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Enhancing Customer Relationships with Consumable Data

Barbara H. Wixom
Principal Research Scientist, CISR

In the early days of big data, organizations invested heavily in analytics talent, data platforms, and business intelligence units in the hopes of making key business activities better, cheaper, and faster. The majority of these efforts were for internal consumption only and had no direct value for customers. In 2013, however, scientists at the MIT Sloan Center for Systems Research (CISR) began observing a nascent approach toward data monetization they dubbed “data wrapping” that focused on assisting and delighting consumers.

Done well, data wrapping can yield a 60% average return on investment, according to a recent article in MIT Sloan Management Review (SMR) by CISR Principal Research Scientist Barbara H. Wixom, prenode co-CEO Ronny M. Schüritz, and MIT Sloan graduate researcher Killian Farrell. “Why Smart Companies Are Giving Customers More Data” is a must read for executives and product managers seeking to maximize the benefits of data wrapping.

What it is and where to begin
“Companies are data wrapping when they give data and analytics to customers as product features and customer experiences—such as spend categorizers, automatic sound optimizers, and shopper insights—with the goal of increasing a product’s value proposition,” write the research trio in SMR. They caution, however, that “the capabilities, processes, and skills that historically helped the company use data analytics … are insufficient for producing data analytics that delight customers.”

Using insights gained from in-depth case studies, interviews with company leaders and project teams, hundreds of use cases, and a survey of 500+ product managers worldwide, Wixom and her colleagues have distilled the creation of well-wrapped data into three steps. The first is to assemble a multidisciplinary team that includes data analytics and IT staff but is headed by product owners and managers. That hierarchy is key, according to the researchers.

Learning from high-performing data wrappers
“Product owners and managers,” they write, “deeply understand a product’s cost structure and the customers being served…. They also have access to customer-facing processes and channels that help the company sense and respond to customer needs.” Such teams are well equipped to deliver on the second step of successful data wrapping—designing features and experiences that inspire customer action. Value ensues when customers are prompted to a behavior or experience that meets a compelling need (e.g., saving time or money).

The third and final step of high-return data wrapping is measuring impact. The researchers report that companies “draw upon a portfolio of techniques such as usage tracking, A/B testing, controlled experiments, customer surveys, and pilot studies to get a good sense of their data-wrapping outcomes.” The design principles described in “Why Smart Companies Are Giving Customers More Data” are supported with examples of successfully deployed data wrappers from BBVA, PepsiCo, and the Australian hearing solutions manufacturer Cochlear.

Based on their research, Wixom, Schüritz, and Farrell estimate that data wrapping provides 26% of the value a typical company yields from all data monetization initiatives. They also write that in today’s digital world, customers increasingly expect value from data analytics. The clear bottom line: companies that fail to deliver such value will surely be left behind.







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