Data Is The New Oil
A trove of profitable information may be hiding under your horizon.
Photo courtesy of Christopher Michel.
Are you overlooking a revenue opportunity?
In the past you could identify a location, sink a well and black gold would flow from the ground. Today, all you need to access these riches is to identify data sources that already exist in your business and drill down into it, or information you could have access to, but have yet to collect. With a bit of analysis and help, you can create new revenue streams by monetizing your un-tapped data, by thinking of it as “liquid gold,” while creating rules of engagement with your customers so that all this is transparent and safe for everybody.
A lesson from Facebook
Facebook founder Mark Zuckerberg, who hopefully just learned the hard way that data presents huge opportunities provided you use it responsibly, recently described his business before Congress as a “community” (with 2.2 billion members), a vehicle to connect people all over the world. In reality, Facebook is a data / advertising company whose currency is your information. It collects hundreds and sometimes thousands of data points from its users, aggregating and monetizing them by offering targeted advertising to various companies while maintaining control over them and making a fortune! Mark’s net worth is currently $66 billion – all built with my information and yours.
You too may be sitting on a wealth of untapped data or the opportunity to collect it. Most of us don’t like to stray from our core businesses; however, in today’s environment it’s imperative to grow and diversify. Plus, having this additional revenue stream may allow you to give your customers lower prices, just as Facebook can afford to be free as long as it can monetize information collected from their customers. Mining existing data (customer lists, buying patterns, preferences, etc.) or creating simple mechanisms to capture it (apps, websites, discount and loyalty programs, collection of email addresses that access Wi-Fi at retail locations, etc.), enables you to collect, aggregate and monetize it.
Lose your fear of data
Many companies are reluctant to monetize the information they control for fear of breaching customer confidentiality. However, if the problems Facebook is facing can teach us a lesson, data collection and data use can be part of a ‘covenant’ with our customers where they get some benefit in exchange for the rights to use their information to generate revenue via ads. This, when done properly, allows a company to maintain control over the data without losing customer trust.
One way to monetize your data is by focusing in your core industry and utilizing it to enhance your sales or offerings to assist industry partners in enhancing their sales, at a price. Another is to think out-of-the-box and look at other verticals that may be interested in reaching the companies or consumers in your data base. The one thing to remember is that the goal is to facilitate the marketing effort while maintaining control over your data so that your customers’ trust is not weakened by having third parties misuse their information – which has contributed to Facebook’s current trust problems. Ensuring this takes considerable planning and dedicated resources but enables you to continuously monetize data with confidence. By following simple rules of engagement on third-party use of your information, each time a vendor needs to initiate a new marketing campaign, you create a new revenue opportunity without compromising it. This is the Facebook model: each bite of the apple generates additional revenue for your company and enables you to offer your customers lower prices or even a free service!
Your CFO can help
Like oil, data can be a blessing or a curse, depending on how careful you are when monetizing it. One of the ways a strategic CFO can help you is by applying some out-of-the-box thinking so that you can identify and collect it in a way that maintains your customers’ trust and monetize it with confidence.