(Here’s how to use Big Data like the big boys)
If you own or manage a small business, you are David in this analogy. And as David, you are likely fighting at least one Goliath in your industry. In this day and age, with the internet shrinking the world and the purchasing sphere of each client, every small business competes with at least one big business – from Amazon for retail, to Legalzoom for attorneys, to Uber for transportation, etc.
We small businesses like to tout our close relationships with our clients as one of our main advantages. But the big boys certainly have advantages as well. One of these advantages that is ever increasing is the data gap, more specifically how big businesses utilize data more effectively than small businesses.
Bridging the Big Data Gap
Let’s look at a few of the advantages that big businesses have when it comes to Big Data and how you can bridge the data gap and fight the giants.
1. Big businesses have more data to collect.
THEIR ADVANTAGE: It only makes sense – they have more clients so they can collect more data on those clients. They also likely have a more diverse client base than you, which helps in better identifying trends and patterns.
YOUR ADVANTAGE: You can collect BETTER data than them because of the relationships you have with your clients. During your close customer interactions, make sure you find ways to encourage customers to share data, preferences, etc. When it comes to data, often quality trumps quantity.
2. Big businesses have better avenues for collecting data.
THEIR ADVANTAGE: Most of the Goliaths have a large internet presence which gives them the ability to collect a LOT of data in real-time from customers.
YOUR ADVANTAGE: While you will likely never have a web site like Amazon or LegalZoom, you can certainly establish an online presence. Even if you can’t afford a web site that can process payments and collect customer information, you can still use it to strengthen your strong customer relationships – using your online presence to maintain close communications, provide valuable information, and even collect data of your own (ask customers to take short surveys, collect data in exchange for a chance to win a monthly prize, etc.) And don’t forget social media – another great way to stay in touch and collect critical customer data.
3. Big businesses use their data more effectively for pricing.
THEIR ADVANTAGE: Many larger businesses utilize dynamic pricing models that adjust pricing based on who is purchasing something. (Think buying an airline ticket). And while many small businesses set their pricing to stay competitive with the big boys, they simply cannot offer the same flexible price advantages.
YOUR ADVANTAGE: While some of these strategies, like true dynamic pricing, aren’t practical for small businesses, you might be able to better segment your pricing structure to allow for people who are willing to pay more for a premium version, or pay less for a more basic version.
4. Big businesses use their data more effectively to understand their clients.
THEIR ADVANTAGE: A huge key to the success of many larger businesses is knowing as much as possible about their clients. The data they collect is a window into the lifestyles and purchasing decisions their customers make. This data is EXTREMELY valuable in pricing, products, services, locations, and many other things. I’ve seen more and more acquisitions happen simply so the purchasing company can secure the data assets of the other company.
YOUR ADVANTAGE: As a small business, the most important thing is to make sure that you are actually using the data you have to enhance your business and add value for your client. Every business collects data, no matter how small the business. The key is using the data you have – whether it’s seasonal data, pricing data, demographic data, survey data, or anything else – and converting it into actionable items that make you more valuable to your clients.
As you know, I’m a big proponent of Big Data. And while the big companies you compete against have a sizable advantage when it comes to data, don’t rule yourself out. So as you’re considering how to competes against big competitors, think about ways you can overcome the data gap. And if you want help strategizing, stop by my office and we can discuss how you collect and use your customer data.
With Big Data loaded in your slingshot, you can slay the giant.