“Introducing new technology alone is never enough. The big spurts in productivity come when new technology is combined with new ways of doing business.”
—Thomas Friedman, The World Is Flat
For those of us old enough to remember when computers first started to enter the business marketplace, the underlying assumption of the business community was that computers would become a competitive advantage. They would increase individual productivity and data processing, and the company would become faster and more agile than its competitors. The assumption was that with speed would come profit. There was a feeling of infinite possibility.
If you read much of the technology related advertising of the 1980s the marketing hype far outstripped most of the benefits delivered. It took years for software to catch up to the power of the hardware and deliver tangible benefits to companies. But after the internet grew and became wide spread, productivity gains accelerated. Email delivered messages instantly. Website visitors were able to vet a company and consider their products and services long before speaking to a sales representative. Eventually, customers were able to purchase products and services online without even talking to a sales person. It was not long until nearly every company adapted email and built a website.
The business community adopted information technology as a fundamental part of a business. IT became somewhat of a commodity. How many companies do you know today without email or without a website? Very few. There is little competitive advantage left because most every business is using the same tools.
Today, there is a seismic shift taking place in information technology that once again offers a competitive advantage for early adopters—data. Companies that are able to gather and process the best consumer data are able to improve their marketing by putting the right offers at the right time, in front of their perfect target market. They can also create custom products at a much faster rate than their competitors.
The difficulty most companies have is in developing an understanding of how to collect data and then create insights from it. Most small businesses market without any data at all and for those who invest and take the time to develop it, reap the benefits long term.
Target is infamous for their ability to collect data and profile potential customers to help craft marketing messages. In his 2012 article, How Companies Learn Your Secrets, Charles Duhigg relates how Target was able to use its data gathering and processing capabilities to determine a teenage girl was pregnant just by her behaviors—before even her father knew she was pregnant. They used motion sensors to follow her trail through the store and track the time she spent in each section looking at different items. From her behavior, Target’s data team determined she was more likely than not pregnant. They then linked the data they collected with her name and address at checkout and began sending her marketing material that would be of interest to an expectant mother.
Target’s data collection system and processing is out of reach for most businesses, but the kernel of the plan is there for every business—collect and process data and use it to craft timely messages for potential clients.
The first step in gathering useful data that can deliver insights is to understand what data to collect. For most companies the first step is to develop a demographic and psychographic profile of their target market. Who are their best customers as individuals? What traits and behaviors do they share? What are the leading indicators that they are ready to buy something in the marketplace?
After determining what data to collect, the next step is to determine how to collect the data. Large enterprises spend millions of dollars conducting focus groups and large-scale surveys to gather enough data to be statistically relevant. But their methodologies are out of reach of most companies. The easiest and most cost-efficient way for SMBs to gather data on potential customers is to track the behavior of their website visitors and present them with valuable offers in exchange for information. There are a number of tools available to help with the data collection process such as Google Analytics, Hotjar, Hubpsot, Alexa and many others. The challenge for companies is in selecting and testing the right set of tools for their data collection needs.
During every new technology revolution there are always late adopters who sit on the sidelines watching until they are forced to participate. They miss out on the early adopter advantage. During the early 1900s when the horse and buggy was being replaced by the “horseless carriage,” many naysayers thought it was a fad. They were unable to see the future until it was too late. Kodak missed the digital camera revolution even though they invented the digital camera.
Don’t miss out on the advantage of big data. Start your data collection plan now and let it guide your business forward to a place you never quite imagined. There is nothing to lose in trying, and everything to lose by procrastinating.