Experts have been repeating that "data is the new oil" for more than ten years now and while the mantra was already true ten years ago, it is now more so than ever, especially for e-commerce companies.
You've probably heard this phrase before. In 2022, its meaning is now truer than ever, since data has become the fuel for solving business needs.
However, same as oil, raw data has little value. Data's real value comes from its processing and analysis. In e-commerce, the relevance of data analysis and transformation is even greater considering that in the digital ecosystem the vast majority of information is, precisely, in "raw" data.
But how do we transform data into value?
Today, one of the biggest challenges for the transformation of raw data into business insights and value is the enormous amount of data we generate and, consequently, collect. Too much data makes it difficult to extract the information that really adds value. The simplest way to explain this is by comparing it to recycling. The more waste we generate, the more complex it is to recycle.
In an increasingly digital world, every move we make online produces data that is later processed by technologies for monitoring and tracking customer behavior. Touch points are multiplying and so are the number of possible customer interactions. All this makes the work of data analysts, business analysts and digital marketing professionals, to name a few, more difficult. These professionals, who depend on information to generate customer strategies, are now faced with a flood of information of which only a small portion will end up being useful for the business.
In e-commerce, the amount of data collected by companies has expanded enormously in the last two years with the rise of e-commerce after Covid-19. Circumstances have forced customers to get used to shopping online and, after going back to pre-pandemic conditions, e-commerce continues to grow. More customers means more data and more data means more difficulty.
The excess of data, however, does not mean that companies should stop collecting data or stop relying on alternative information gathering techniques such as market research. Quality outweighs quantity, but without quantity there can be no quality.
In this blog we have previously discussed one of the most complex dichotomies of recent years: Big Data vs. Smart Data, which raises the question of whether it is more effective to collect a lot of data or to collect quality data. According to Borja Martín, Kale's director: "Having more information does not always mean making better decisions. Having data is fine, but knowing how to implement it is much more important."
Obviously, it is not all about the amount of data available, but also about the multiplicity of data sources: web analytic platforms, social media, CRMs, etc. All these platforms collect data in different formats that, in order to be analyzed, must be transformed into a standard format.
The new challenges associated with the processing of information and the generation of business value from data have accelerated the emergence of new technological tools designed to solve these challenges. In e-commerce, technologies for customer data management such as single customer view systems or, more recently, the emergence of the Customer Data Platform (CDP), a technology that promises to amend the problems of other customer data systems such as CRM or Data Management Platforms.
In short, the purpose of these new technologies is to transform information about our customers into value that drives improvement actions: optimization of the customer journey and the customer experience, better marketing strategies, customer loyalty strategies, etc.
These types of strategies are crucial for any type of company or organization, but with e-commerce being one of the industries in which personalization is more relevant, customer data is essential for the survival of digital companies.
Modern companies are more data-dependent than ever before, especially e-commerce companies. The good news is that these companies have access to more data than they did years ago. The bad news is that the massive amount of customer-generated data makes it difficult to transform it into business value.
More data does not always translate into greater insights or better strategies. In fact, in many cases it is the exact opposite. To avoid this dichotomy, e-commerce companies need to invest in new technologies for processing and managing customer data.