How Small Companies Can Profit From Big Data

Posted by Joanna Conti on August 14, 2014 in Data Analytics

 

Despite all the hype that big data is getting recently, small or mid-sized companies tend to think that big data is a game they’re too small to play.  Nothing could be further from the truth.

The pay-off for small companies who use data analytics to improve their bottom line can be huge.  McKinsey estimates that a retailer embracing big data can potentially increase its operating margin by more than 60%! 

The first thing small businesses considering investing in data analytics need to figure out is where to start.  Rather than designing a complicated program to answer every possible question under the sun, small businesses should start by focusing on one or two areas where they’re most likely to get a big return on their investment.  For many industries, using data analytics to personalize product offerings or cut costs are good starting points.  Could your company benefit from duplicating one of these success stories?
 

Personalize Your Offerings

  • By integrating customer purchase histories with demographic information, even a small marketer or retail establishment can develop specific offers more likely to appeal to certain customers.  Williams-Sonoma, for example, has found that targeted emails obtain 10 to 18 times higher response rates than untargeted emails.
  • The Point Defiance Zoo & Aquarium increased online ticket sales by 771% over two years by offering time-limited deals in the late evening or early-morning hours when parents are typically online planning their family’s weekend.
  • As much as 30% of Amazon’s sales come from recommending other products a customer might want to purchase based upon analyzing purchase history, preference, and demographic information.
  • Karma Couture, an upscale resale boutique in Rhode Island, found that implementing a Swipely customer loyalty program allowed them to reward customers for bigger purchases and provided a wealth of information about the customers accounting for the majority of their profits.
     

Cut Costs

  • Twiddy & Company, a realty company on the Outer Banks, was able to increase rental bookings by adjusting weekly rental prices to reflect historical demand.  In addition, they were able to reduce maintenance costs by 15% by comparing charges for its 1,200 vendors.
  • By combining point-of-sale data, labor metrics and financial information in one application, The Spiller Group has been able to cut labor costs by 10% at their three Dallas restaurants.
  • Roofing contractors can now identify customers who might need a new roof and estimate roof replacement costs without leaving their office by analyzing aerial images and roofing measurements developed using Google Earth data.

A Bain & Co. study of over 400 large companies found that those with advanced analytics capabilities are outperforming competitors by wide margins.   The sooner your company joins the data revolution, the quicker you will be able to enjoy the benefits of increased sales and reduced costs. 

 

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