Insights-driven businesses have different DNA
Like many digital native startups, data analytics underpinned peer-to-peer eCommerce site Etsy’s operations since the company was founded in 2005. In their early days , their struggles to achieve true customer understanding led to poor digital experiences for its sellers and the failure to accurately capture customer preferences.
Etsy turned this around by building out a dedicated research department to blend quantitative and qualitative insight and embed customer insights into every department – leading to high levels of user satisfaction and smarter product decisions. With insights ingrained firmly in its culture, Etsy has experienced 400% growth since 2012. (Read our detailed case study published by my CX colleagues here, subscription required)
What did Etsy do? They matured from a “data-aware” or even data-driven approach to become an “insights-driven” business. Data-aware firms focus heavily on collecting data and mining it for insights – a necessary, albeit myopic, approach to customer understanding. Insights-driven businesses not only excel at data analytics, but also bring quantitative insight to bear on problems then embed insights in their business models, operations, and company culture.
Take Tesla, as another example, whose vehicles are quite literally insights-driven. Each car’s performance data is streamed in real-time to Tesla’s data scientists, who build models to help diagnose driving issues and provide software or firmware updates over the air. The result is seamless enhancements to the driving experience and a system of insight that let’s them test, learn and improve over time. (See the video below).
In our recently published “Insights-Driven Businesses Set The Pace For Global Growth” report (subscription required) we highlight six other examples of how both digital natives and established enterprises are becoming insights-driven. James McCormick and I have published this research as an update to 2016’s “The Insights-Driven Business” report and this new report will be the vision report of our upcoming market imperative playbook on how to build an insights-driven business. We’re continuing to monitor the evolution of insights-driven firms, and our financial models tell us that they’ll earn trillions of dollars over the next 5 years. Some of this money will come from your top and bottom-lines.
Why are these insights-driven businesses in a league of their own?
The firms highlighted in our research do things differently:
- They build business models on insight and action throughsoftware. They have systematic processes to capture insight, and implement them in a closed-loop fashion through software systems.
- They embrace the notion that true insights are actionable. To these firms, insights are not merely interesting bits of information derived from data. Information only becomes an insight when the enterprise understands what to do with it – which is typically to help inform a decision or process within software.
- They reward for experimentation and learning. Insights-driven firms embrace trial-and-error. They map customer journeys and develop hypotheses, which are continuously tested and optimized. This allows them to fail fast, and learn quickly.
But becoming insights-driven, that is one piece of the solution. Forrester has identified four other imperatives: Drive revenue with great customer experiences, excel at customer-obsessed marketing, differentiate with digital, and maximize the value of business technology. What is unique about the insight imperative is that an insights-driven transformation will help fuel the other four imperatives, so it’s a great place to start.
(Christian Austin, senior research associate, contributed to this column)
(This post originally appeared on the Forrester Research blog, which can be viewed here).