There are over 500 million results for the term “big data” on Google.
It’s pretty crazy how popular this term has become the last few years.
As technology has improved companies have had access to more data they can use to improve their business. Data is being used in all areas of business to improve efficiencies, sales and profits.
Companies have been using data for years, but today there is pressure to use more and more data.
With all the pressure and promises it’s a valid question to wonder if it’s worth it for your business.
Understanding Customer Behavior
My first job out of college was working for the largest footwear cataloger in the US. We looked at lots of data to figure out where to send the catalogs each month.
It was interesting to learn how customer behavior in the past could lead to conclusions in the future.
For the most part customer behavior doesn’t change. It’s difficult to change it.
This allows businesses to look at history and make decisions on how they will operate in the future. In the case of a catalog company they can decide what customers are likely to make purchases this year. It creates efficiencies in the mailing process and maximizes revenue.
Today, there is even more data available that gives companies the ability to analyze customer behavior.
There is a ton of information about online customer behavior. You can track what people are doing on your website, how they interact on social media and even what they’re searching for on Google.
This is part of what big data has become today.
Changing Customer Behavior
The one area where big data can work is looking at customer behavior and figuring out if your company can tap into those behaviors to make a profit. I think where some get in trouble is when they try to change customer behavior. It’s not an easy thing to do. We’re all pretty set in our ways and it’s difficult to get us to change especially when the pressure is coming from a business.
Thinking back to the customers at the catalog business the ability to change customer behavior was really difficult. We pretty much knew what customer segments were going to purchase in the coming year.
There were two things we could do to change customer behavior. The first was with a promotion, which worked in the short-term while having potentially fatal long-term issues because you risk training the customer to expect promotions.
The other was with merchandise.
Trying to change customer behavior with big data is a losing battle unless you focus on merchandise.
Tap into big data, if you can, to figure out what customers are doing and use that to change your business, if you can. Both can be losing battles, but if you try to change customer behavior it’s a losing game.
Merchandise and Services
Apple is a good example of a company that understands the power of merchandise.
They don’t focus on social media. They don’t focus on a lot of marketing tactics. They focus on merchandise and customer behavior.
When Apple was creating the iPod they could see that there was a demand for portable music. It wasn’t a new thing. People had been carrying Walkmans and Discmans around for two decades. The data showed Apple that people liked portable music. The data also showed that people were becoming familiar and comfortable with digital music.
Apple didn’t really try to change customer behavior. They tapped into the existing behavior and created a product: the iPod.
Apple kind of takes a hybrid approach with data. They look at customer behavior, but they also change it a bit. People really didn’t browse the Internet or check email on phones or even on the go until the iPhone came out.
You can change customer behavior a little bit if you meet a need with merchandise and services. It’s tricky to do this with big data, but it is possible.
One business constant that will always work is solving problems. If you can figure out issues people are having and you can figure out how to solve them profitably you’ll have a business model.
You don’t always need big data to tell you that. You can, but it’s not always necessary.
I think that’s one of the dangers of the big data movement. You can get lost in things and forget that it’s about solving problems. You can invest money and time looking at huge data or you can talk to people and experiment with services to see what works.
In the end it’s just solving problems and understanding people.