Big Data for Small Companies: Incentives and Implementation
As of 2017, almost 20% of small companies have embraced the benefits offered by Big Data and have learned that size is not a reason to hold back. This was possible through the increased democratization of data analysis solutions by software as a service (SaaS) platforms which offered pay per use opportunities.
Since both human and financial resources are scarce for small businesses, the catalyst for using Big Data is represented by a friendly design which does not require any specific programming skills. Big data consulting firm InData Labs explains that all the processing is done behind the scenes using specific technologies like Hadoop and returned to the client in an actionable report or dashboard form. This gives the business owner a chance to focus on the strategy and create business goals.
What difference does it make?
Most small business owners are afraid of changing their ways and investing in new tools that are not on the priority list. However, there are at least three sound reasons why Big Data is not a fade and not only a toy for the top players. In fact, it can mean the difference between thriving and bankruptcy.
Understand your customer
Your customers leave traces wherever they are. On your website, they tell you what they are looking for by clicking on specific pages or filling in the search box. On your social media, they are liking or hiding specific content. Even when they leave for a competitor’s website they are giving you an incentive to improve your own service. Reading between the lines and looking at the profiles of the people who create such communication is the key to selling more of the right products to the right people.
Improve the quality of your decisions
When resources are a luxury, each step needs to be optimal or at least to minimize a potential loss. Big data can set a direction or help you choose the best alternative in an ocean of uncertainty. For example, an A/B testing session can help you choose the winning image for a banner all based on data, not the owner’s preferences.
Improve operational efficiency
If you’ve always thought that you need to get organized, Big Data can help you identify those products that should be removed from the offer to give more visibility to the best-sellers. It can also help you create a dedicated customer care service even if you are a solopreneur by designing a chatbot. Improving time to market can give small companies a competitive edge.
The DMAIC cycle
Using data to grow a business is not a new idea, it has been around since the end of WWII when it was used to rebuild Japanese industry. The Six Sigma process has five phases which can be easily adjusted to help a small company use Big Data.
- Define – What are the primary questions you want to answer? Brainstorm and write down things like: “What is my most popular product?”, “How much return do I have for each dollar spent on each marketing channel?”, “Who is my typical consumer?”. Rank these by importance and only select the top three.
- Measure – Starting with the previously defined questions, ask what data you need to help answer them. Create a separate list of data for each question and identify reliable sources.
- Analyze – Gather as much data as possible, going back in time and broadening the initial dataset with related items that could give a more nuanced answer to the original question.
- Improve – Discuss the findings with your stakeholders and create new targets, design pilot trials and ask yourself about the root causes. For example, if you found out that one of your client groups are not responding to the ads, redirect funds to the most profitable group.
- Control – Put in place long-term solutions for the findings and re-run the DMAIC cycle to check for improvements.
Where do you get your data from?
One of the first questions of companies deciding to use Big Data is what the reliable sources are. Starting with the KPIs previously defined, it shouldn’t be that hard to get clean, reliable data. First, use internal sources such as sales records, bank statements and an online history of websites visits and social media activity. It is always a very good idea to add external data sources such as census data, governmental records, and data from international organizations such as WHO, UNICEF or even public data by Facebook and Google. If you are looking for a comprehensive list, Forbes has already answered this.
Learn from others
One inspiring story about the power of Big Data for small companies comes from Australia. The struggles of a pool making company had come to an end when a marketing agency had the idea of comparing sales, searches, and local weather patterns. They found out that a deal was struck when the temperature was constantly higher than it was in the last few days. This has led to the idea of running online marketing campaigns on social media only in those hotter than average days. The ROI ratio was 54:1, an impressive result.
Another company that is all about the data is Graze, a fast-food retailer that can materialize any idea in 48 hours and put it on a shelf to be enjoyed. They only rely on the feedback they get from clients, and they crunch the numbers to decide which of their snacks remain part of the offer and which are retired.
Is this the end of gut feeling?
Small business owners are not ready to abdicate from their role of “ship captains” and let a computer do all the thinking and guessing work for them. Most likely the insights provided by Big Data will replace a very experienced advisor and will be taken into consideration as long as they fit in the general business logic. It is a leap of faith that owners are not ready to take themselves, let alone create a whole culture around it. This is most of the times the primary barrier to adopting a data-driven management.