When the term ‘big data’ is mentioned, many small business owners immediately think this has nothing to do with them. They are, after all, not ‘big’. If this is how you currently think, read on to find out how big data can in fact benefit your small business.
Big data is a term that refers to data that is so complex, fast, or large that it’s hard or even impossible to use traditional methods to process it. While data processing has been around for decades, industry analyst Doug Laney coined the term ‘big data’ during the first few years of the 2000s. Laney became known for using the ‘three Vs' approach to describe what big data is.
Variety. Big data can, for example, include numeric data, text, videos, emails, financial information, stock ticker data, and audio.
Velocity. With the Internet of Things now also adding to the amount of data, the speed at which it comes in is unprecedented.
Volume. Big data is collected from various sources such as smart devices, business transactions, videos, industrial equipment, and social media. This results in massive amounts of data.
Many small business enterprises have already realized the value of big data in fields such as tracking their competitors and customers and helping to choose the businesses they partner with. There are, however, many other benefits. Below we list a few of them.
Reducing costs. Big data can give a small business the information it needs in order to cut costs without sacrificing customer service or efficiency. A study of big data could, for example, show that buying gift wrapping at checkout counters does not interest most customers. This service can then safely be scrapped, which will cut operational costs.
Boosting sales and revenue. Big data enables small firms to gain valuable insights into the shopping preferences and beliefs of their cleintele. With this data, they can better understand what exactly these customers want and give it to them. This should boost both sales and revenue.
Enhancing pricing decisions. With big data tools, small businesses can better assess their finances and analyze competitor pricing to determine the best prices for their own products so they can remain both profitable and competitive.
Getting a competitive advantage. By giving insights into local buying behaviour, big data tools remove the guesswork for small business owners who want to better compete in their local market. Once a small firm better understands how local customers think and know what they like and dislike, it can gain a competitive advantage by adding the always appreciated ‘personal touch’.
Increasing decision-making efficiency. Social media sites such as Twitter, Facebook, LinkedIn, and Instagram have joined forces to create both the need for and the process of what has become known as ‘social media mining’.
This term refers to collecting and studying data about social media users to learn more about their buying behavior, reactions to promotions, interests, and more. All of these can help a small business to develop more efficient marketing strategies and decisions.
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