Data Driven: Driving Profit With Data
Data can be leveraged to drive profits for business in two ways. Generally Accepted Accounting Principles (GAAP) are the recognized standard practices for financial data, and are based on profit and loss reporting using general ledger accounts. Profits in this world revolve around minimizing tax exposure and maximizing value on the balance sheet. But a single standard for profits driven by marketing data is a different story.
Data-driven profits can be defined as profits made by identifying KPIs that are proven to put cash in the bank. This can be a powerful added value analysts can serve up. Bestselling author Michael Lewis wrote of two examples of this. One is in his book, “Moneyball,” when he found the metric of simply getting on base leads to more runs and subsequently more wins. In “Flash Boys” he tells the story of one simple KPI, namely “speed,” making millions of dollars for those who owned it.
Analysts can drive profits through data by identifying KPIs that drive profits within their brand. Here are a few examples:
1. Do It Yourself Projects
Brands that depend on Do-It-Yourself (DIY) consumers or products need to know when a customer is starting to think about a project that will require the products that they sell. Data can be used to develop a single metric to indicate when a person is starting to think about a new project. Let’s call this metric PSD or Project Start Date.
There is a wealth of data that can be collected, profiled and ranked to score when a customer is likely to be seriously thinking about a new project. Web browsing data alone provides a wealth of information and can be tied to a customer record through either a customer number or email address. Additional sources for identifying a project start are recent requests for and opens of “how-to” content, as well as recent subscriptions to targeted magazines. Once the metric is developed and tested, it can be used to trigger very targeted marketing investments that will drive sales and incremental profit.