Big Data is transforming the way we do business. Today, every two minutes, we are generating the same amount of data that was created from the beginnings of time until the year 2000.
That offers opportunities for entrepreneurs and start-ups that we have not seen since the rise of the dot-coms. Entrepreneurs who put data at the centre of their business model will quickly outsmart traditional players in any industry, but less than 10% of the data held by companies is used to inform decision-making.
Big Data offers you an unparalleled opportunity to extract insight into the behaviour of your customers; that, in turn, can transform business results. Amazon believes it will soon be able to predict what its customers will buy accurately enough to despatch it even before they have bought it.
However small your business, you will have more than enough data to revolutionise it; you just need to know how to use the data constructively. The key is to focus on Smart Data, not Big Data.
Don’t start with the data, start with your strategy. What are your business objectives? If you start with data, you will find yourself lost in an impossible rabbit warren of options. Instead, get clear about what you need to know and why; by starting with strategy, not data, you will focus on what you need rather than being overwhelmed by what’s possible.
I worked with a small fashion retailer, which was trying to increase sales but had never used anything other than basic transactions data. We worked out the questions to which they needed answers: How many people pass our shops? How many stop to look in the window and for how long? How many come into the shop and, of those who come in, how many actually buy anything?
We installed a device into shop windows to track mobile signals. This told us how many people were stopping and how many of those were coming in; by combining this data with transaction data, we were able to measure conversion ratio and test window displays and offers to see which ones increased conversion rates most effectively.
Another client was a telecom company whose problem was stopping customer churn. They ran analytics on some of their data, but had never looked at how people called each other. They didn’t know whether their customers made mainly inbound or outbound calls; they didn’t know for how long they spoke, or what times of the day were most popular. By mining that data and applying analytics we were able to discover that one particular calling pattern was most likely to lead to churn.
By identifying the customer likely to move most frequently, the company was able to target that segment of the market with special offers and deals to entice them to stay.
To get the best results for your business, use my Smart model.
- Start with strategy, not data – by asking what are you specifically trying to achieve you will narrow your data requirements into manageable areas.
- Measure metrics and data – once you know what you are trying to achieve you can work out how to access the right information.
- Apply analytics – once you know what type of data is available and have accessed it, you will extract insights that will answer your strategic questions.
- Report results – the insights are useless unless they are presented clearly. Wherever possible, use a one-page info-graphic; don’t bury them in an impenetrable 50-page report.
- Transform your business – when you approach data from this focused and practical perspective you will find the rewards are considerable.
For small firms, it is easy to be overwhelmed by the thought of Big Data. Most companies will never have the money, technological capability or talent to mine vast, messy datasets, but cloud computing, improved network speed and creative new techniques to analyse data mean we can now do it without the need to purchase or build supercomputers. This means any business can now use Big Data to improve their decision-making.
The truth is we are so mesmerised by the data that we’ve forgotten that the question is often much more important than the answer the data may provide. As Google’s executive chairman Eric Schmidt said: “We run the company by questions, not by answers”.
Big Data and analytics are here to stay and it’s only going to get more sophisticated. As a business, you need to embrace it.
Most businesses are already data rich, but insight poor. Today, the really successful companies understand where their customers are; what they are doing; and where are they going. They know what is happening as it’s happening and they allow that information to guide their strategy and transform their business.
By Bernard Marr
Big Data: Using Smart Big Data Analytics and Metrics To Make Better Decisions and Improve Performance, by Bernard Marr (Wiley, £12.99)
Bernard Marr has worked with many of the world’s best-known organisations, including the Bank of England, Accenture, Barclays, AstraZeneca, BP, Mars, Microsoft, the MoD, Orange and Shell.
He is the founder and CEO of the Advanced Performance Institute, has been named by LinkedIn as one of the world’s top 100 business influencers and has written a number of books and more than 300 high-profile reports.
You can contact him at Bernard.email@example.com