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Data concerning a company’s costs, profits, operations, customer’s behavior and supplier’s practices is arguably one of the most valuable assets a company holds. Today’s technology makes it possible for big businesses to turn data into modern-day gold. Five ways that a business can monetize data is by enhancing the company’s current products, personalizing services, selling data, creating new products and creating new data.
Enhance Current Products
The most time-efficient way to transform raw data into valuable data is to utilize analytic insights to enhance the products or services already being offered. Data-based insights pave the road for more meaningful services, more optimized production and a greater understanding of customer demands.
In early 2014, Microsoft Corp. named Satya Nadella as CEO. Nadella was insistent that the sales department could greatly benefit from utilizing data, like how likely and when a sale is going to close to optimize company sales. After about a year of collecting, analyzing and implementing data-based insights, Microsoft salespersons gained an average of ten to fifteen extra minutes per sales opportunity.
Personalize Products & Services
Data-based insights can be used to personalize products and services. Customers who receive personalized offers or products are much more likely to purchase the product or service. This marketing strategy has been coined targeted advertising and has become a major source of revenue for large companies. This tactic is so effective that Harvard Business Review found that behavioral targeting significantly increases a consumer’s interest in a product simply because it is reflective of their own characteristics.
One very simple way to turn data into revenue is to simply sell the information to a data broker. Data has become a valuable commodity as a stand-alone product. Data brokers are companies that will purchase massive amounts of data from businesses, bundle it with information from other sources and then resell the information to other businesses. The main goal of the transaction is to produce valuable insight on the best and most effective advertising strategies.
Create New Products and Services
A business can monetize data by leveraging insights from the information to create new products and services. SAS, one of the world’s leading data analytics companies, explains that over 54% of Asia Pacific organizations invest specifically in data solutions to foster innovative growth in products and services that the company offers.
One example of this is the financial company Equifax. The company’s access to a plethora of customer income data and employment records allowed for expansion into adjacent businesses. Equifax created their Suspicious ID product to monitor accounts for fraud. This additional feature has been a major catalyst for growth. In 2013, the company predicted to grow about 7-10% and attributed at least two to three of those percentage points to growth from new products and innovations related to data analytics.
Create New Data
An effective way to monetize data is by using the massive amounts of raw data in combination with customized algorithms or indicators that will generate new data sets. These new data sets can be used in all the above ways to facilitate company growth.
Major companies like Uber and Netflix, for instance, utilize Kafka as a service to manage the enormous amounts of real-time data streams. This type of service allows companies to build complex algorithms and customized tools that will generate even more data that can be monetized for the company. For instance, a financial company could utilize a data managing service to translate the raw, real-time transactions of their customers and combine this data with a customized algorithm that detects certain patterns indicative of fraud. By doing this, the company generates a new source of data, like fraudulent transactions, that results in even more products, services or other benefits to the business.
Almost any business can generate growth and revenue by monetizing their data. Enhancing the company’s current products, personalizing services, selling the data, creating new products and creating new data are only a few of the opportunities that big data can offer for businesses. The value of such data is predicted to continue to explode in this new age of personalization. IDC predicts that big-data driven products will reach a worth of $41.5 billion before 2019.