What is Data Wrapping: Enhancing Customer Value in the Digital Age?
Data wrapping is a powerful strategy where companies combine an existing product or service with sophisticated analytics to significantly boost its value for customers. This approach is one of three key ways businesses monetize data. It's designed to either reinforce, streamline, or enrich the customer's experience and usage of an offering. Think about how Amazon customizes your shopping experience or how heavy equipment manufacturers predict and prevent parts failures. Data wrapping, in essence, uses smart analytics to solve real problems for customers, making their lives easier and more efficient.
To effectively implement data wrapping, companies must deeply understand customer needs, translate analytics into actionable solutions, and seamlessly integrate these solutions into the customer's journey. This is a crucial concept for students studying business, technology, and customer relationship management.
The Two Core Capabilities for Successful Data Wrapping
Regardless of where it fits in the customer journey, successful data wrapping hinges on two essential capabilities: analytics and customer intimacy. Both are vital; relying on just one will limit the value generated. Together, they enable tailored and automated solutions that maximize customer benefits.
Understanding Analytics Capability in Data Wrapping
Analytics encompasses several key components: the data itself, the data science tools and techniques used, and the company's overall analytics-savviness. This capability helps a company build analytics-powered features and experiences directly for the customer. High-quality analytics are crucial for making use cases ready for the market.
A strong analytics capability requires a company to be both digitized (meaning it has master data and integrated systems) and digital (possessing a digital offerings platform with reusable digital business components). This capability relies on analytics-savvy technologists and product managers who can brainstorm data wrapping ideas, evaluate their feasibility, and execute complex analytics.
The Role of Customer Intimacy in Data Wrapping
Customer intimacy refers to a company's customer connections and its customer knowledge. Combined, these provide a current and accurate understanding of customer needs and actual behaviors. Companies build customer connections in various ways:
- Customer touchpoints: Call centers, salesforce.
- Ecosystem partners: Purchased customer demographics, shared supply chain data.
- Customer involvement: Co-creation, pilot programs, advisory boards.
- Digital technologies: Facebook pages, mobile apps.
- The offerings themselves: Via sensors embedded in products.
These connections generate vast amounts of customer data, feeding the company's knowledge about customer demographics, sentiments, context, usage patterns, and desires. This deep understanding is indispensable for creating truly valuable data wraps.
Data Wrapping Use Cases Along the Customer Journey: A Comprehensive Overview
Data wrapping can be applied at any customer touchpoint, such as purchase, usage, or service interactions. Companies typically focus on areas where customers most need assistance or where the company can generate the most value. Data wrapping use cases can contribute in three ways: by providing data, insights, or direct action.
Data-Based Wrapping: Empowering Customers with Information
Some data wrapping use cases provide customers with raw data, often in the form of reports, dashboards, visualizations, or even APIs. This allows customers to utilize the data in ways that are meaningful to them. For example, a B2B financial company might offer institutional clients API access to their near real-time transactions, enabling them to generate custom reports. Similarly, many machine manufacturers give customers access to machinery data via online portals or email reports, helping them better understand machine usage and manage operations.
Insight-Based Wrapping: Guiding Customer Decisions
Insight-based use cases equip customers with decision-making aids. These can appear as suggested next steps, alerts for unusual activities, or benchmarks. A consumer products company, for instance, created a Facebook Messenger chatbot to help shoppers determine the quantity of products needed for a party. An institutional bank might provide inferences from models about investor trends or portfolio risk, generated using client and external data, to help clients develop long-term investment strategies.
Action-Based Wrapping: Proactive Solutions for Enhanced Customer Value
Use cases that inspire action favorably change a situation for the customer without requiring the customer to act directly. These are often the most reliable in delivering benefits because the company plays an active role in solving the customer's problem. For example, an equipment provider collects data from sensors on its machines, predicts potential failures, and proactively replaces parts to prevent unplanned disruptions. A consumer retail manufacturer might detect outliers in sales patterns and use this insight to devise strategies to boost product sales, offering implementation support to retailers.
While data- and insight-based wraps empower customers, action-based use cases lead more reliably to benefits because the company takes an active role. This represents the strongest level of vertical integration, allowing the company to better understand and capture the value created for the customer.
Data Wrapping at Cochlear Limited: A Real-World Example
Cochlear Limited, an Australia-based company, designs and manufactures implantable hearing solutions. Their success in data wrapping provides a clear example of these principles in action, demonstrating how analytics and customer intimacy drive innovation.
In 2017, Cochlear launched its Nucleus® 7 Sound Processor, developed with Apple for iPhone interoperability. This product features the SCAN Scene Classifier, which uses algorithms to analyze a user's environment (e.g., a quiet room, a crowded street) and automatically adjusts the sound processor's settings for optimal hearing. This is an excellent example of an action-based wrap, as it automates adjustments previously made manually by patients who might not always choose the best settings.
Another feature, the coil operation feature, tracks