The term “big data” has been front and center lately, intimidating businesses of all sizes. But for small businesses it’s not about how many terabytes of data they can amass but what they can do with their existing data to grow and improve their business.
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“Small businesses can’t get caught up in the hype,” says Steve King, partner at Emergent Research. “They should think about their business and what steps they can take to take advantage of data in new ways.”
For months now consulting firms and technology pundits have been spreading the word about the importance of accessing and analyzing so called big-data, which in essence is collections of data that are so large and complex it’s hard to get any actionable information out of it.
For large companies it’s a major problem, but for their smaller brethren the focus shouldn’t be on analyzing massive amounts of data but instead looking at the data that matters to their business. “Small businesses need to be involved in relevant data not big data mania,” says GaryDrenik, chief executive of Prosper Insights & Analytics. “For Mary’s dress shop it doesn’t matter if its 2.4 quintillion bytes of data.”
When it comes to the data that small businesses should care about, technology experts say it’s a good idea to zero in on the information that can improve customer service and business operations. For instance most small businesses have a Website, a fan page on Facebook, a Twitter account and a professional profile on LinkedIn. They also capture emails from their existing customers and get inquiries from potential ones. All that data can be analyzed to better serve their loyal customers and target new ones, and it doesn’t have to cost a lot. There’s a ton of software and services, some that are relatively cheap, that will analyze all their social media data.
Even small business owners who don’t use social media can benefit from some data analysis. King says a great place for small business owners to start is with a customer relationship management or a CRM program.
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“Only about 14 to 18% of small businesses use CRM systems which keep track of interactions with customers,” says King. “That’s low hanging fruit. Everybody should have a CRM system. They are cheap and give insight into your customers.”
If there is no chance the business owner will spend any money on data analysis, Drenik says small business owners can start with simply capturing customer email addresses and sending out emails whether it’s about a promotion or asking them to take a customer survey. “It doesn’t have to involve buying a bunch of servers and buying all this software,” says Drenik. “All they need to have is basic data skills to understand the customer better.”
Although the idea of analyzing data can be intimidating to already stressed-out small business owners, Wilson Raj, global director of customer intelligence at SAS, which makes business analytics and intelligence software says small business owners need to approach the data in chunks to make it more palatable to handle. For instance a retailer can break the data up into what happens when the customer is browsing the Website, when he or she puts something in the shopping cart, at the point of purchase and then after the sale is complete. By breaking it up into those buckets it will be easier for the small business to analyze customer behavior at every point in the sale. For instance by looking at the data on what customers who purchased x, y and z also checked out, can enable the small business owner to send targeted ads and relevant promotions.
Raj says small business owners can also tap the plentitude of so-called open data or free data that’s readily available on the Internet. According to Wilson, it’s basically comprised of government and federal data pertaining to things like weather, traffic patterns or property registrations, all of which can be used to help the business. He points to the example of a local yogurt store that harnessed weather forecasts to learn there’s a cold front coming in the next couple of weeks. Instead of running an empty store, the shop can run a promotion during those cold days to keep business going.
“Companies using big data tend to be five times more likely to make business decisions faster,” says Raj. “In today’s world they need to be operating in an agile fashion.”