There are certain times in sport where a team loses the plot even before the game really heats up. Crucial errors early in the game overhang and determine the eventual result. The 1998 football World Cup final between France and Brazil comes to mind. Brazil chose to play Ronaldo, who had suffered convulsions earlier in the day. Closer to my heart is Zaheer’s opening over in the 2003 cricket World Cup final. Those first 15 runs set the tempo for the Aussies.
As they like it
Something strikingly similar happens in the world of data as digital natives compete with traditional brick-and-mortar firms. It is about how they handle data as they run their business. Take for instance the need to buy furniture, like a dining table. I walk to a nearby store (yes, with a mask on!). A gentleman runs me through 4 or 5 options, and I buy one. We chat about the recent Tamil Nadu elections, real estate in the vicinity and the lack of good carpenters as plastic furniture abounds. I pay with my card; he points me to a discount sticker. I have that card, but it’s not in my wallet then. I still go ahead and pay with another card and move on.
Now, imagine I buy the same table from a social media marketplace or an e-commerce app. These firms are up and running with a million data points on me. They have data that I fall for anything rustic and traditional. They also have data that I don’t like plastic furniture’. My past transactions can indicate that while I am keen on quality, I really do not tend to spend on brands.
Capital markets & VCs across the globe are backing these digital natives to exploit each of these ‘have data’ instances into incremental value in terms of pricing and personalization. While we can differ on whether they really do it, nobody can deny that they are well placed to do it. The same data in the brick-and-mortar version just shut shop and picked up dinner!
Data can deliver value, at scale
Extrapolate this to a wealth management conversation between a relationship manager and a high net-worth client and the same transaction done on a fintech platform. The difference is not in the value of the transaction but what we capture about preferences and motives of the client right there. This translates into a world of difference on what it can mean for subsequent business, and how that can get delivered at scale.
The game is lost at the date ingestion stage. Business folks who are left gaping at the valuation of their digital counterparts need to think about how to capture data at the client interaction stage. The options abound! Get the conversation recorded. Make the sales rep answer 10 questions on the sale. Give the client an incentive to punch in a few details or complete the sale on a weblink.
No data left behind
The advantage that non-digital natives have is that the client is at hand with their full attention span. It gets easier to plug different data gaps and get a more complete picture in comparison to standardized platform sales. In case of high intensity sales like insurance, there are multiple email interactions or chat conversations that get washed down the drain.
The issue is not the structure of their business, but their inability to understand a basic tenet: “Get greedy about the data your business generates and harness it for subsequent growth.”
FMCG firms and large luxury chains have already woken up and are aggressively scouting the market for opportunities to handle first-party client data. They understand that the classical structures of market research and product ubiquity are not going to help in the new world. Going digital is not mandatory if your clients do not wish to, or if your business model is about a personal experience. But there is not much of a choice left on thinking data first. Ingesting all the data your business generates does not guarantee anything, but losing it means that one gets pushed out of the game before it starts!