Everyone now knows the truth about the start-up world: 9 out of 10 fail in the first 4 years.
Yet the chances not only to survive, but to grow are there! The point is that any project, even the most brilliant, needs a Data Driven Business Model to walk.
Don’t be frightened; it is less complex than it seems. By this term we denote, simply, a business model built from the analysis of data, particularly online Big Data.
Let’s see, then, what are the basic rules for creating a winning one from data! Read on, at the end we present 3 examples of Data Driven Business Model!
The importance of having a Data Driven Business Model
Starting a project without having a Data Driven business model is like buying a lottery ticket, waiting for the draw and hoping to win.
What it means. It means not being in control of your business and thus exponentially increasing your chances of failure!
Here are some data confirming this:
- nearly60 percent of startup projects founder because of theabsence of a market for their product or service or because they have the right idea at the wrong time;
- Nearly 20 percent of start-ups, on the other hand, do not survive because of errors in the pricing of their products or services and the valuation of their development and production costs.
As you can see from this data, then, almost all start-ups fail because of issues strictly related to their business model (built, precisely, without having a Data Driven approach!).
The good news, however, is that all of these mistakes just mentioned can be avoided, as they are all predictable. You just have to have the right data to succeed!
But how to find the information you need?
Create a Data Driven Business Model through Market Intelligence
By now the importance of having a Data Driven Business Model is clear. The question that arises, however, is, “How to build such a one?”
To answer that, two words are enough: Market Intelligence. We’ll explain right away what we mean in practice!
First, this term refers to the set of all the methods, activities, tools (and even mindset) for collecting, analyzing, and applying relevant data about your competitive environment.
The most revolutionary aspect of this discipline is precisely the ability to unite internal and external data by considering their interactions.
Read also “What is Market Intelligence? Benefits and practical cases“
In this sense, in fact, through social listening activities it is possible to monitor market data and understand whether there is an expressed or latent demand for a particular product/service.
Also read“Social Listening Best Practices: how to get started and not make mistakes.”
Throughtarget audience analysis, on the other hand, you can gather external data and understand what your target audience’s needs and expectations are and whether your startup’s offering will be successful.
Also read“Target analysis: what it is and why it is central if you intend to acquire new customers“
At the same time, withcompetitive analysis, on the other hand, you can keep tabs on other players, understand how they are doing and what marketing, pricing and sales strategies they are adopting.
Finally, again thanks to the Market Intelligence tools , you can ferret out and analyze market trends and can even, for example, predict in advance whether there will be an increase in procurement costs.
By doing so, you will be able to not only be prepared in the face of sudden changes in the industry in which you operate but also be able to get ahead of your competitors.
So as you can see, through Market Intelligence, you can get a tremendous amount of information. However, collecting these masses of data is not enough.
The next step is to turn them into useful and valuable information to create your Data Driven Business Model. And here comes the hard part. Here then is what you need to do:
- First, continue reading. We explain the 7 basic rules you need to follow!
- If instead, you don’t have time and resources to waste on this activity, you can always outsource it. Our Big Data experts at Central Marketing Intelligence can help you.
The 7 basic rules to follow to create a Data Driven Business Model
We got down to the nitty-gritty, as we say in Team CMI. We don’t want to waste any more time. Once you understand what Market Intelligence is and have collected, analyzed, and translated internal and external data to create your Data Driven Business Model, let’s look at how to do it in practice. All you need to do is follow these 7 rules!
1st rule: take control
If you are not in control of the product, service or solution you offer, you will never be able to sell it. Therefore, invest your energy and budget only on something you really have control over.
2nd rule: monitor flows
Keep an eye on cash flow and always try to collect before you even have to pay. Growth must be financed. Then set up your model so that you charge up front or develop new products and processes while you are working on a project for a client.
3rd rule: focus on the sold
Produce only on the sold. Do not stock, or rather do it in a reasoned way. Today, thanks to business intelligence tools, it is possible to collect data on goods receipt and storage, returns status, and transportation costs to develop predictive models that reduce the risk of unsold goods.
4th rule: calculate Life Time Value
Always calculate your customers’ Life Time Value, i.e., their total value from first purchase to last purchase, and focus on solutions that generate recurring revenues that maximize it.
Don’t go to all the trouble for the classic one-time sale unless this is high ticket with a very high margin.
5th rule: do not exceed the 5% threshold
Don’t have customers weighing more than 5 percent of your sales. So you will prevent the loss of one of these from jeopardizing your business
6th rule: watch your costs
Always study your cost data and prefer a variable cost structure. You will be able to make your business model more sustainable by avoiding fixed costs that may not be sustainable in the event of lower revenue streams.
7th rule: create your own brands
We are speaking in the plural because you have to create a brand for every product you sell. When you generate new revenue streams with a new product or service, you need to enhance it with its own autonomy and identity.
3 examples of Data Driven Business Model
If you’ve come this far, you’ve probably realized that without the data you’re not going anywhere.
Even to create a winning business model that allows you, to this day, to remain competitive in the marketplace, you must first collect and analyze data internal and external to your company.
Once you have collected them, then you have to turn them into concrete and useful information in your specific case, and only then are you able to create your data-driven business model.
But at this point a question arises, “What Data Driven Business Models already exist in the market?”
So here are 3 concrete examples of business models that are being exploited today by both small and medium-sized enterprises and large multinational corporations.
Conclusions
If you have come this far, congratulations! This topic was complex, but hopefully we have provided clarity with this article.
Let us recapitulate to remove any doubt:
- most start-ups today fail because of problems with their business model;
- the reason lies in the fact that in order to remain competitive in the market nowadays, it is essential to develop a data-driven business model;
- this means having to collect, analyze and translate internal and external data through Market Intelligence;
- Only after doing this preliminary analysis can you build your Data Driven Business Model;
- and to do so, it is essential to follow the 7 precise rules we have explained in this article.
Finally, here’s a final caution: always remember that even the best business model must always be monitored and actualized through data. Especially in today’s extremely complex and dynamic environment, it is crucial not to remain anchored to your business model.
On the contrary, it is important to always be ready to modify, optimize and update it to stay competitive.
Good! Now all you have to do is put into practice all the lessons you have gleaned from this article. And remember: if you need help analyzing data; if you need support with Market Intelligence tools; if you don’t know how to monitor data to then make decisions about your business model, don’t get stuck!
Contact us and the Big Data experts at Central Marketing Intelligence will help you out!
