Big Data is all that, except when it isn’t




I’ve got a problem with Big Data. It’s not that I don’t believe that insights gathered from a variety of data points can put retailers in a better position to serve me, their customer. It’s just that while retailers may be saying they are doing a better job of using my personal data to reward me for past behavior and to anticipate my future needs, it’s not so clear to me. I certainly have not seen enough to make me want to share more information that I currently am.
So, what’s wrong with Big Data? Here are two quick takes.
1. Insufficient data: Retailers are making recommendations and presenting offers based on an incomplete set of data. Using my REDcard data, for example, may give Target information to tailor offers that I would find a value. But what about those products I purchase from other retailers instead of buying at Target or on target.com? What about purchases I make at Target for which I pay cash or use another card? The chain doesn’t know what it doesn’t know, and fact-based decision-making only goes as far as the facts will take you. In most cases, it only takes you part way.
2. Analytical inertia: Many retailers simply aren’t using data to move the needle. While IT pros often talk about the advancements they’ve made in analytics, a precious few businesses are actually using the insights gained in strategically significant ways, from what I’ve observed. I’ve heard from some that this is a management and cultural issue. The data says do A, but the CEO says B is the answer. Others have told me that chains simply do not have the capacity (human and/or technological) to properly analyze the data captured. This has been an issue since the creation of the UPC code. Wouldn’t you have thought we’d be further along by now?
I don’t know if retail can close the gaps I’ve identified as well as others I’ve missed. Maybe some have figured it out already. Perhaps others are close. It could be that Big Data provides some good answers, just not all of them. Without the hype that has been attached to Big Data since the beginning, that may be good enough. Maybe it will have to be.
What is your take on the advancements (or not) retailers are making in the use of data capture and analysis? Is it all leading to significantly improved customer experiences down the road, or something less?
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23 Comments on "Big Data is all that, except when it isn’t"
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Many retailers are making huge advancements by leveraging Big Data with the right tools and user interfaces that help decision-makers. Big Data must be coupled with the right decision-making tools — sometimes that might mean a simple-to-use front-end or user interface or an API into the retailer’s forecasting toolset or apps.
Big Data needs integration into the decision process. I am familiar with one major apparel retailer that focused their Big Data efforts just on inventory performance — real-time. They had a user interface for the merchants that let them see where the demand was and where the inventory was. This help them re-balance the next replenishment efforts and assured that items most in demand would be in stock.
Simple? Not across multiple countries and thousands of stores in real-time.
Big Data becomes big knowledge with the right platforms and tools.
The problem with Big Data is that people try to analyze it just as they did with “small data”. You can’t. It is too big. It has to be used very differently. You can’t look at the numbers uniquely. There are too many. One must find a different way to analyze the data. It has be done graphically.
There is a great book that uses Big Data graphically, The Human Face of Big Data. Also, there is a group in Sweden that is spectacular with its graphic interpretations of Big Data, http://www.gapminder.org. Try it out. It is so much fun to use.
Big Data is not going to tell big retail how to specifically sell to John Smith. Big Data is going to tell big retail where the business is and where it is going. Then the retailer has to make decisions.
It is not so much about Big Data as it is figuring out the right data. Have you read Malcolm Gladwell’s Blink? A great read about applying knowledge and wisdom to data. Then culling it down to the right data to support your actions.
But that’s just my 2 cents.
They merely need better collection, mining and utilization of highly personal Big Data? Oh please. This is the shiny object excuse too many companies now use to explain their own time-tested retail failures: not supplying adequate or respectful customer service, not having shelves/warehouses adequately stocked and having slow or aggravating checkout procedures.
To George’s first point, some retailers are grabbing some great insights via partnerships with other merchants of all types to share data via common loyalty platforms and other vehicles. Further, there are now more capabilities available to leverage online chatter in new, innovative ways that helps fill the gaps in knowledge of a particular retailer. Putting all of these channels together develops a much more complete picture of the shopper.
Point #2 is all about data being the new “oil,” however it is only as good as your tools are to derive actionable insights from the data. E.g., a barrel of crude oil is not very useful to run a car, unless you have the tools to refine it. The software in the marketplace today, along with the still critical human interaction element can grab those usable insights to make decisions based less upon anecdotal knowledge and more on science. That is the key.
It’s not the data. It’s the interpreters, and managers who don’t manage it on a granular basis. Big data is nothing. Teasing one-to-one insights out of it is everything.
I know of may retailers using so-called Big Data to improve store clustering, customer segmentation, assortments, allocation, promo/price optimization, etc. Where things get tricky is applying it down to the individual customer level, and although great strides have been made, it’s still immature.
I often get targeted for things I’ve purchased as one-off gifts, or items I’ve already purchased. The data set for an individual interacting at a specific retailer is actually quite small and therefore it difficult to derive meaningful intent.
We can already collect lots of general social data, so now we need to add purchase and behavior data from across all retailers. Then we’ll have enough data to form an accurate picture of individual customers. Maybe the next generation of payment solutions will help.
The issue from my point of view is how do you act on the data? Knowing and being able to respond is two different things. A lot of emphasis is made on getting insight from Big Data, but the ability to execute and deliver value to customer and retailer is still missing for the most part. To approach Big Data, the question should be “what is the problem I am trying to solve” and see if the data can guide actions, and then measure the results/accuracy. I see sometimes Big Data is “Let’s see what the data tells us and then we figure out what to do with it” which is the wrong approach.
Hmmm quick quiz. If you could choose only one of:
a) A quant and a seriously awesome collection of all kinds of great data (in all sizes and shapes)
or:
b) A great buyer who understands the customer, fashion trends, and how to build a great collection for sale.
Which one would you put your money behind?
The great ship Panacea sailed some time ago. The correct answer IMHO is c) a well informed buyer… data and context.
Happy Friday.
Big data is like the Goldilocks story: you don’t want too much or too little, but just the right amount. Once you have that right amount it’s a matter of using the right tools and devoting the right team to analyze it properly. Next, a retailer needs to have a flexible enough strategy to implement the takeaways they gained.
I think that the potential of big data is vast, but it’s about finding the Golidlock zone for each individual retailer.
Currently retailers are doing their best to make the most out of big data, but there’s only so much they know about their customers. As they gather more and figure out how to analyze it more effectively, I see big data having a huge impact on improving the retail experience for shoppers and retailers.
Big Data spots trends. It doesn’t create a personalized experience. Something I refer to as “little data” or “micro data” drills down to the individual customer. That is where a customized experience—in your store and in your marketing—begins.
The advancement—and opportunity for advancement—retailers are making by leveraging “big data” will prove to be some of the greatest benefits to consumers, since the ability to purchase goods/services from a connected device. There are few other plays in retail (at the moment), which lead to such massively beneficial impacts as collecting and leveraging “big data.”
This is evidenced and there is a very little debate, that “big data” is a macro driver of change to the consumers’ benefit in many industries already (transportation, healthcare, telecom, etc.).
Retail will absolutely rise to the opportunity to realize the benefits of “big data” for consumers, if for no other reason than because it is so commonplace (and beneficial) in nearly every other transaction in their lives that they’ll demand it.