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Measuring business value - Cost Modeling Data Lakes for Beginners

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Measuring business value

The first project on your data lake journey starts by stating what your business goals are. These are often extracted from your business strategy. Business goals are high-level aspirations that support the business strategy, such as “improve customer intimacy”.

Once these business goals are identified, together with your team write a set of business outcomes that would have a positive impact against these goals. Outcomes are targeted and measurable, such as reduce cost of customer acquisition.

Finally, we identify a number of metrics that can be measured to validate the success of the experiments. This helps ensure that the right business value is being achieved.

A good example of this is Hyatt Hotels, a leading global hospitality company. Hyatt wanted to improve customer loyalty, improve the success rate of upsells and add-ons, and better guide the users with accommodation recommendations. This fed directly into their business goal to improve their American Customer Satisfaction Index (ACSI). To achieve this, the team at Hyatt identified a requirement to build personalized connections with their customers.

Some example business outcomes could be:

  • Number of return visits per 1000 customers per month

  • Number of upsells per 100 customers per month

  • Number of add-ons per 100 customers per month

  • Number of bookings made per day

  • Number of negative customer reviews per weeks

This is only an example of one piece of work a data lake could support. After the initial piece of work is delivered, the team can then iterate. For example, as a by-product of delivering the previous feature, they could have identified important information. For example, perhaps Hyatt discovered that commonly searched for add-on purchases (for example, specific spa treatments) were not offered in the chosen location. Or, they might have discovered that customers were searching for accommodation in areas that Hyatt doesn’t yet have a footprint in.

The team could go on to develop new features and service offerings that would help them deliver a better customer experience or help them make decisions that would improve their chances of choosing the right location to scale their footprint globally to help them deliver against their business goal.