Like cash and content, data is king. It’s used to make actionable decisions that directly affect companies’ bottom lines – like service offerings and product development.
As you’re in the midst of big decision making, have you ever stopped to think ‘am I utilizing the correct data?’
Ultimately, the answer comes down to this… Is your data hot or cold?
What’s the Temperature of Your Data?
Similar to your favorite sandwich, data can be consumed 2 ways: hot or cold.
Cold data is historical information, which is gathered in the past. Depending on your industry, the past can be 2 weeks or 20 years. Simply put, the older your data, the colder it gets.
Hot data is fresh out of the oven. It’s recent, immediate or real-time information
It’s typical that, when faced with strategic decision making, companies customarily use historical data. Understandably so; it’s cheaper to store and the long-term strategic value of predicting future behavior is widely accepted. But is it correct?
What Cold Data Won’t Tell You
While cold data has had a prominent place in decision making, it isn’t always the most effective tool. Of course, historical information provides a view into “what was”, but it gives no insight into the unknown.
Take Blackberry for example. The beloved brand was coveted for its groundbreaking QWERTY keyboard and scrolling functionality. Historical data proved (or so the brand thought) that customer satisfaction was high, and pacing upward. Unfortunately, what this data didn’t show was the potential impact of the upcoming launch of the iPhone – one of the many catalysts of Blackberry’s market share doom.
At the end of the day, Blackberry’s chart-topping satisfaction data didn’t provide proper insight into customer buying decisions amidst a market disruption.
Let’s take a look at Amazon. Before its inception, shoppers were content with waiting several days or weeks to receive deliveries. Fast-forward to the launch of 2-day shipping. All of a sudden, customer expectation is upended and competitors are forced to get in line or be forgotten.
Amazon’s innovation, and subsequent market shift, were clear indicators that customer needs and expectation shift rapidly. And with that, so does the data.
News Flash: Historical data does not predict market disruption. Nor does it tell you how to quickly adapt to changing customer expectations. Therefore, cold data shouldn’t be the sole driving force behind strategic decisions.
How To Make Better Decisions
Consumer decisions are largely defined by perception and sentiment. Like a sheet in the wind, these factors can easily be shifted by a single experience. That being the case, how does a company make smart, data-driven moves – decisions that will accurately reflect the current customer market?
In 2016 a FICO bank client noticed a skyrocket in the decrease of usage for a particular credit card. Strangely, customers weren’t swiping their cards, but they also weren’t canceling them.
After deploying the Worthix survey, credit limit adequacy was identified as the culprit behind the usage problem. The company had not approved limits that were suitable to its customers lifestyles, nor did they communicate recent credit limit changes.
Enter hot data, in all its glory.
As a solution, FICO added “hot data” (garnered via Worth Index) to their cold data models and developed the perfect credit limit for their customers.
As a result, in just 12 months, the client saw a 16X return on investment. In 24 months, ROI jumped further to 206X.
The moral of the story is: hot data is a valuable source for uncovering the “why” behind customer decisions. That “why” allows companies to make actionable decisions that meet customers’ shifting needs and expectations.
Effective consumer-centric decisions should be made with timely data – that which is current and provides a real-time view.
The next time you’re faced with mountains of data and important decisions to make, remember that when it comes to keeping up with the speed of change, data is best served hot.
Adrienne Brown is the Senior Digital Marketer for Worthix and has 15+ years of marketing and advertising experience and has worked with brands like Southeast Toyota, Pampers, African Ancestry, National Black Arts Festival and the Keisha Lance Bottoms for Mayor Campaign.
As the founder of Adrienne J Media (AJM), Adrienne was selected as a member of the Inaugural Class of the City of Atlanta’s Women’s Entrepreneurship Initiative. She was also recognized as a “2016 Woman on the RYSE,” for outstanding personal and professional development, by RYSE Magazine. Adrienne is a graduate of the University of Alabama.