Big data isn’t only for big business.
If you’ve been following the news over the past couple of
years, you’ve probably heard a lot about big data. Microsoft CEO Satya Nadella says
the “data dividend” could be worth $1.6 trillion to large businesses
over the next four years, according to the BBC.
But small businesses can benefit from big data too. In this
tutorial, we’ll look at how small businesses can make use of big data to
improve their performance.
We’ll see some real-world examples, from the video-game company that tweaks its products on the fly to the zoo that analyses climate data to predict attendance. And we’ll also look at how you can implement a big data solution in
your company.
By the end of the tutorial, you should have some concrete ideas
of how you can use big data to make your business more efficient, find out more
about your customers, and increase sales.
1. What Is Big Data?
If you’re wondering what big data means, don’t worry—it’s
just what the name suggests. It refers to really large sets of data (generally
measured not in megabytes or gigabytes, but terabytes or even petabytes), which
can then be analysed to spot trends and improve processes. According to IBM:
Every day, we create
2.5 quintillion bytes of data—so much that 90% of the data in the world today
has been created in the last two years alone.
Think about your own business. In previous generations, data either wasn’t stored at all, or existed on pieces of paper in filing cabinets,
hard to access and impossible to analyse on a large scale.
Today, on the other hand, even most small businesses store a
considerable amount of data electronically. And if you can aggregate data from
millions of businesses and customers, then you have a very large set of data.
It’s not just about size, though. Most definitions of big
data also include the three Vs: volume, velocity and variety. SAS
also adds in variability and complexity.
“Big data” has become a bit of a business buzzword, and is
sometimes taken a bit too far. It can sometimes be applied to ordinary data
analysis, for example, where the amounts of information are not really that
“big” or complex. But there are some real, practical uses for big data, and
we’ll look at some examples now to give you a better idea of how you can
benefit from it.
2. Understanding Customer Demand
One of the clearest uses for big data is to understand what
customers want.
A key thing to remember is that even if your company doesn’t
have a lot of customer data, you can tap into other, larger sources of data
too. Few small businesses will have enough information to qualify as “big
data”. But you can also access more general, large-scale data about what
clients in your industry or target demographic want. And in some cases, you can
make smart decisions even based on smaller data sets.
For example, a small vacation rental company in North
Carolina used SAS database software to analyze trends in bookings and spot
weeks when demand was slack, and allowed homeowners to tweak their prices for
those weeks accordingly, resulting in increased bookings.
The rental firm, Twiddy & Company, also cut costs 15% by comparing each
contractor’s maintenance charges against the average of its 1,200 other
vendors, as well as cutting out errors in invoice processing and automating
service schedules. Those savings outweighed the cost of the software.
“There’s truth in numbers, and this software helps you
find it,” marketing director Ross Twiddy told Inc
Magazine. “When we saw that happen for us, it was like tasting ice
cream for the first time. It’s something you never forget.”
The data sets don’t have to be directly based on your own
customers either. Point Defiance Zoo & Aquarium in Tacoma, Washington,
improved its performance by analysing
the weather.
The zoo worked with IBM and BrightStar Partners to compare
its historical attendance records against years of detailed local climate data.
The results enabled them to make accurate predictions about how many customers
to expect each day, and to tweak staffing levels accordingly.
The zoo also boosted memberships by using the software to
target frequent visitors and pinpoint the best times to reach them.
3. Improving Your Products
Some businesses are collecting large amounts of data on how
their customers use their products, and then crunching that data to reveal
insights that let them improve those products.
This is fertile ground for video-game companies, for
example. Games company Mediatonic analyses vast amounts of data on its users: when,
where and how long they play, and which parts of the game they find especially
hard or easy.
It can then “test different versions of a game on different
demographics at the same time,” says its chief executive Dave Bailey,
“and tweak them in response to the real-time data we receive. We can now
understand each individual player.”
You could also use data analysis to provide extra services
to your customers. Consultant Mark Schaefer wrote in Social
Media Today about his work with a small company that offers airplane repair and maintenance services. The company had started to store masses of data about
the performance of customers’ planes, but wasn’t sure what to do with it. He
showed them that they could gain a competitive advantage by offering their
customers extra value.
For example, they could use the data to indicate if a jet
needed maintenance before a scheduled outage, helping to reduce costs and keep
the jets in the air longer. Or they could give the customers insights on fuel
efficiency, or use years of repair data to determine the most probable cause of
a problem and the most likely means of repair, cutting repair times. The data
could also help customers find areas for improvement and make smarter
purchasing decisions in the future.
Whether you sell products or services, consider whether
there’s any extra data you could provide to your customers that would be
helpful to them. You could either charge for this as an extra service, or
provide it as a freebie to improve customer loyalty.
4. Making Sense Out of Social Media
Think about the huge amounts of data available on social
media. Every day, your customers are sharing masses of information that could
help you target your offerings much better—the kind of thing business owners in
previous generations could only dream about.
The trouble is, this data is messy and unstructured, and
most businesses don’t make much out of it. But a range of apps and software
programs now let you sift through all that data and spot trends.
It’s common these days for companies to use software to
monitor social media conversations and flag negative comments that need a response
(or positive feedback that can be promoted). But the amount of data can also
provide more specific, actionable information.
Hotel chain Accor Hospitality, for example, used social
media analytics firm Synthesio to examine
thousands of comments posted on travel websites and to track the online
reputations of 12,000 hotels, both Accor’s and its competitors.
The analysis revealed small but important problems that
guests were experiencing, such as room keys being demagnetized by their
smartphones. Accor was able to deal with the problems, significantly boosting
its hotels’ positive feedback.
Accor is a large company, of course, but think about ways in
which your firm could make use of all those millions of opinions, complaints
and compliments that are flying around every day on social media. There are
plenty of social media analytics solutions available, many of them at low cost.
Popular options include Brandwatch, HootSuite and SproutSocial.
5. Benchmarking Against the Competition
Learning what your competitors were up to used to be
difficult to achieve. You had to rely on surveys, often based on limited and
outdated information. Now, however, big data allows you to access huge amounts
of up-to-date information about other companies in your industry or region.
For example, the accounting application QuickBooks Online has millions of
business users around the world, and handles huge amounts of data on revenue,
expenses, profit growth and more. For each individual business, this data is
hugely sensitive and they’d never divulge it to anyone. But QuickBooks can
aggregate it, anonymously of course, and share the overall results.
You can see some examples of how this works for U.S.
companies at the QuickBooks data explorer
page. Click on your state, and you can see some data on other small businesses
in your state: how quickly they’re growing, how much profit they make, what
they spend their money on, and more. You can also see key financial metrics for
companies in various industries, and benchmark your own company against the
competition.
QuickBooks is just one example: there are plenty of others
out there. Compass, for example, lets you
add data about your company and be matched with similar firms to see how you
stack up. Your own company’s data is encrypted and held privately—again, it’s
only the large-scale, aggregate data that’s shared.
Next Steps
So now that you’ve seen some examples of how to use big
data, the next step is to think about how it can apply to your business, and
pick a strategy to implement.
The good news is that there are many suppliers out there,
from the big hitters like IBM and SAS to smaller companies like Qualtrics, InsightSquared and Tranzlogic. And storing large amounts of data
is now cheaper than it was in the past, thanks to the falling cost of physical storage and the rise of web-based cloud storage.
But be sure to consider exactly what your needs are. Just
because big data is what everyone’s talking about, it doesn’t mean you should
jump in right now and start gathering all the data you can. Cloud computing
does make data storage cheaper, but you’ll still need to be careful. Some
providers, for example, charge little for storage, but more for access.
“Cost can be a double-edged sword,” says Craig
Bloodworth, chief technology officer at The Information Lab. “It’s fantastic
that you can spin up instances as and when you need them, but if you don’t have
a handle on your usage and your billing rates, then you can find yourself
paying a lot for cloud-based data storage.”
It sounds paradoxical in a tutorial about big data, but you
may want to start small. Perhaps you could focus at first on making better use
of data stores that you already have. If you have a lot of traffic to your
website, for example, you could get some interesting insights simply by
exploring the details of Google
Analytics, also experiment with using Google Analytics at scale. Then look at some simple, low-cost ways of analysing social
media and tying up some of your existing databases to reveal interesting
insights. That should give you a feel for how big data can help your business
grow and improve, and at that point you can start looking into more
comprehensive solutions.
Resources
Graphic Credit: Data designed by Piotrek Chuchla from the Noun Project.
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