Data has been lauded as "the new oil," which is more apt than it may seem at first glance.
Just like oil, data is an asset. When it's refined and processed, it becomes more valuable, and like fuel, it drives a business forward.
As businesses wake up to the potential of their data assets, they're increasingly facing the challenge of deciding how to approach effective data monetization.
Data Monetization Comes in Many Guises
There are a number of ways that businesses can monetize data. The first is to sell datasets as a commodity. You could sell raw data, but you might find it more appealing to sell access to the insights that you've derived from it.
In some ways, this is the model of consulting groups such as McKinsey, Gartner or Forrester, which have effectively productized detailed reports based on the findings of their surveys and industry observations.
Another option is to mine your data for internal insights into your business performance, looking for opportunities to cut costs, streamline processes, and boost revenue. It might not sound as exciting as selling data, but it's highly effective for boosting your bottom line, which makes it a type of data monetization.
Finally, there's the possibility of creating or expanding data-driven services and products, using approaches like embedding analytics into your products and services. FedEx's parcel tracking service was an early example of this approach.
Embedded analytics can help your customers learn more about their own customer bases and provide you with more information about your clients' business objectives. It's a lucrative strategy, but it does require a long-term plan, cross-organizational buy-in, and could demand that you pivot resources away from your company's core focus.
Whichever data monetization tactic you choose, the foundations for success remain the same. You'll always need high-quality information signals, data collection processes that are beyond reproach, and enough metadata to know exactly what data you have access to - which, in turn, demands a thorough data and analytics strategy.
Behind this lies a commitment to the project from business leaders, and active talent-management to hire people with the right skillsets to manage your data. The latter is particularly difficult in a world with a shortage of "translators" i.e. people with both domain and technical expertise. As you can see, data monetization is not an easy task, but it is worthwhile. Here are a few key reasons why.
Opening Up New Revenue Sources
The driving force behind every business decision is the bottom line, and data monetization is no exception. When you hit on the right way for your organization to monetize your data, you open up new revenue sources and improve your profit margins. Selling datasets or data insights allows you to tap in to a new market and make new, profitable connections.
Applying data analytics to your business practices and decisions helps you to spot new opportunities to make your business more efficient and/or to expand your market share. Embedded analytics products and services enable you to deliver more value to your customers and acquire new ones.
With data monetization, your company can diversify its product offering.
Establishing Brand Authority
Data monetization is still a relatively young trend, so businesses that act now can position themselves as market leaders.
Advanced data management and embedded analytics is seen as cutting-edge and innovative, which makes data monetization a good way for brands to revamp - or enhance - their reputation as innovative and proactive.
When you can provide reliable data to your sector or vertical, you'll stand out from the competition. Data is a powerful asset, so whoever controls it can capitalize on a great deal of goodwill. Additionally, if you're in charge of the data flow, you'll have better and earlier insights into your market and can make use of them yourself.
Improving Customer Relationships
No matter how you choose to monetize your data, it always impacts upon your customer relationships. Mining your own internal data gives you a better understanding of your customers' pain points, fears, preferences, and behavior patterns, allowing you to adjust your marketing and sales tactics, improve your product-market fit, and deliver better customer experience.
Indeed, 63% of companies that monetize data see improved customer loyalty.
Selling data, insights, or data-driven products and services opens up an opportunity to forge relationships with new customers and deepen existing ones. Your embedded analytics products deliver new data insights to your door as well as for your clients, so that you too can learn more about your customers' needs.
Driving Better Business Decisions
When you monetize your data effectively, you'll be able to transform your business into one that is truly data-driven. Instead of relying on "guesstimates," you'll know exactly which products perform the best and pinpoint how you can turn around those that are failing.
With data monetization, you can evaluate every aspect of your business, giving you a better understanding of your performance, marketing campaigns, sales tactics, and more.
You'll be able to use your business resources, including employee talent, more efficiently to cut costs and raise revenue. Data monetization helps you spot new business opportunities that you might otherwise miss.
Data Monetization Is Worth the Effort
Data monetization requires an undeniable input of time and energy in order to ensure that your data is consistent, high quality, and reliable, but it's also a path to business success.
When done well, data monetization allows your company to boost revenue, improve customer experience, drive better business decision-making, and establish itself as a market leader. It might be hard work, but companies that are willing to make that investment are likely to see significant value for their efforts.