One of the biggest challenges founders of a company face is how to become profitable. In capitalist societies the incentive to create a business is great. Unfortunately, most people will fail to ever become profitable and will end up losing a lot of time and money trying. Statistically only two out of every ten new businesses will succeed. With odds like those it’s a wonder even the most ambitious take the risk at all. Winners in the marketplace having been focused on finding a way to be profitable will often fail to see the data value generated naturally from customers or clients as a part of operating their profitable business.
Big companies usually have high numbers of customers or clients, all of whom interact in various ways, to varying degree. They may interact through point-of-sale systems, swiping credit cards, or they may interact through online portals. In all these cases some record of the interaction is logged, and it’s here businesses often overlook the fact the collected data can be used to increase profits.
There is information, such as the time of day, time of year, type of product etc., from which inferences can be made. It’s usually possible to construct a virtual profile of the customer and determine interests which may be an opportunity to sell related products. Likewise, virtual profiles can be checked against an algorithm to determine suitability for successful generation of new leads.
In other words, businesses can supplement or maybe even forego altogether expensive marketing campaigns designed to increase sales by simply leveraging the data they already have. Businesses that use this natural resource to their advantage will gain an even bigger advantage over competitors. The effect of successfully capitalizing on recorded data amplifies itself: the business uses the free information to become more profitable, grow and attain more customers, which in turn produces more data to harvest and learn from. The cycle then repeats. For this reason more and more companies are becoming aware of this naturally growing resource and are actively looking for ways to benefit from it.