If you’re a small business owner, the term “Big Data” can seem overwhelming. What exactly is Big Data, anyway? And how can a small business ever hope to use it? The answers to both questions are somewhat ambiguous, but they’re also important. Let’s take a look at what Big Data really means, and find out how small business can bring a big concept down to a manageable size.
What is Big Data?
The term Big Data was originally meant to refer to any data set that was too large for traditional data processing methods. These days, though, the term is more closely related to the actual practice of predictive analytics than it is to the size of a data set. Big Data is basically just the practice of making accurate and actionable predictions based off of data – and generally, that practice requires having big sets of data to analyze.
How to Collect Big Data
If you want to start making decisions based upon accurate and actionable predictions, then you’ll need to start collecting data. For small businesses, collecting Big Data might seem intimidating – but it’s actually very doable. Here are two ways to start.
- A Robust POS System
This is the main point of contact for small businesses when collecting Big Data. The best POS systems can track customer spend behavior on individual levels, help to manage operational activities like inventory and production, and more. Unfortunately, a surprising amount of small businesses are stuck in the past with antiquated systems that barely get the job done. Today, great POS choices abound. Make one, and start collecting valuable Big Data.
- A Loyalty Program
Another great way for small businesses to collect data is through loyalty programs. These can add supplemental data to the data collected through POS systems by providing a deep level of information on loyal customers. If you want the best Big Data from your program, you’ll need to go digital. Try using a small business loyalty app like LoyalTap. These days, mobile loyalty solutions are the best options for collecting data. If you’re still using paper punch cards, you’re missing out.
How to Use Big Data
So, once a small business has Big Data, what are a few ways that they can use it to their advantage? Well, it all depends on what problem is being solved. Here are few ideas to get you started.
- Make Promotions More Effective
As a small business, your marketing dollars are at a premium. You can’t just be throwing money around to generate awareness; you need to make sure that you’re getting the most ROI from your promotions.
Let’s assume you have access to basic sales ledger data. If you’ve been keeping track of your sales for a year or more, you can begin parsing the data to find out annual purchase trends. You probably intuitively know that certain seasons are slower, but try arranging the data by both gross spend and purchase frequency to see if the results confirm your hunches. Maybe certain seasons have normal purchase frequency, but less spend per purchase. That means that a seasonal promotion to encourage spend per purchase could be particularly effective, as opposed to a promotion that simply encourages people to come in. Try filtering by different variables to see the relationships that are represented in the data.
- Cut Operational Costs
Big Data can also be extremely helpful in analyzing operational activities to increase efficiency. Chances are, you have slow periods that you’ve been overstaffing for, resulting in lost profit. Big Data can help to predict when customers will actually come in, so that you can be prepared for when they do – and not waste time and money being prepared for when they don’t. You may also be able to use data to more effectively make product inventory decisions, or to trim your production costs. Again, the insights you can gain are really only limited by the data you have access to.
Big Data is a big concept, but hopefully these tips can get you started in using it to your advantage. Want to collect more data? A community loyalty app like LoyalTap is a great way to do just that. Get in touch with us to find out how LoyalTap can help small businesses do big things.