In the minds of many, big data is nothing more than a buzzword that gets thrown around in reference to the information businesses collect on customers and processes. However, there’s a lot more to it. When you actually break it down, it becomes apparent that big data is more than just a generalized term with a vague application.
When it comes to defining big data, most experts choose to break it down into simple categories known as the three V’s:
- Volume. Big data, as the names suggests, is all about collecting large data sets from multiple sources. The size of this volume increases accuracy and leads to better takeaways and insights.
- Velocity. Big data is collected, analyzed, and streamed in real time (or as close to real time as possible). This speed is what makes it so convenient.
- Variety. Big data comes from both structured and unstructured sources of data, which makes it highly reliable and easily applicable in a variety of settings.
"It would take a library of books to describe all the various methods that big data practitioners use to process the three Vs," data expert David Gewirtz admits. "For now, though, your big takeaway should be this: once you start talking about data in terms that go beyond basic buckets, once you start talking about epic quantities, insane flow, and wide assortment, you're talking about big data."
Currently, the biggest problem is that most businesses have no idea what to do with the data they’re collecting. They’ve been told over the years to collect, collect, collect — and rightly so — but data without application is useless.
If businesses want to experience growth in the near future, they’re going to need to figure out ways to leverage big data. Only then will their potential be realized.
Three Ways Businesses are Putting Big Data to Use
With the right data processing framework, it’s possible for businesses to get past this hump of inaction and actually organize data in a manner that’s accessible and applicable. Most small businesses have yet to figure out what this looks like, though some larger companies are setting good precedents. In fact, here are some specific ways they’re putting big data to use:
1. Targeting Customers
One of the more useful applications for big data is the ability to understand customers on an intimate level and then predict their habits and needs ahead of time. As a result, companies are able to better target customers and satisfy more of their pain points.
Most companies currently use some sort of customer targeting online — typically in the form of advertising placement and product suggestions — but there’s room for more application here. Specifically, it’ll be interesting to see how brick and mortar starts to implement customer targeting as part of the in-store shopping experience.
2. Predictive Maintenance
For businesses that rely heavily on industrial equipment or large pieces of technology, one of the more significant applications of big data is the ability to predict when maintenance or repairs are needed, so they can be performed ahead of schedule. This reduces downtime and lowers costs associated with maintenance.
For businesses that sell equipment, machinery, or even vehicles, predictive maintenance can also be used in customer-facing scenarios to help customers better care for their investments. This increases brand loyalty and drives repeat sales.
3. Resource Allocation
Regardless of the size of a company or the industry, businesses are always trying to be more efficient with their resources – and this includes time. Big data has the potential to greatly enhance resource allocation within individual organizations.
For example, American Express recently started using data collected on banking behavior to develop models that predict which customers will attrite to competitors and which will remain loyal. In their Australian market, they’re able to forcast 24 percent of accounts that will close within 120 days. This enables them to focus their time and energy on the right accounts.
Big Data Creates a Big Advantage, But Be Careful
As Facebook has learned recently, it’s important that you don’t sell out for your data. Even if you’re collecting it legally, you need to be smart.
"The truth is, despite all of these innovative uses of big data, there’s still a fine line to cross between convenience and creepiness," data expert Sherice Jacob writes. "Advertisers and brands are becoming smarter about what information they use, when they use it, and how. In the not so near future, the question might not be 'what do you know about me?' but rather 'How are you going to use what you know?'"
You need to use the data you’re collecting, but do it in intelligent ways that bolster your connection with customers, rather than compromise these relationships. In doing so, you’ll enjoy a significant return on investment.
Larry Alton is a professional blogger, writer, and researcher. A graduate of Iowa State University, he's now a full-time freelance writer and business consultant. Currently, Larry writes for Entrepreneur.com, Inc.com, and Forbes.com, among others. In addition to journalism, technical writing and in-depth research, he’s also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing. Follow him on Twitter (@LarryAlton3), at LinkedIn.com/in/larryalton, and on his website, LarryAlton.com. To read more of his reports — Click Here Now.
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