The impacts of data analysis as a tenet of business success are often painted as futuristic, and for good reason: market and trend insights will be essential to gaining a sustainable competitive advantage over the coming years.
What’s often overlooked, though, is how introducing custom data strategies relates to and optimises robust business fundamentals. How and why is your product making money? What is it that enables you to charge more for your product than your closest competitors? And how can you make money consistently, sustainably and with a model that ensures growth?
High margin vs. high turnover
Phrased in the most basic of terms, businesses can generate profit by adopting a high margin or a high turnover in product sales.
A high margin means you’ve already outpaced the competition, as consumers are willing to pay more for your premium product. So, where’s that competitive advantage emerging from? Most likely, it’s superior quality, cutting-edge design or well-executed marketing that’s making your product stand out.
But sector-dominating companies – the major players that are here to stay – have yet another string to their bows. They’ve seen the added ingredient that’s driving the future of business and they’re already using it to outpace their competition. That ingredient is data.
Superior data analysis allows these companies to predict and act on trends to successfully launch products with maximum impetus. Take Netflix, for example. The streaming platform assesses viewing trends to inform its content development strategy, ensuring new releases respond to substantiated audience preferences. That way, Netflix can maintain its premium offering of “customer pleasure” without succumbing to an ad-based profit model, offering clutter-free streaming customers are willing to pay up for.
Say that margins are on the smaller side, though, and it’s high turnover that’s keeping the show on the road. How can businesses manage a more precarious balance of investment to returns for that all-important sustainable advantage?
Data insights are fundamental to steering a strategy that will keep things on course. E-commerce giant Amazon, for example, is able to turn a phenomenal profit – $280.5 billion in 2019 – while maintaining attractive prices, due to superior operations based on consumer insights.
In the words of CEO Jeff Bezos, “even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.” Analysing customer data allows Amazon to personalise the buyer journey according to personal preference and release increasingly targeted advertising. Ultimately, this achieves exceptional levels of revenue per site visitor.
Adopting a custom strategy tailored to your company’s unique data insights will provide you with superior knowledge of both existing and potential clients compared to your competitors. Act on this advantage to optimise your approach across both high margin and high turnover strategies.
Control your internal capabilities
Before ground-breaking products become mainstream essentials, they’re naturally the odd one out. They carve out market space, holding their own with innovative USPs.
Behind any competitive product lies a wealth of assets: years of R&D, top quality raw materials and wily marketing portfolios. But there’s another invisible asset that’s too often overlooked: data.
It may be an intangible raw material but – used correctly – data is no less forceful in shaping your business success. Leading companies forge their design processes, supply chains and corporate cultures to create the custom environments that facilitate brand excellence.
Why wouldn’t you do the same with your data analysis? Tempted by offerings of cloud solutions and server space, it’s easy to plate up your business data for large-scale, managed service providers to handle.
Salesforce, Amazon Web Services, Microsoft Azure… these are known, trusted names. But their vast scale negates the provision of truly client-centric services. As of late 2019, Microsoft Azure had over 20,000 clients. AWS currently has over 1 million active users while Salesforce caters to over 150,000 companies, including 99 of the Fortune 100 brands. How can businesses looking to adopt data-driven strategies hope to receive custom solutions from services operating at that scale?
The fact is, choosing standard, centralised data solutions means your brand might lose the flexibility to innovate, while exposing itself to arbitrary cost increases that could instantly damage its carefully crafted ROI trend.
The alternative lies in choosing a custom data strategy, engineered for your unique requirements by a trusted tech partner company. A top quality tailored strategy will adapt to the latest developments in data analytics and cloud data processing, streamlining your digital spending while peaking your business performance. Tech partners that are truly committed to their client’s long-term success won’t lock you in to capability-limiting contracts, either. After all, flexibility is the key to innovation.
It’s a no-brainer: choose custom over standard, every time
Off-the-shelf data solutions simply aren’t enough to sustain a competitive advantage.
For Tesla, this knowledge has laid the groundwork for market domination. The brand can afford the luxury of developing its own unique software inhouse, without relying on generic solutions from large-scale providers.
Tesla’s unique fleet learning plans will vastly accelerate the machine learning process toward self-driving autonomy, synthesising the myriad unpredictabilities in human driving behaviour into an ever-increasing data pool. In the quest to create the safest self-driving cars available, this strategy will likely hand Tesla a key edge over market competition.
Critically, this will build on the brand’s success to date. According to BNEF data released in February 2020, Tesla’s Model 3 comprises roughly 50% of the US electric vehicle market. That’s just one model taking up half the market.
But we can’t all be Tesla. Most companies don’t have the funds or the charisma to attract and retain the brightest minds in data. Nor do they have the capacity to keep pace with rapid, exponential technology and data growth.
To win, your company needs to build custom data architecture tailored to your business goals, through collaborating with a trusted, specialised data engineering and analytics partner.
Investing in innovation
Investment in R&D is arguably the most vital aspect of engineering a sustainable competitive advantage. Launching pioneering products relies on companies putting their money where their mouth is, as boundary pushing innovation requires a material cash flow commitment.
Today’s business giants exemplify an ever-accelerating trend of reinvesting profits right back into R&D, from concept design to raw materials and manufacturing processes. The 2016-2017 period saw a phenomenal jump in Amazon’s R&D spending, up from $16.1 billion to $22.6 billion. At the time, it was the highest R&D investment of any US company. Apple, meanwhile, upped R&D investment from $1 billion in 2009 to some $13 billion in 2019.
This R&D spending ultimately leads to tangible products that can be seen, held and purchased. But before that stage, R&D generates reams of invaluable data that informs bold new designs, business ventures and marketing strategies.
The bridge between R&D data and new products that take the market by storm is innovative, custom data solutions. Scalable, adaptable and secure modelling transforms key R&D insights into the latest craze, utilising software that can seamlessly keep pace with business innovation.
Securing the right tech partner is key to maximising the potential of your data
For your business to sustain its unique and superior proposition, it needs a specifically tailored data structure operating behind the scenes. Standard, large-scale providers won’t provide the client-centric approach required to cater for your distinctive strategy.
Instead, retain control and join forces with a tech partner company to underpin the sustainability of your competitive advantage.