How Top Brands Are Harnessing The Data Firehose To Crush Their Competition

Jeff Booth

If we needed another example of how the old business models are failing, Aeropostale recently announced the closing of almost 200 stores in North America, part of a trend leaving empty big-box buildings and broken communities in its wake.

Meanwhile, Uber, a vanguard of the new sharing economy, recently revealed that it is making it easier for third-party developers to build apps for its fast-growing car-calling service. The company is using data to restore power and choice to their stakeholders, in the process turning customers into marketers and suppliers into vital yet virtual cogs in its platform.

Here’s a quick look at how today’s companies are using data to get smarter, cut out the middleman, and empower their stakeholders — all while earning unicorn-size valuations.

Crowdsourcing decisions

Real-time landing page click data, peer reviews, and other metrics are helping companies become far better decision-makers than any individual CEO could ever be.

Among the best-known examples of companies putting data to work is Apple’s iTunes platform. It doesn’t just show you products in the same category as others you’ve bought, but offers intelligent suggestions for all kinds of content—music, movies, and more—based on users who fit your profile.

Closer to home, my company has incorporated the same technologies and applied them to much bigger and bulkier stuff: home improvement supplies. By tracking what people are clicking and what they’re putting in their cart, we can offer more intelligent buying advice.

Customers aren’t just telling you their preferences over ever-more sophisticated online platforms, they’re telling you what metrics are important to them. Listen to what the data is telling you and make the big plays (without taking a big risk) to make a big profit.

Ditching the middleman

Create a platform where you can take out the middleman. That’s exactly what Uber has done. Without owning a single taxi, it has become the world’s biggest cab company. Uber restored power and choice to the consumer.

Armed with new technology and better access to data, we can now hail rides directly from drivers without needing to be routed through the pinch point of traditional cab companies. But in contrast to old-school business models, Uber didn’t monopolize power as much as share it, minimizing their own role and relying on scale, rather than scarcity, to profit.

With this customer-centric model, companies are able to offer better pricing, convenience, and selection than anyone else, without even dealing with physical inventory. When the customers win, you win.

Sharing data with suppliers

The unsung heroes in the business world are always the suppliers: the manufacturers and service providers who labor behind-the-scenes to actually make and deliver what consumers use.

Sharing data with suppliers is an easy win-win, and all too often it’s overlooked. In Airbnb’s case, for instance, all hosts get access to a dashboard full of detailed information on how often their property is being clicked on and what prices are likely to yield the most bookings at specific times of year.

We’ve seen success with this, too. In the past we had collected detailed data from our website filtered through it ourselves and put in orders with suppliers based on what we thought we’d need in our warehouses . Not only was this labor-intensive, it was also an inexact science. So we decided to give our suppliers around the world a direct pipeline into this data — and allow them to use it to inform their production timeline. After we got out of the way, and connected suppliers directly with consumers, everyone benefitted.

Honoring their platform

Once you’re dominating the market with your online platform, it can be tempting to put the squeeze on customers and suppliers. But that strategy can be counterproductive.

Even the biggest heroes of the sharing economy can give in to this urge. For all its merits, Uber, for example, is taking progressively higher cuts from its drivers and the grumbling has already started. A new consortium of competitors are already swooping in to lure away frustrated drivers.

Ultimately, harnessing data effectively is about sharing information, not just collecting it, and using that insight to benefit customers and suppliers, not just your own bottom line. Companies that get that balance right may well own the future.

For more on tapping the potential of data, see Data—The Hidden Treasure Inside Your Business.

 Follow Jeff on Twitter @JeffBooth.

About Jeff Booth

Drawing on his background as a builder, Jeff Booth co-founded BuildDirect in 1999 in response to the inefficiencies and high costs inherent in the home improvement and building supplies industry. As CEO, he applies his deep knowledge of both technology and trends to invent new ways for people to explore, purchase and connect in the home improvement space. Reach him on Twitter @JeffBooth.