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.
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.
Envato Tuts+ tutorials are translated into other languages by our community members—you can be involved too!Translate this post