When I started in marketing over 50 years ago, all we had to drive sales and reach consumers were mass marketing devices like TV ads, promotions and shelf wobblers. We, marketers, knew virtually nothing about our customers. Now, there is a wealth of data available and technologies, like AI and machine learning, to help marketers accurately and effectively connect, better understand and predict the actions of their target consumers. So why isn’t every company taking advantage of these tools?

John Thornhill recently wrote, “the rise of data-rich “superstar” firms such as Google, Apple, Facebook… will suck the life out of many traditional companies. Those who know how to exploit the informational advantages of data will flourish, but the rest will die… Innovation will increasingly result from feeding data into machine learning systems to understand customers’ needs. In the future, those companies that have that data are going to be more and more innovative…”

“The rest” are basically offline businesses, including branded companies like the ones I worked with in my first job. These companies don’t operate in the online world and their marketers are not trained as digital marketers – and the online markets today are where all the data is. We’ve already seen what has happened to big-box retailers at the expense of e-commerce over the last several years. It’s the same fate that awaits brand marketers in today’s world.

Already they are feeling the effects: just a few weeks ago, P&G lost significant market sharedue to the likes of Amazon, resulting in the company lowering prices as it struggles to fend off intensifying competition.

Let’s accept the premise that data is (about to be) king and that companies that don’t adapt do so at their own peril. P&G previously didn’t need to care whether Tide was sold at Target or Amazon and didn’t really know their customers. But companies with data at the heart of the customer experience are forcing prices down and building their customer relationships up so that P&G has no choice but to transform their entire approach.

Who is using data correctly? For sure, Amazon. They have built Prime into THE major differentiator by virtue of their ability to accumulate, and use effectively, massive amounts of consumer data. And while Amazon was founded with price as its major advantage, Prime customers are less likely to use price as the dominant factor in their purchase decisions today. In fact, Amazon Prime is the preeminent example of the leverage which accrues from their vast quantity of information about their customers such that Amazon Prime is clearly the gold standard for customer relationship management.

In order to compete with data-centric companies like Amazon, branded companies must emulate the Amazon Prime model. First, this means creating a direct connection with their customers, on demand, open 24/7 – with a conversational interface. Amazon has always had this by virtue of being online (like Uber, Lyft, Netflix) but the offline world needs that as a necessary lynchpin for creating a customer-focused, data-driven, real-time business.

Enablement of your customers’ engagement is the second step. There needs to be a use case which prompts their engagement with the new tool – for instance, a more satisfying call center experience prompted by automation of mundane inquiries (virtual customer assistant) or a new loyalty program which rewards usage in some meaningful way.

Then, the name of the game is to accumulate more and more relevant data on target customers — but this must be done with security and trust at the forefront. Some data will come from marketers’ growing knowledge of their customers’ consumption patterns, but there are also significant new data sources never before available in the offline world. For instance, opt-in customer behavior for millions covering locations and events is now available offline, the type of behavioral data which has been available for years online.

As we enter the data-driven age, the tools that manipulate data will assume preeminent importance, as is already happening with the explosive growth of AI. In many respects, AI is evolving as a separate category, led by Silicon Valley companies, that are hiring the bulk of the AI talent available and creating large islands of expertise. To enterprises, this is where the above issues come home to roost, as a big threat, because they need these tools and capabilities to continue their journey to approach the Amazon Prime gold standard.

In summary, I refer back to my earlier reference that data is (about to be) king. The ascendancy of data is unchallengeable, but its path to dominance has some potential pitfalls when viewed on a company by company basis. As Amazon continues to succeed in new business areas (such as last summer’s Whole Foods acquisition), we will continue to see the erosion of major companies market position unless they address the demands of the new data-driven marketplace. While the “rest will die” may be overstated, a look back at big box retailers can preview the carnage that will ensue.

Originally published on Rick Braddock’s Linkedin.