Harvard Business Review reports that the “advance of big data shows no signs of slowing.” Organizations can no longer afford to sit on the sidelines, allowing larger organizations with more aggressive strategies to be at the forefront. Today, Big Data has come to all, big and small organizations alike. HBR warns that organizations that choose to sit this trend out now risk “falling behind as competitors and channel partners gain nearly unassailable advantages.”

In “Big Data and the Creative Destruction of Today’s Business Models,” A.T. Kearney poses two questions to organizations facing Big Data challenges that we will explore today: 1) How do we get started? 2) What tech investments can enable analytics capabilities?

It is important for organizations to think about what strategies and tools they have in place in order to move from Big Data, or large quantities of information, to smart data that translates into actionable insights. Organizations are taking different courses of action in order to create smart data. Some of these actions include hiring data scientists skilled in making “discoveries in the world of big data,” restructuring IT and marketing departments, and acquiring new technology.

The Adobe 2013 Digital Marketing Optimization Survey revealed that organizations that are making an investment to incrementally improve their digital performance have a competitive advantage. These organizations are experiencing small to large uplifts in conversion rates. Overall, this can translate into millions of dollars of extra revenue.

In the first part of this five-part blog series, we discovered why analytics is the first key solution to an organization’s audience management challenges. Today we will look at what target optimization is and how this new tech can help your organization turn Big Data into smart, actionable data.

What Is Target Optimization?

Target optimization is simply using technological tools to target and test an organization’s digital strategies. The first step is putting this new tech to good use is for the organization to identify a digital feature, such as a website’s homepage, that they would like to target and test. Then, using either multivariate (testing at least three features/variables) or A/B testing (testing only two features/variables), data-driven results will be gathered. Those results will be used to optimize or improve upon that feature in a never-ending process to create the ideal feature that will ultimately increase the organization’s conversions and revenue.

Organizations can use target optimization as a solution to improve an array of features from user experiences on websites to banner ads to automated personalization. For example, with multivariate or A/B testing, organizations can see what content is most engaging to certain audience segments and then create new strategies to leverage those findings. “Whether suggesting articles based on a visitor’s previous reading patterns or presenting tempting cross-sell offers based on a shopper’s affinity for certain products, (target optimization) provides a wide range of automated approaches to personalizing recommendations on web sites, mobile sites, applications, and email.”

Let’s Look at the Success of YouSendIt

YouSendIt, a collaboration service with more than 34 million users in 193 countries, is a classic example of an organization making the necessary paradigm shifts to convert Big Data into smart data. “In the past, YouSendIt … relied on intuition and simply compared the results before and after making changes” to their website. Does this reflect your organizational practices today? How heavily would you say you rely on intuition over data and analytics?

YouSendIt decided that their organization was moving and evolving too quickly to continue using intuition-driven analysis. They decided it was time to employ the right technological capabilities to accomplish their work. So YouSendIt “established best practices for A/B testing” and then waited until they “achieved statistically significant results” to make changes. Organizational leaders reported being “caught off-guard by the unpredictable paths users take beyond the primary designed flow, which underscores the need for objective and rigorous testing.” According to leaders, this process lead to new insights about users’ website behavior and shifted the organization “from intuitive decision making to a data-driven process resulting in real returns.” Some of their outcomes included 1) increased conversion by 6 percent on their homepage and 2) adjusted copy, design, and marketing campaigns across channels that resulted in increases of up to 21 percent for conversion and 10 percent for lifetime value (LTV).

Why You Should Budget for Target Optimization

There is ample proof that target optimization leads to higher website conversion rates, which leads to better bottom lines. There’s also a direct correlation between the amount of money budgeted for optimization and that organization’s website conversion rate. There’s no way around this fact: “Only 16% of those who allocate up to 25% of their marketing budget for optimization enjoy average website conversion rates of 5% and above, compared to 39% of those who allocate more than a quarter of marketing budget to this area.” To sum it up, the marketing optimization survey found that the more money organizations spend on target optimization, the more conversions they will experience. Compare those numbers with the average conversion rates being below 1 percent for 59 percent of organizations who have chosen not to “invest in testing or don’t have a strategic, structured process in place.”

Investing in a new technology package that includes testing, targeting, and optimizing is a win-win situation for organizations with a proven track record of success.