Title: How your company can leverage datafication for growth
URL: https://www.infobip.com/blog/how-your-company-can-leverage-datafication-for-growth
How do Netflix and HBO know what we would like to watch next? How does your favorite shop always send you deals on products you love?
One term - datafication.
In this blog, we will define datafication and explore examples across industries. These examples will show how using data can benefit your business and explain what challenges you may encounter.
## What is datafication?
Firstly, let's define datafication.
Datafication is a process of converting various aspects of our lives, activities, practices, and social actions into digital data. It involves gathering lots of information, from a mouse click and keyboard stroke to likes, comments, card transactions, and emails, and turning it into usable data for decision-making and automation.
Because of datafication, streaming platforms can personalize movies and show recommendations. Farmers can monitor soil conditions and weather patterns; real estate professionals can predict market trends. Athletes can use it for movement patterns and performance metrics for optimizing training and tactics.
And, in the corporate world, datafication helps businesses:
- make more informed decisions
- improve CX
- optimize supply chains
- develop products and services
Projected datafication market size in billions, 2022 to 2032
### Datafication vs digitalization vs digitization
Generally, people often use these terms interchangeably, but they aren't the same.
Digitization is the process of converting analog information into a digital format. Think about making a digital copy of a physical book or converting a paper report to a PDF.Digitization is how you can get a copy of Pride and Prejudice on your Kindle. And, if you previously downloaded Jane Austen books, datafication is how you'll get Emma recommended.Conversely, digitalization is the use of digital technologies and digitized data to change business models, improve processes, and create new revenue and value-producing opportunities. For example, a manufacturing plant implementing sensors and automation to monitor production lines and optimize output.
## Examples of datafication across industries
Although implementing datafication can be a challenge for all organizations. However, these examples in various sectors demonstrate its potential for business growth:
Retailers collect extensive customer data like browsing history, purchase patterns, preferences, demographics, and payment information.
With said data, they can deliver personalized recommendations, detect fraudulent transactions, reduce cart abandonment rates, and optimize their marketing strategies.
Financial institutions can leverage datafication to analyze customer transactions, spending habits, income, and credit history and create risk profiles. These help them manage credit risk and decide customers’ adequacy for loans, insurance, and credit cards.
Additionally, it can help banks prevent fraudulent activities and detect and prevent cybersecurity threats, including phishing attacks and malware.
Telecom companies can use data to offer personalized plans and recommendations, target customers with offers based on their specific needs, or improve customer support by anticipating issues based on usage patterns. For example, if a customer frequently travels internationally, the telecom company could offer special roaming packages or notify them of potential savings before they travel.
Additionally, telecoms can analyze data to identify patterns of behavior that indicate a customer is likely to switch to a competitor. Companies can intervene with retention offers or service improvements to prevent churn. If a customer shows signs of dissatisfaction through reduced usage or frequent customer service interactions, the company can send personalized offers to encourage retention.
Until recently, only medical staff recorded people's health data. Now, wearable devices such as smartwatches collect data on physical activity, sleep, heart rate, and more. It helps individuals monitor their health and control their overall well-being.
AI-powered traffic management systems can analyze data from cameras, sensors, and GPS devices to:
- adjust traffic signals
- optimize traffic flow
- reduce congestion
Drivers can use Google Maps to avoid congested areas and get to their destinations faster. Google uses live data from mobile devices to detect traffic jams and update suggested routes in real-time.
On the other hand, driverless cars can follow each other at shorter distances, which can reduce traffic congestion. They also share data with traffic management systems for more effective route planning.
Also, ride-sharing companies like Uber analyze and monitor data on trip durations, traffic conditions, and driver availability. That is why they have implemented dynamic pricing models. With higher demand and limited driver availability, prices increase to motivate more drivers to participate. In the same way, during off-peak hours, costs decrease to attract passengers.
Undeniably the most well-known use of datafication is in social media. Social media platforms collect data on user demographics, interests, behaviors, and connections.
This quantified data makes it easier to identify trends and set up advertising campaigns. Knowledge of individual preferences helps deliver personalized content and improves the overall experience.
Online education and tools have advanced the use of data in education.
Each student can have content, pace, and difficulty levels personalized to their needs. And it is easier to identify areas for improvement.
Teachers can use data for curriculum development or streamlining admissions and enrollment processes. It can also analyze teacher effectiveness based on student performance.
Human resources departments can use data to identify the most effective ways to find and recruit talent.
With data-driven approach, HR professionals can quickly assess candidates’ fit for specific roles and even replace personality tests. And set performance metrics (KPIs) and goals for each employee.
Additionally, it can help them with:
- **onboarding**
- **receiving the** **necessary training**
- **access to resources**
## How datafication can benefit your business?
By leveraging big data and predictive analysis effectively, your organization can:
### 1. Improve decision-making
Your business can base its tactics on evidence rather than intuition and guesswork. This leads to more informed and effective choices.
Imagine you want to launch a new product. Datafication can help you in market research and competitor analysis. As you gain new knowledge, you can decide on what strategies to implement during this process.
### 2. Personalize experiences
By analyzing your customers' behavior and preferences, your business can help you create personalized experiences for each one. In the long run, this can foster stronger connections and increase customer satisfaction and engagement.
### 3. Increase efficiency and optimize operations
Datafication can help your business identify bottlenecks and areas for improvement. That can include anything from process automation, exclusion of unnecessary steps, allocation of resources, or process optimization.
For example, airline companies can use sensors and maintenance records data to predict when equipment needs servicing.
### 4. Innovate and upscale
In this ever-changing world, staying up to date with the newest trends can be challenging.
Suppose you predicted that the next technological trend in the market is artificial intelligence (AI). With that information, you can take several strategic actions to respond to those market changes.
First, you would assess the risks associated with AI adaptation, such as security, and implement risk management strategies. Then, you would consider how to integrate AI technology into your products and services. And also adjust your marketing strategies to highlight your expertise.
Leveraging datafication can give your business a competitive advantage when responding to market changes and evolving customer preferences. It can lead to the development of new products, services, or business models. This data may encourage you to try something new and take your business to another level.
## Navigating the challenges of datafication
Knowing the challenges of datafication is essential so your businesses can maximize benefits while mitigating potential risks.
Here are a few challenges and ways to tackle them:
Collected data consist of personal information such as names, email addresses, locations, and browsing history.
Under privacy legislations, such as GDPR, all organizations must implement transparent opt-in processes that inform individuals about:
- data collection
- its purpose
- consent withdrawal
Additionally, each country has its own data protection laws, which businesses, suppliers, and communication providers must adhere to.
You must provide clear and transparent privacy policies, adhere to privacy regulations, and safeguard individuals’ privacy rights.
For datafication to work, businesses need to create vast databases of personal, private, and sensitive information and adequately secure these databases.
If not, you can become a target of cybercriminals. They can illegally distribute and misuse information for financial gain, espionage, or other malicious activities.
To mitigate these risks, you must prioritize cybersecurity measures like network security, encryption, and access control. And always keep your security practices up to date.
Data bias can occur when the data sample is not representative, leading to inaccurate conclusions or even discrimination. This can further perpetuate existing social and economic gaps.
This emphasizes the importance of ethical considerations and transparency in developing and deploying data-driven systems.
A responsible and ethical approach to datafication can effectively resolve many of these cons.
## Why is datafication the way forward?
Collecting and analyzing data helps you make better decisions, streamline workflows, and improve customer experiences. With our customer data platform, People, you can responsibly collect, unify, store, segment, and analyze data.
Furthermore, with our customer engagement solution, Moments, you can design communication using different channels, goals, metrics, segmented audiences, and more. You can measure the conversion, adjust settings, segment audiences, and analyze the funnel. Moments allow behavior-based communication – depending on your customer activity, you can trigger specific messages on multiple channels with one communication flow.
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