In the race to win customers and market share, data-driven organizations are increasing the distance between them and their less-informed peers. McKinsey Global Institute reports that data-driven organizations are now 23 times more likely to acquire customers, 6 times as likely to retain customers, and 19 times as likely to be profitable as a result.
Make no mistake that there are still companies today that are good at what they do and operate more on gut than data. But the question is, can you do that over a consistent period of time? “The short answer is no,” says Ray Wang (Principal Analyst, Founder, and Chairman at Constellation Research) in the new eBook, The Role of Data in Digital Transformation. Data-driven organizations will ultimately win out with six significant competitive advantages:
- Consistency: Wang notes that, “you might have a company that is good at what they do, but they don’t have a data-driven organization. In fact, every organization operates on gut sometimes, and gut is darn good for many companies. A problem arises though when someone leaves, when you have a succession issue, or something significant changes. The value of having a data-driven organization is that you have consistency over time.”
- Longevity: Increased staying power goes hand-in-hand with consistency. In a data-driven organization, “people understand how decisions are made,” says the Global 2000 advisor. “People understand the implications of data that’s being collected and managed, and they take action appropriately. When everyone’s involved with and knowledgeable of the company’s data, you have longevity.”
- Awareness: Data-driven organizations know if sales are up or down, if customers are happy or not, and what’s working (and what’s not) in their own and other departments. Awareness and transparency across an organization help drive buy-in, loyalty, engagement, action, and responsibility—and encourage employees to ideate on change and new product, service, or business model development to move their brand forward.
- Responsiveness: A top advantage for data-driven organizations is having historical, real-time, right-time, and predictive data to be more responsive and proactive. “You can identify trends or patterns before they occur,” says Wang. “There’s a company that can predict by analyzing movie scripts if a movie is going to be a box office hit. To have that kind of insight—that’s really powerful stuff. If you didn’t have it, you wouldn’t know what to expect and what to adjust.”
- Feedback/built-in market research: “Over time in a data-driven organization,” notes Wang, “you get feedback—what’s being used and what’s not, what’s liked and what’s not. That helps you transform and formulate new products and services, new workplace initiatives and other offerings. That gives you so much of an advantage, because you have built-in market research in terms of all you do.”
- Fast, confident decisions: “The other advantage that data-driven organizations have is that when you make decisions based on facts and data, that dramatically increases the speed of decision making. None of this takes away from gut or human intuition,” notes Wang, “but it allows you to look at the data, make a gut check, look at the data again and say okay, I’m confident in the decision I’m making.”
Think about these competitive advantages in terms of leading data-driven organizations today. Netflix, founded in 1997 (and turned down by Blockbuster as a partner in 2000), recently surpassed Walt Disney Co. as the United States’ number one media company by market value. Amazon, which began as an e-commerce book seller out of Jeff Bezos’ garage in the 1990s, is now the world’s biggest online retailer. Domino’s, whose stock was $3 a share in 2008, has turned itself into an e-commerce powerhouse and has recently become the largest pizza company in the world based on global retail sales.
With consistency, longevity, awareness, responsiveness, feedback, and quick, confident decisions, data-driven organizations are obtaining and retaining customers and market share in accelerated fashion.
Want to learn more about how data and analytics accelerates growth and new business model creation? Ready to read about what enterprise organizations should be doing today to get ahead? Itching to know the bleeding-edge trends that all executives should be following? Get MicroStrategy’s 18-page Q&A eBook featuring key insights and advice from analyst, author, and Global 2000 adviser Ray Wang. Download The Role of Data in Digital Transformation eBook today.