Big data key for small business
Business owners who are not leveraging "big data" to deliver services to customers risk handing a massive advantage to their competitors, analytics experts say.
James Foster, product marketing manager for analytics software company SAS, said small-to-medium enterprise (SME) owners in New Zealand were still in a discovery phase when it came to big data, but were keen to understand how to best leverage information about their customers.
Big data refers to the vast amounts of customer information now available to businesses, gathered not only from social media, digital applications and other online use, but also more traditional sources such as transaction histories, customer feedback and surveys.
Foster said the challenge for SMEs was in understanding and resourcing the analysis of such large quantities of information.
"This information is not only valuable in understanding what people are saying about your business, they can also be used to see what people say about your competition," Foster said.
Effective analysis of the data lets business owners see patterns and trends, as well as what is being said and done in real time.
"We sometimes see organisations taking a 'build it and they will come' approach to big data," he said.
"That is trying to acquire and store as much information as possible, without understanding the benefits.
"Many organisations are also keen to rush to new and exciting external data sources, such as social media, without realising the great source of data they may already have but just don't use. This is especially true for unstructured or semi-structured data such as surveys, call-centre notes or customer feedback forms."
One of the reasons for limited Big Data uptake to date in New Zealand was the perception that "big" was an absolute definition - that New Zealand was not big enough to take advantage of all the possibilities big data could offer, Foster said.
"The reality is that all organisations, large or small, in all countries - New Zealand or Australia or the US - can benefit from big data and business analytics," he said.
Foster said there was also a lack of analytics skill in Australian and New Zealand SMEs to extract the best value from big data.
"Although larger organisations can often invest in dedicated analytics teams, or even data scientists, this presents a challenge for smaller organisations with limited staff budgets," he said.
Sulabh Sharma, managing director for app development company Sush Solutions said this lack of skill and uptake meant there would probably soon be a rush of start-ups keen to broker data for SMEs unable or unwilling to gather and analyse it for themselves.
However they received the data, the crucial thing for a business would be leveraging it, Sharma said. "We already encourage our customers to make the most of Google analytics," he said.
"And a lot of companies already sell their customer databases - but this is so much bigger than any of that.
"Used well, big data can help predict trends and help businesses become more efficient and productive.
"You can tailor your marketing directly to individual customers or groups of customers, instead of spending more and marketing more widely."
He did not anticipate consumers would have many privacy concerns around the use of the data.
"Those days are over," he said.
"People put all sorts of information on Facebook and other social media, they use GPS apps on their phones."
Foster also doesn't anticipate a privacy backlash from consumers, providing businesses were aware of regulatory requirements in this area, were open and transparent in their use of data, and were using it to improve products and services.
"Consumers get very weary of organisations that aren't aware of their previous history or loyalty with them, or blindly make offers or incentives that are not relevant," he said, adding the bigger risk for business was not using the information.
"If you aren't, your competitors will be," he said.
Privacy lawyer Renee Stiles from Russell McVeigh, who also addressed a recent Auckland conference on big data, said the two traps for SMEs were ensuring consumers had access to any data being kept about them if they wanted it, and keeping the data secure.
Business owners who contracted data collection and analysis to a third party would also know that organisation had the right to pass it on.
It was also important to remember that information gathered from social media, even though it was in the public domain, was still subject to the same privacy laws once it was held by a business, Stiles said.
Individual companies, such as a supermarket chain, using data to improve their services by target marketing specials or services, was fine, provded that use was disclosed to individuals, she said.
"But if they suddenly send me specials for a supermarket in a different city, that indicates they've had access to my flight information," Stiles said.
"That's a different thing."