What Is Big Data and Why Is It Important?
One of the hottest buzzwords in business right now is "Big Data." It seems everyone is talking about how companies large and small should be using big data to their advantage. But what exactly is it?
In a nutshell, big data is a term we're using to define a volume of data that is so massive, it's difficult to analyze and process using the spreadsheets, database management and software techniques we've used in the past.
What types of information does “big data” refer to? It starts with all of the data you've collected on customers throughout the years by traditional processes, including information you've collected through marketing surveys, list purchases, call centers, customer transactions, sales and financial records. Add in people's prevalence to do everything online, and the data coming from a range of different sources—social media, online orders, website activity, mobile data and online registrations—increases exponentially.
That said, learning how big data applies to you and your business is definitely worth your time. Recent studies reveal that marketers believe that it is critical for businesses to begin analyzing all available data, even the information that may seem insignificant, in order to provide better customer service, create stronger brand recognition and ensure growth. Here is how big data can boost your sales:
Improve the customer experience.
Data patterns will show you where you can improve the user-friendliness of your website. For example, you might discover that you lose a large percentage of customers during a particular step in the online sales process. Upon further inspection, you figure out that your registration process takes too long. You can then make changes to speed up the process, test it and determine if that improves sales.
Advice for small business owners: You should measure everything when it comes to your site, including what keywords sent customers to landing pages, the time people spend browsing, what images or links they click on and at what point they leave your site. Check out these resources for help with measuring website traffic and analytics.
Provide customized promotions.
Segment your lists so that you can tailor your promotions to different cohorts. For example, you would highlight different product features to a group of 50-something males than you would to preteen girls. Segmenting the data allows you to personalize your messages so that you speak directly to a specific type of customer.
Advice for small business owners: It's critical to collect specific data about your customers, so if you aren't, start. You can do that by requesting information during customer transactions or through surveys. Sometimes, it's just a matter of talking to your customers to learn what they want—and ensuring that you capture that information in some sort of database.
Make smarter decisions based on patterns.
When you analyze the data, you'll discover customer purchase patterns. For example, you might learn that most of your customers purchase your products at a certain time of year or that they are more apt to purchase products because of an email rather than a direct mail piece. From that data, you can make strategic production, marketing and manpower decisions that can save you money and ensure that you aren't shorthanded or without inventory during your busiest times of the year.
Advice for small business owners: Start small, analyzing your internal data before you begin exploring all of the data available externally. Google Analytics is one of the most popular and useful tools that will allow you to track and evaluate customer trends and traffic on your site.
Define and isolate your "good" customers.
Open rates and click-throughs on your ads and links are all fine and good. However, once you figure out who is actually buying from you, you gain a clear picture of the customers you should be targeting. Also, you can focus on building stronger ties to your "good" customers through special promotions and offers.
Advice for small business owners: If you don't know who your target customer is, start investigating. Pull a list of everyone who has ever purchased from you, and search for patterns in age, location, gender, education level, job level and so on. If you haven't been collecting that data, consider sending a survey with a free offer for completing it to your customers. That is a quick and efficient way to gain a snapshot of whom your most loyal customers are.
Develop and improve on products based on feedback.
Find out what people need, and meet those needs. With millions of people using social media, it's a great way to find out what people are buzzing—and complaining—about. By monitoring what people are saying about you online, you can quickly address problems or make improvements to a product or service before it hurts your bottom line. Tons of tools exist that make it easier to monitor and protect your online reputation.
Advice for small business owners: Many small business owners have a very small social media presence—if they have one at all. It may be hard for you to glean any kind of information from your Twitter, Facebook, Pinterest and so on accounts. However, monitor what's being said there, and focus on growing those accounts. They will continue to play an important role in marketing.