As programs, peripherals, apps, search engines, social media, censuses, smartphone chips, credit card purchase records, loyalty programs, competitive intelligence, business research, and you-name-it continue to capture, compile, spew, and store trillions of bytes of information about customers, suppliers, and operations, we find ourselves firmly in the age of "Big Data." The increasing volume and details of the data -- now doubling every two years -- is a mine of information to be tapped by those who can figure out how to harness it -- for greater innovations, efficiencies, operations, productivity, growth, competition, and profits. This also means that leaders -- and not just data-oriented managers -- are joining the wrestling match with "Big Data" in order to help tease out the value for themselves and their businesses. Today, we stand at the gate of “The Industrial Revolution of Data,” which is, according to a McKinsey Global Institute (MGI) Report last spring, "the next frontier for innovation, competition, and productivity."
What are some of the implications of “Big Data” For Retail?
* Use existing data more efficiently. Mine information buried within your company’s database; inventory your own data assets, look at purchase histories, and thereby learn how to increase value.
* Drive higher conversion. From controlled experiments or natural experiments, study variability in performance and learn to drive overall performance higher.
* Improve and automate decision-making by applying Big Data algorithms. You’re not in this alone -- you will have benefit of data supporting and helping you take appropriate actions -- many of them programmed automatically.
* Innovate new business models in products and services. "Big Data" will provide information that will allow businesspeople to look at things in new ways; retailers will find a lot of new directions based on data patterns and secrets to be discovered.
Some Challenges Of Harnessing Big Data:
1. The biggest challenge will be teasing the needed information out of the overwhelming stockpiles of data. For example, companies like Google, Facebook, Twitter, etc. have a lot of personal data, but nobody from a customer marketing perspective really has a complete picture -- yet -- of what the customer relationship looks like. At this point, “Facebook can see certain things about you, Google can see certain things about you, but nobody can really connect the dots yet to create a complete view of the customer.”
2. Second will be the greatly increased demand for more talent to work with these subjects (MGI research predicts 140,000 to 190,000 people will be needed by 2018);
3. Third, privacy and social issues will have to be addressed, i.e. how data is used, what’s legally required, what contracts exist implicitly with customers and other stakeholders, and being sure that the data is used for legitimate purposes.
4. And remember the millennials that we mentioned in our blog post, “7 Tips To Make Your Business Irresistible To Online Shoppers”? This generation of twenty-somethings is more inclined to hand over their personal information in exchange for something else of value, which may represent another way the general population will look at the availability of information in the future.
“The Industrial Revolution Of Data” is in its toddler stage -- and growing fast! More talent will need to be recruited to work with Big Data, and more people will work to get their heads around how to crunch and analyze the data, study it for insights and implications, and harness it for the benefit of merchandisers, consumers, and society in general. In part 2, I’ll tell you 6 ways retailers can use big data to increase margins by 60%. (6 Ways To Use "Big Data" To Increase Operating Margins By 60% - Part 2).