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16 January 2012

Business

Data and Analytics: Why It’s A Big Deal For Businesses

In an interview recently where he talks about the evolution of the consumer, Google Industry Director of Technology Sector, Kyle Keogh, explained how businesses should no longer think of their customers as a mass market, but rather a market of individuals. Why? Because consumer behaviour has changed, brought on by a big increase in the adoption of technology in the home and encouraged by the diversification of choice.

Because of this, marketers are increasingly moving away from segmenting their customers based on demographic information such as age, gender, and income, and focussing more on buying behaviours and the way they interact with their products. Moving with the times, and as Keogh puts it, marketers now have to employ better data mining techniques to position the “right offer, at the right time, for the right person.”

How are businesses adapting to this shift?

For companies that are already ahead of the game, investing in information architecture and developing their capacity for collecting better data has allowed them to understand how their customers interact with their products and therefore identify new business opportunities. Similarly, it has allowed them to remain agile and adapt quickly to market forces before the competition has chance. For instance, ecommerce websites use systems which are designed to track individual sales journeys; process that data; and make product suggestions at critical points in the sales process according to the individual customer’s preferences. This increases the value of each transaction whilst also driving down costs and improving efficiency, because the retailer is able to manage stock levels more accurately.

Mobile Apps and Tesco

In the last couple of years, smartphone and tablet usage has rocketed, ushering in the age of the ‘app’. Although still in their infancy, apps have and will transform the way digital marketing is approached as it brings with it new opportunities. If they’re about to rock our worlds, then, are there so many great apps that are free?

Each time you download apps such as Angry birds, eBay, BBC News, Facebook, Voucher Cloud etc., you’re allowing information about your interactions with that app to be relayed to the company who developed the software. That’s powerful information, if you know how to use it. And what’s more, it’s very valuable to retailers who are willing to pay handsome sums to get their hands on it. For more on mobile marketing, I suggest taking a look at this good article on Fiksu.

Aside from apps, perhaps one of the biggest success stories, in the UK at least, is Tesco’s Clubcard scheme, which catapulted the supermarket chain from healthywhat is analytics competitor to global heavyweight with 15 million active users in the UK. What the loyalty scheme allowed Tesco to do was not just see what their customers bought, but how. Understanding consumer behaviour in such a way and having access to large volumes of data to carry out sales concept testing allowed Tesco to leverage that knowledge to provide their products in a way that their competitors simply couldn’t match. The result- increased market share and years of record breaking sales (until just recently, at least).

Who’s at risk?

All organisations who fail to see the importance of ‘big data’ in their business will find it difficult to compete in the coming years. But there are some in particular who will have a rougher ride than most, such as companies who generate revenue through gaming the value of proprietary data.

For example, estate agents will no longer have the upper hand when it comes to determining the value of a house, because consumers now have access to that kind of information on the internet. The data stored locally is no longer as inaccessible as it once was.

Similarly, organisations which don’t have an effective way of communicating their business data across a network will struggle to adapt to change. This is often the case in public sector organisations where large divisions may operate isolated systems and have no way of transmitting that information to other parts of the business. The threat here arises from an inability to coordinate activity in a controlled, uniform, and prompt way.

big data securityUltimately, despite the potential for companies to drive down production costs and pass those efficiencies onto consumers, it is the customer who will suffer the consequences of surrendering more and more personal data to them in return.

I’m really interested in market research and data. If you’d like to share your thoughts or talk more about the ideas raised in this post, leave a comment or connect via Twitter or LinkedIn.

By Adam Cowlishaw

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