Zero marginal cost of big data explained and how Salesforce can enable opportunities from it

force4change Blog, Uncategorized

One key disrupter concept for business and our society in our age, is the of concept zero marginal cost phenomenon.

Here’s a quick definition of zero marginal cost from wisegeek.

“Marginal cost is the term used in the science of economics and business to refer to the increase in total production costs resulting from producing one additional unit of the item. Zero marginal cost describes a situation where an additional unit can be produced without any increase in the total cost of production. Producing another unit of a good can have zero marginal costs when that good is non-rivalrous, meaning that it is possible for one person to consume the good without diminishing the ability of others to simultaneously consume it as well.”

Zero marginal cost has already played a key role in disruption such as in information goods industries such as music, media and print. Consumers have become prosumers who now produce and share knowledge, blogs, and music. And recently Uber and a little controversy with their global ride sharing service. Source: Huffington Post Blog Jeremy Rifkin

In Jeremy Rifkin’s book Zero Marginal Cost Society, Rifkin envisages the future and predicts the converging networks of resources such as data and energy all connected via IoT with senses connecting everything to everything in our homes, offices and supply chains

Importantly though and back to Big data is how companies can take advantage of the near zero marginal cost of big data to improve everything from the customer experience and services to significantly reducing across the value chain.

Salesforce is at the forefront of really enabling businesses and organisations to leverage these opportunities that come with this shift.

With senses being added to products, infrastructure, logistics networks we now have a mass of data. The cost of creating this data once production is set up is near zero. This can be a gold mine for businesses to create systems of intelligence, moving away from systems of record.

To bring the business benefits to life we have outlined a scenario below for a manufacture and their partners: a retailer and a service and repair company. In this case a product such as an air conditioner or washing machine

1.An air conditioner has a various senses and is connected to the web. When it has an issue it sends to the service center and or the manufacturer – its serial number, its warranty period, owner details and location, usage data and any issues that the device may have. This would have significant costs for the manufacture and its partners, more importantly.

If there was an issue with the device it may be able to be fixed remotely or an automatic service call created without the customer having to do anything. Customers are going to value and will be loyal to goods and services that have that superior level of quality and durability. If there was a problem that did need the customer to intervene an email can be sent to owner with cleaning tips and reminders. A device could provide the customer with data and reminders / intelligently telling the customer what setting for the temperature to sufficiently keep the space warm or cool with the lowest energy usage – thus adding more value by ensuring the maximum energy efficiency of the device.

2.The service and repairer can collaborate with the manufacturer and receive direct information and know if there was an issue with the installation or that it was due for a repair could more effectively plan my workforce – and build up a trust relationship with the customer – only providing parts, services, when the exception occurred as needed

3.The retailer would know when a customer was due to repurchase, being ready to engage the customer when they are ready to purchase again, The retailer can reduce costs of storing inventory and reduce time of customer deliveries. The retailer can then access the list of accredited Installers (the service repair team and SMS instantly the job request for the installation. reducing time, and reducing the cost of the advice.

For a customer this would create an exceptional customer experience. A product that never breaks down, or intelligently tells me how to maintain it. A product sends key information to the Service center or manufacture when there is a fault – saving time of the customer calling the Service center, finding the relevant information warranty, serial number. Saving time with the Service center and angst of receiving a customer call about a fault in the product and then managing the service repair process.

Zero marginal cost of big data that is critically enabling organizations to reduce costs and that is as significant as the innovation it is also enabling for creating exceptional customer experience

This isn’t the future, this is now, and there are Australian Salesforce customers that are implementing this today.

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