Here we have an excellent extract that is taken from an article written by Dr Brian Smith (vice chair of CIM, and runs PragMedic), Dr Hugh Wilson (director of the Cranfield Customer Management Forum), and Professor Moira Clark (director of the Henley Centre for Customer Management).
Turning data into value is difficult. Data does not turn into value at the push of a button. First, data must be ordered into information, which must be contextualized into knowledge. Some of that knowledge will be valuable and deliver ‘insight’. To create value, that insight has to drive changes to the marketing mix, leading to sales that in turn create new data. his virtuous circle is complex and requires the right environment to work.
THE TEN COMMANDMENTS OF VALUE CREATION
Use data about unmet needs
Transactional data, such as sales, tells you about the needs the customer has met. The most valuable data tells you about unmet needs, like complaints, customer satisfaction and the use of other products and services.
Synthesise multiple sources of data
Any one source of data, no matter how huge or well analysed, gives only limited understanding of the customer. Since customers are complex beings, real insight comes from the synthesis of quantitative and qualitative, tacit and explicit data.
Make and test hypotheses
Technology makes it much easier to gather and organise lots of data, but the real value comes from applying it. In particular, value emerges when firms take time to think about how their market works and use the data to test any beliefs and assumptions they have about customers.
Use deliberate processes
Most firms are now process oriented. They have clear, step-wise methods for doing everything from paying invoices to firing people. By contrast, too many firms see turning data into value as a touchy-feely thing. The best firms create amazing value by almost mechanical processes.
Start with real segments
In some firms, technology-driven data analysis is the latest fad, driving out some of the basics. In the best firms, technology is used to enhance rather than replace traditional, excellent marketing. And excellent marketing always starts with real segments, based not on data, but on the needs and motivations of customers.
Change the mix, don’t tweak it
Some things, like promotion and packaging, are easier to change than others, like pricing and channels. Some firms delude themselves that value can be created by such easy options. In reality, the difficulty of changing the marketing mix is usually proportional to the value resulting from the change.
Target segments that care about tailoring
Value comes from customers choosing to give their money to us instead of someone else. Value is created only when we target those segments that care enough about how we’ve tailored our offer to make that choice.
Change it now
Value creation is a real-time and relative activity. Using data to change the offer to the customer only creates value when we do it faster than the competition, otherwise change things merely incurs costs.
Manage the culture
The data to value process is either help or hindered by the company culture. Firms think business is about products and service fail; those that realise it is about customers and their needs succeed.
Break down the silos
Transforming data into value is a cross-functional activity. It fails when it belongs to marketing, sales, IT or R&D. Value has to flow across silos before it flows to and from the customer.