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Mining Data at PayPal to Guide Business Strategy

A founding member of a new category of financial services providers, PayPal is looking to transform itself from a predominantly online (and mobile) payment service — it has more than 100 million active users worldwide — to a payment service that can be used in the physical world as well. PayPal announced a partnership in August with Discover Financial Services, for example, that will expand its payment services from a few thousand brick-and-mortar locations to potentially seven million by the middle of next year.

As PayPal moves to increase its market share, one thing is certain: Data analytics will play a pivotal role. Why? Because the executive team is paying attention to the numbers. And they're using data analytics to help guide business strategy.

"PayPal leadership wants to know the return on investments PayPal makes," says Veronika Belokhvostova, head of Global Business Analytics at PayPal. "Therefore, each proposal for a new initiative or product feature has to come with a plan for measuring its impact on the PayPal customers and PayPal financials. Each portfolio manager is responsible for not only tracking the performance of his or her portfolio, but also for identifying key drivers of the growth and for tracking leading indicators, such as customer acquisition, of financial results. Business analysts are the ones who design and execute these analyses."

Achieving actionable — and measurable — results through data analytics, however, often requires breaking down the communication gap that can exist between data analysts and business. That means empowering trusted analysts to develop well-thought-out recommendations and implementation plans that answer the all-important question in business: What should we do next?

In a conversation with Renee Boucher Ferguson, a contributing editor at MIT Sloan Management Review, Belokhvostova discussed how PayPal is bridging that communication gap.

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