate with other systems that housed critical data or were necessary to act on that data.

Even when those gaps are closed, businesses will then need to turn their data into actionable insights and integrate their data into all relevant consumer touchpoints to live up to the full promise of the cloud services. Doing so will lead to stronger and longer-lasting relationships between brands and customers, which can be demonstrated through increased revenue and lifetime value, validating the technology investment decisions.

While many businesses struggle to survive the current economic, social, and political upheavals, others are thriving. Businesses across many industries are proving there are opportunities to be had during this moment of crisis, and the common theme is their use of data to build and maintain revenue-generating customer relationships. How will your company use its data to thrive in these uncertain times?

About the Author

Marc Shull, chief consultant at Marketing IQ, founded the company in 2009 to bring together the best of marketing’s left-brained analytics and insights with right-brained creative and strategy to develop more effective marketing solutions. Over the last 20+ years, he has worked with businesses ranging from regional nonprofits to large multinational corporations in the retail, financial services, education, dining, CPG, insurance, technology, and pharmaceutical sectors. Contact him via mkt-iq.com or LinkedIn.