Data is changing the way the world works — especially big data.
But it's worth recognizing that big data can be a double-edged sword.
In the last few years, big data has shown a dark side. However, in the right hands and with a focus on privacy, transparency, and ethical use, big data offers a huge amount of value. As data has become the world's most valuable commodity, Forbes has coined it "the ultimate renewable resource," adding that, "we must manage the dark side of data, but the advances in data fuels are worth the effort."
The truth is that data isn't going anywhere -- 85% of organizations see data as one of the most valuable assets to their organization, according to Experian. When we think of big data, usually it's in the context of huge organizations, especially technology and social media platforms.
However, it offers plenty of benefits for small businesses too.
The real value of big data for business includes making customers' lives easier with a product, service, or experience that best matches their needs. It takes one of the oldest best practices for doing business — understanding what your customers want and delivering more of this — and handles it at a far greater scale and with more precision than you could ever achieve manually.
What is Big Data?
Data can be classified as big data if it has a high volume, velocity, and/or variety. These are known as the "three Vs of big data." IBM also argues for the inclusion of a "fourth V": veracity. As just a few examples, big data can be applied to sales optimization, fraud detection, and call center triaging.
Big data is unique in that its volume, velocity, and variety are all much higher than can be handled manually. By nature, big data delivers richer and more subtle insights than can ever be achieved with standard data collection and analysis.
With a high volume of data, you have the most holistic view of your customers based on a wide range of past, present, and even hypothesized future data points.
At high data velocities, you can work with real-time data that's updated to the minute and shows the most relevant insights.
A high variety of data helps you view subtle nuances and segment your database. This helps you avoid falling into a one-size-fits-all mentality and maintains the individuality of your customers.
And with high data veracity, you can trust that you're working with clean, consistent, and accurate data.
When you combine those four Vs, you can obtain the most value from big data in your business.
Types of Big Data You Can Extract Value From
There are many different types of big data. Some examples include:
Lead data and demographics
Website and product usage data
Customer purchase data
These can be interpreted individually or in tandem to create a more in-depth view. For the most accurate and insightful view of your data, you can sync data between your apps to enrich each platform's data and create a standardized view of your contacts on every app.
The Value of Big Data for Businesses of All Sizes
Now more than ever, an effective data strategy is a key driver for business success. But even if we know it's valuable, why precisely is big data beneficial for businesses? There are four main benefits of big data, including for small businesses:
1. Improving Customer Experiences
When you collect data about your leads and customers, you can track trends to deliver the best customer service throughout their journey with your company. One unconventional but highly effective example of this is the "House of Cards" series on Netflix.
Netflix used the big data it had collected on its viewers to proactively determine what they might like to see. As New York Times explained: "[Netflix] already knew that a healthy share had streamed the work of David Fincher, the director of The Social Network, from beginning to end. And films featuring Kevin Spacey had always done well, as had the British version of "House of Cards." Netflix took the risk of putting down $100 million for two seasons.
Essentially, data determined the creative direction of "House of Cards" and delivered viewers with exactly what they wanted to see.
2. Solving Problems
Big data can be used to identify blockers in business processes and funnels and remedy these with diagnostic data analysis. Uber is one example of this. Since 2014, Uber has been honing its big data solution to forecast rider demand during high traffic events and even identify and address bottlenecks in the driver sign-up process. Uber Movement now shares anonymized data aggregated from over ten billion trips to help urban planning around the world.
3. Increasing Revenue
Revenue is closely tied to customer experience. By using big data to deliver tailor-fit recommendations for every viewer, Netflix has an estimated churn rate of just 9%. Big data enables businesses to also increase revenue by iterating existing products and designing new launches around proven customer needs.
4. Cutting Costs
According to NewVantage Venture Partners, the top advantage of big data is decreasing expenses. By nature, big data works at scale — it removes the need to manually collect and analyze data, which, alongside reduced churn, comes with big cost savings.
Keeping Big Data Ethical
Big data can get a bad rep, but it can and should be handled ethically and impactfully. The key fundamentals here are privacy, transparency, and security. These are already important for any business to implement to meet data protection regulations such as the GDPR.
Key Principles for Big Data Ethics
Customers should have a transparent view of how their data is processed, used, or shared.
Customers should be able to manage their data and have the option for it to be removed.
Data should be stored securely with efforts made to maintain physical and logical integrity.
Data should be removed once it is no longer required according to data protection regulations.
Don't forget about the human side of data.
The more data you have, the more complexity there is. This means noise and false correlation. While algorithms can help you correct this, common sense and gut instinct can still go a long way.
Data analyst extraordinaire Nate Silver advises, "Get 80% of the way there with your algorithms, then bring in common sense. If something doesn’t seem like it should be right, it’s probably not."
How to Analyze Big Data
There are four main types of data analysis that can be valuable for businesses, including when handling big data: descriptive, diagnostic, predictive, and prescriptive.
Descriptive analysis shows what is happening now based on incoming data, often via a real-time dashboard or email reports.
Diagnostic analysis takes a look at past performance to determine what happened and why, often in the form of an analytic dashboard.
Predictive analysis forecasts likely scenarios of what might happen.
Prescriptive analysis reveals what actions should be taken and usually results in rules and recommended next steps.
Remember that data in itself isn't meaningful. For it to offer value for your business, you need to turn data into information. This happens when data is processed, structured, and given context.
The businesses that use big data most effectively have a reliable data management strategy, insightful reporting, and focused analysis of the areas that matter.
Example Uses of Big Data in a Small Business
Sales lead scoring
Lead scoring is enabled by predictive analysis and ranks prospects against a scale to calculate their perceived value. If you've found out that prospects in France who work in ecommerce are your ideal client, you can award points to the leads that fit this definition and detract points for other leads with negative attributes. By carrying out this analysis, your sales team can focus on the highest-value prospects.
Big data goes hand-in-hand with marketing automation. By collecting big data that offers insights into your key customer segments, you can create tailored marketing communications that are triggered at key moments in the customer journey.
Optimizing your product
Big data highlights what's working and what isn't for your product. If data shows that most of your customers ignore a certain feature or spend a very short time engaging with it, it can be a sign to discontinue or adjust the offering to create a stronger overall product.
Launching new marketing content
You can also use big data to identify where the highest marketing ROI is. Website engagement in particular can offer valuable data to influence the direction of your marketing strategy. If you discover that your travel agency's blog posts on kayaking in Norway are driving plenty of organic leads that have a high conversion rate, you could create a more valuable opt-in such as a downloadable guide or webinar on adventure travel in Norway.
Introducing Big Data Analytics in Your Business
Big data isn't just for huge enterprises. In fact, there's value for every type of business, including the smallest organizations. Start by looking at the data you already collect and identify opportunities to collect and analyze new data. Next, explore your opportunities to put the insights to use for the greatest impact on your business and for your customers.
Originally published Dec 3, 2020 11:32:49 AM, updated April 21 2021