Big data is the biggest of business buzzwords, but unlike many buzzwords, it has plenty of substance behind it. The idea is that mining vast repositories of raw data can uncover patterns that lead to competitive insights. Walmart’s been doing this for decades, analyzing its cash register traffic in real time to shave every last ounce of waste from its retail operations.
According to McKinsey, the amount of data generated globally is growing by 40 percent each year. No wonder: Facebook alone generates 10 terabytes of data each day. Speaking of Facebook, it’s crunching that data to fine-tune its ad targeting—and up its market cap. A report by Intuit and Emergent Research, THE NEW DATA DEMOCRACY: How Big Data Will Revolutionize the Lives of Small Businesses and Consumers, says data is a new kind of raw material that’s as important as labor or capital, with even greater potential.
“Digital data will turbocharge the use of analytics, in both small and large businesses,” the report predicted. “Proprietary data combined with data from the cloud will create new insights and a deeper understanding of what consumers need, what they like and what will keep them happy. The development of new data sources and unique analytics will drive entrepreneurial growth around the globe over the coming decade.”
But big data isn’t just for big companies like Walmart and Facebook, according to Steve King, a partner at Emergent Research and the author of the report. King says that, in the same way that Amazon uses its massive databases to recommend books and movies to individuals, small businesses will be able to use their data to better understand individual customers—and offer more personalized service than giant chains.
Data crunching on the cheap
To take advantage of big data, “You don’t have to have high-end machinery and data scientists,” King says. There are plenty of third-party services that offer analytics services for free:
- Quantcast: Measures and analyzes your traffic with demographic and geographic information. You can compare your site to others to see how you stack up.
- Google Analytics: Customizable reports show which parts of your website are performing well, which pages are most popular, what sites visitors came from, and what search terms sent traffic to a page.
- WebTrends Reinvigorate: Offers sophisticated charting and reports in real time so you can, for example, track the results of an online promotion. The starter subscription is $10 a month with a 14-day free trial.
- Your web hosting service: Most offer at least basic traffic analysis. Have you ever looked at this?
The first step is identifying what data you can collect. “Go through each functional area of your business,” King advises. You don’t need to have a really big data set. Any information that you haven’t analyzed before is grist for the big data mill. For example, “It’s amazing how many small businesses with websites don’t bother to analyze their web traffic,” King says.
Customer relationship management systems, known as CRMs, are an easy way to get all your customer information into one database. This information can be shared across the company, and different divisions can feed information back into it. CRMs can be acquired cheaply or for free. For example, Zoho CRM and Insightly are free for up to three users.
King suggests that you start simple. Accountants usually have a handle on important metrics and are used to working with data. “Meet with your accountant and figure out what the key performance indicators are for your company, track them, and grow from there,” he advises.
You can’t afford to ignore data these days. When Emergent Research first studied the impact of web analytics on corporate competitiveness in 2007, it found that it made little difference: The skill of business owners and executives outweighed technology as indicators of business success.
No longer. Now, Emergent’s research shows companies that successfully use analytics are beginning to outperform those that do not. While many managers found success by relying on their experience and gut instincts, “The world has gotten faster and more complex,” King says. “They will need—more and more—to add analytics to that intuition, or they’ll fall behind.”Comments