Many years ago, when gold was discovered at Ballarat, it kick-started an historical gold rush. While it lasted, people weren’t looking for the precious metal; they were simply finding it wherever they were.
In 2013, data became the new gold. Executives started to understand the true value it brings to an organisation. Those forerunners who made such successful use of data will, in 2014, inspire other organisations to get the pans out and start sifting through any data they come across.
But as with real gold prospecting, being good at sifting through data requires more than picking up a pan and going to work. There is still uncertainty about the precise nature of the sifting process and how to separate the gold nuggets that show up from the pyrite (fool’s gold).
Not all data is created equal and with the sheer weight of data out there, organisations need to be careful not to drown in search of the big score.
Some of the things that organisations need to watch for in the great data mining boom include:
DATA QUALITY: Pulling up pyrite and trying to sell it as gold is embarrassing and won’t fool the experts. So too is collecting the wrong data on your customers. We are at the point where it’s possible to leverage a customer’s data to provide better insights about them than we would gain by sitting the customer down and talking to them. It’s just a matter of recognising what that data is.
It is important to focus on the integrity of the data monitoring. Harvard University professor Gary King, for example, used big data to gain insights into unemployment through Twitter. He set up algorithms to mine data on keywords relating to “jobs” and “employment” on Twitter. Suddenly, his results skewed when there was a big spike in the usage of one of the keywords. The reason? Steve Jobs had died.
So, as useful as the insights into customers through data mining can be, managing it to ensure its quality will also be important in 2014. This will instill faith in your customers that you’re coming to the right conclusions based on the data you are gathering.
RESPONSIBLE USE OF DATA: The data an organisation collects will be of benefit to all areas of the business. But to use a wonderfully nerdy truism “with great power comes great responsibility”. Generation Y especially is comfortable with leaving a digital trail of bread crumbs on the internet, but while the gold is lying there to be exploited, misusing it will land you in hot water with your customers.
For just one of many examples of organisations learning from their mistakes, in 2011, global positioning system device TomTom was caught giving their customers’ driving data to the police. Naturally this did not go down well with its customers. This (and many other) serious breaches of confidence contributed to a resistance many feel towards organisations collecting their data.
This led to Macy’s vice-president of customer strategy Julie Bernard publicly ruing; “the media has spun this story so negative… consumers are worried about our use of data but they’re pissed if I don’t deliver relevance”.
This is true: customers (regardless of which industry) expect a relevant, tailored experience from your organisation but are cautious of the way you use their data. Organisations in 2014 will need to get it right from the outset and maintain accountability across the organisation and management.
BE AWARE OF THE TOOLS THAT ARE AVAILABLE: Data technologies are advanced enough that businesses just need to play join the dots to make effective use of it. These technologies are worth investing in, as they make data sources richer, deeper and much easier to understand.
It is equally important to get the right people on board to manage this data. In November 2013, an SAS report found that demand for data specialists can be expected to rise to 69,000 jobs over the next five years in the United Kingdom. In 2011, McKinsey & Co claimed that by 2018, the United States will face a shortfall of up to 190,000 data experts.
Australia is going to face much the same skills shortage, so making effective use of tools and partners will be critical in taking advantage of the gold rush.
By the end of the year, customers will be very uncomfortable with a business that doesn’t have right insights into them and their needs, and they will be quick to anger if they feel like they’re being cheated or misused. Every organisation is going to be panning for data gold and while it’s a goldmine, it will feel at times like a minefield. The organisations that do well at it, will come out on top in 2014.
Tristan Sternson is Managing Director of InfoReady.