Updated: Apr 2, 2018
Yes, it’s a myth that big data is only for big companies with massive amounts of data. With new technologies, small businesses collect transaction, customer and demographic data, analyse it and make data-driven decisions. Small businesses are also more flexible, have closer customer relationships and can quickly act on these insights. How can big data benefit your business?
Big Benefits for Big Data
Know your customers better. Big data can help you understand your customers better, sharpen your marketing strategy and drive product innovations. A small business can integrate customer interests and demographics from social media with weblogs from their website to understand who buys their products and what they buy. For example, a t-shirt design company with customers who are mostly women between 25 to 34 and have pet dogs might want rethink their marketing strategy and launch a line of puppy design graphic tees.
Create better marketing campaigns. You can use big data to enhance and sharpen your marketing campaigns. Very often, small businesses use a one size fits all approach to their campaigns. They target large audiences get few conversions and spend more per lead. If you overlay your marketing lists with customer demographics, behavioral and psychographic information you will be able to send targeted messages to different customer segments. If done properly, this approach will not only increase conversion rates but give your customers a better brand experience.
Big data can be used for performance management and campaign testing. After launching your marketing campaigns, you need to monitor the performance and evaluate what works. Overlaying campaign performance with customer information, you can fine tune your campaign mechanics, marketing messages and visuals to appeal to your target audience. For instance, you can target customers who have dropped their shopping carts with a product specific banner and promotion for free shipping on your first purchase.
Make sense of social media. Social media contains a wealth of customer information. What they like? Do they like your brand? Why do they like your competitors? Very often, the data is unstructured (messy) and very tedious to collect. But small companies can use various online tools to gather, analyse and derive insights from these social media interactions. Big data can help you understand your customers, optimize your social media strategy and find effective ways to sell your products.
Reduce costs by eliminating inefficiencies. For some businesses, demand is difficult to predict and it leads to operational inefficiencies and wastage. Big data can help forecast demand and allow you to better plan staffing and resources. For example, a café integrates historical trends with holiday and weather information can more accurately estimate the number of customers each day. It will improve planning and staffing, reduce wastage and even increase revenue.
How Can Small Businesses Use Big Data?
1. Identify Information Needed
More than 2.5 exabytes (18 zeros) of data created every day (from BBC News). That is equals to 1.25 trillion photos, 715 billion songs and 625 million movies! With so much data out there and limited resources, you have to prioritize what information you need for your business. Some useful information might include customer interests and demographics from social media, ad click through rates, visitor behavior on your website.
2. Choose a Flexible and Simple Solution
Most business owners aren’t data scientists. Use tools like Google Analytics for data collection and then analyse this data in a simple way. Timeliness of the data is important as well. If you spend a lot of time on collection and analysis, the insights that you derive might already be outdated. Popular social media platforms like Instagram and Facebook provide free analytics features as well. Utilize these tools to gather and analyse data in a simple way.
3. Cost vs Revenue and Savings
Cost is an important factor to consider. Big Data solutions used to be prohibitive expensive for small businesses and were used exclusively by large corporations with deep pockets. However, times have changes and companies like IBM, Microsoft and Tranzlogic are offering affordable, easy-to-use big data solutions for small businesses on cloud-based platforms.
If these solutions are still out of your reach, then there are ways to do it yourself. Before you embark on this route, evaluate if the time spent justifies the savings. There are many sources of data that you can extract and analyse yourself. For example, you can extract visitor information from your website and click-through from ad campaigns through Google Analytics. Use the free Google AdWords and Google Trends tools to understand your potential customers and find new markets. Social media platforms like Instagram and Facebook offer their own free analytics tools that help you understand the interests, engagement and demographics of your followers. Finally, use the wealth of information available in government databases. These databases are free and contain detailed demographic information by zip code.
The Future of Big Data for Small Businesses
As new technologies and innovations enter the market, more small businesses will be able to harness the power of big data through automated tools and algorithms. The once prohibitive big data solutions will become a myth. Small businesses will be able to gather, integrate and analyse larger amounts of data, find correlations and insights that will transform their businesses and power their growth. Stay ahead of the game and take advantage of big data now to drive sales and target new customers.
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