Datafication of Customer Relationships


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People often consciously or unconsciously reveal personal information as they perform daily activities like shopping, communicating, using apps, sharing photos, and much more. This provides vast possibilities for analysis and is currently driving many businesses.

Data analytics was not known until Duhigg wrote a small article in the New York Times in 2012, wherein he mentioned a story of a father who went to a Target store complaining that his daughter got coupons for maternity clothing and baby products. It further turned out that Target knew that the daughter was pregnant. How was that even possible? Target collected data about the daughter’s purchase history for some 25 unique products, which, when analyzed further, generated a “pregnancy prediction” score. This story sparked the interest of many businesses and Big data and data analytics all suddenly became very concrete for the public.

At the heart of many businesses from different industries is relationships with the customers, specifically for the one providing services. Organizations are clamoring for data – as much as they can, wherever they can. Datafication of information can generate new information and knowledge about customers. As data is no longer just a by-product of other processes, businesses are datifying their activities to thrive in a data-driven world.

In a most anecdotal example of datafication, let us reflect on Netflix, an on-demand Internet streaming media operating in over 40 countries with some 33 million streaming members. As we all know, its core business was in mail-order-based disc rental, which evolved standardized and structured metadata around the disc content. To manage its demand & distribution, the company further dematerialized and incarnated its business into streaming one, wherein, subscribers can sample videos before settling for a specific one, they can consume several videos in one sitting and the company can observe viewing statistics to a deeper level using over 1000 data sources. This provides a salient example of algorithmic shaping effects that has benefited the company and its customers equally. As a result, 75% of content choice is now influenced by recommendations, and in a business where customers lose interest after perhaps 60 to 90 seconds of choosing, Netflix is saving $1 bn or even more every year from subscribers quitting its service.

What is Datafication?

Datafication translates human activities into data and subsequently repacks it into units to offer new forms of value. It involves not just data collection and analysis but also understanding the context in which it is used, and the implications to ensure it is used with maximum potential. Typically data is collected and organized from multiple sources customer surveys, market research, web analytics, social media, etc, which is further analyzed to extract meaningful insights and support decision-making.

What Benefits does Datafication Offers?

  • Improved Efficiency
  • Better Visibility
  • Improved decisions
  • More Security
  • Better Customer Relationships

How Datafication is Used Today?

Datafication is primarily being used to gain valuable customer insights by analyzing their feedback, behavior, and needs which can help organizations develop better products and services that meet their customer’s needs. Furthermore, it can be used to prevent fraud, reduce operational costs and optimize marketing campaigns. Datafication can also be used to gain insights into competitors’ products & services, pricing strategies, offerings, and much more along with benchmarking their internal processes.

Some of the most common applications include:

Human Resources
The data collected from various sources like apps, social media, job portals, etc can help identify the potential employees, their characteristics, and personality traits. Experts believe datafication will soon replace personality tests or behavioral interviewing questions.

Insurance & Banking

Recently, insurance schemes that implement sensory technologies and utilize policyholders’ behavioral data have attracted considerable attention in the tech and insurance industries. Such schemes are often called ‘interactive insurance’, ‘pay-as-you-live insurance’, and ‘behavioral insurance’. These schemes use everyday experiences with new insurance technologies to understand how behavioral life insurance (market) and the new data relations are co-constituted.

Media & Entertainment
At the heart of the media & entertainment business are artists’ relationships with their audiences, datafication can reshape the contextual pressures on the relationship. People’s interaction with online content leaves behind measurable data that can be both aggregated and analyzed, such data when fed into streaming providers’ content delivery, playlist making, and algorithm creation can shape the ways in which music is both supplied and accessed via streaming.

Smart Cities
Datafication of public administration like transportation, waste management, etc can help gain many detailed insights into pollution levels, water quality, etc to address environmental issues and develop regulations.

The datafication of health unfolds many aspects like data-driven medical research, public health infrastructures, clinical health care, self-care practices, etc can prevent and mitigate many of the challenges faced by the industry.

Data is empowering everyone, how marketing be left behind? In fact, datafication is the goldmine in marketing that can help understand the customers and devise sophisticated customer journeys to move people from least engaged to most engaged.

Datafication can help build personalized and one-to-one relationships with customers, improve their experience and boost their engagement levels. For customer-centric organizations it allows the customers to take ownership of their relationships with the business. Thus, data not only empowers the organization but also the customers. As stated earlier, datafication is a goldmine, however, digging into it requires expertise.

Aashesh D Shaah
Aashesh Shaah is the CEO & Co-founder of Fusion Informatics Limited, a digital transformation company that transforms businesses through digital applications empowered with technologies such as AI, ML, IoT, Cloud, and more. He is a business leader with 20-plus years of experience and works with Startups, SMBs, and Enterprises to craft, enable and accelerate their digital journey.


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