How to Leverage Big Data for More Targeted and Effective MarketingApril 19, 2012 By Eric Tobias
With research firm IDC estimating that data is more than doubling every two years, the use of “Big Data” for many data-conscious companies has become increasingly important, with some even declaring data a new class of economic asset, like currency or gold. However, while it’s fashionable to focus on data, one has to remember that what matters is what companies can do with the data they have.
Retailers are already collecting various data sets such as customer data, competitive data, social data, online behavioral data and offline data to tailor product selections, determine pricing and timing of price markdowns, and even provide online product recommendations. While this is a step in the right direction, retailers are still faced with numerous challenges when it comes to fully leveraging their data to make real-time decisions that can produce additional revenue and/or cost savings.
Current Big Data Challenges
Data challenges for companies dates back hundreds of years. In the early 1900s, Harry Burnett "H.B." Reese understood chocolate, but it wasn’t until his research showed that people were dipping it into peanut butter that he invented what we know today as Reese's Peanut Butter Cups. Fast-forward to today’s online world, where retailers face the same issue of connecting the dots between products and user experience. Using purchase data, iGoDigital helped a client discover that men who recently had children were buying more razors. The likely explanation: these men didn’t want their children exposed to rough skin.
On the surface, cross-selling diapers with razors doesn’t make merchandising sense, but with time and expert analysis, these data connections can be unearthed. Marketing feats like these are the promise of Big Data. While there's no shortage of data, difficulties in amassing, analyzing and using these large and disparate data sets keep many retailers from maximizing the asset.
With the massive piles of data retailers continue to collect, the challenge isn't to keep pace with consumers, but to catch up with them and take advantage of the opportunity Big Data represents. Inefficient data storage and nonintegrated systems for managing it are just a few of the challenges marketers contend with at a time when it's critical that customer data be timely, accessible and rich with demographic, behavioral and contact information. Although reports can be pulled using current methodologies, they can sometimes take weeks for an IT department to produce, leaving marketers unable to make real-time decisions that could positively affect sales.