How do you monetize data?
February 08 2021
Contributed by: Chris Martin, Managing Director, Food Tech Group
In part 1 of this 3 part series, former Tibersoft CEO and founder Chris Martin talks about data. Part one, below, talks about building an information product that is carefully conceived to solve ongoing customer challenges. Part two will talk about data privacy and part three will discuss the Food Tech Group member company data sharing strategy code named Cantilever.
At some point, nearly every tech company comes to believe their large mound of data could be ‘monetized’. It is tempting to start with the suggestion of “Let’s monetize this data” - perhaps in reference to a new product, a new module, maybe even pull in new types of customers, thus increasing the total market? If this is so easy then why do two-thirds of data warehouse projects fail?
In his book A Company of One Paul Jarvis offers this beautiful turn of phrase: “Successful customers build successful businesses.” (By the way, many little gems like this one in this book.) Adopting a mindset of organizing around customers gets you thinking first about customer problems.
The key to creating an analytics product from an unruly, disorganized mound of data is teasing relationships out from the data and then linking those insights to customers’ critical business challenges. This teasing process will have dead ends, but if you and your team can be allowed to tinker - it can be quite fun. Use the MVP (minimum viable product) concept to build only enough to get feedback on the concept. Don’t spend any time on the presentation layer. Tibersoft showed its first analytic insights using Excel.
“The key to creating an information product from an unruly, disorganized mound of data is teasing relationships out from the data and then linking those insights to customers’ critical business challenges.”
So, if after creating this information product, the prospective customer thinks you have something cool - great. Will they still think that three to six months after they sign up? Will the product continue to deliver value? The next milestone is having customers believe you can solve the problem on an ongoing basis. The problem you’re solving needs to continually be solved and the source data of the solution needs to continually solve it - otherwise you only have a one-time report.
Ok, so customers might be successful and keep being successful. Next, consider how to organize the effort to bring this information product to market. My experience has been that your core business will continue to require your undivided attention. Tibersoft started in the e-commerce world providing food distributors like Sysco with order taking transaction systems for their customers. As we ventured into the analytics space, we realized that order entry and analytics required two different gears in your brain. Transactions are time sensitive, but analytics are not. Transactions are simple, while insights require a more contemplative mindset. We concluded that this new product will need separate resources and a separate mental space from the core business. Trust me existing customers will notice if you’re getting distracted.
Let’s now move on to packaging. People don’t have the time or inclination to look at data dumps - especially millennials. Can the user configure the system to answer their questions the way they want? Does the system adapt over time to their new questions?
I’ve spent my whole career making these mistakes - and then trying to not make them again! I am so thankful that the right clients came along at the right time to help us learn the rest of what we needed to know and put it into the product. The mindset that learning never stops can’t change. It is demotivating for the whole team when you build something, go through all the steps it takes to get it in front of a customer, and then they don’t use it. Made that mistake too.
So, information products are probably harder to create than you think. But it can be done and, having some having some coaching along the way makes a big difference. There are a lot of entrepreneurs that have struggled mightily to aggregate a lot of data only to find it doesn’t impress. And for a new customer the bar is even higher, it must solve a burning need. But when you put those all the pieces together, it is very gratifying.
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