As more organizations turn to data analytics as an integral part of their growth strategy, many leaders may harbor some doubts. How will data analytics work in the real world when it comes time to make critical business decisions? Will the organization really be able to use data analytics effectively, or will it become another “fad” that turns out to be more burden than boon?
But it may be reassuring to learn that real-world business problems are being addressed by data analytics and reaping the rewards.
Here’s a rundown of some companies that are deploying data analytics effectively:
The company collects data on its customers to boost current consumption and upsell new products, which has led to a more efficient operation that cuts costs and boosts profits. As consumers share their opinions of the product through social media, phone or email, it allows the company to adjust its approach and better align with consumer interests and demands. The data the company collects is aimed at improving the brand experience and developing greater customer loyalty.
The large amount of data collected on its more than 58 million subscribers is used to create Netflix’s recommendation algorithm, which has been found to be quite successful in predicting what people will watch. “The latest Netflix series is not being made because a producer had a divine inspiration or a moment of lucidity, but because a data model says it will work,” writes Enrique Dans, who teaches innovation at IE Business School. That gives the company a leg up on the competition, such as big entertainment companies like Disney or other streamers such as Hulu.
Using the baby-shower registry that shows information on female customers, Target has been able to identify that pregnant women often buy larger quantities of unscented lotion in addition to more than two dozen other products. Such purchasing information is part of a “pregnancy prediction” score that enables the retailer to narrow down a woman’s due date and send coupons that are timed for specific stages of pregnancy. Such targeted promotions mean women are getting information and coupons that they currently need. Such interactions help strengthen customer loyalty.
With more than 6,000 properties in 122 countries, the hotel operator finds the key to staying competitive is data analytics that provides information on things like the types of jobs customers and their family members hold or even the kinds of jeans they buy. Data analytics also allows the company to identify certain “types” of customers, such as those into fitness and wellness or those who like to be immersed in an unfamiliar culture, and then promote the properties and amenities that fit their interests.
Sometimes it seems that Amazon knows you better than you know yourself when it makes buying recommendations. But those targeted messages are the result of data analytics that lets the retailing giant know when you make your purchases, how you rate them and what other customers with similar buying habits are purchasing. For example, Amazon has learned that those who buy televisions also buy a TV mount – and that gave them the idea to upsell and promote the products being purchased together.
How and when to use data analytics is a decision that must be made by each organization. But ignoring data analytics could prove fatal, according to management consultant Geoffrey Moore. “Without big data analytics,” he says, “companies are blind and deaf, wandering out onto the web like deer on a freeway.”