• Big Data: Business Edge Autumn 2016

Big Data: Business Edge Autumn 2016

14 April 2016

Hamish Mitchell, General Manager |

Buzzfeed. If you don’t know what it is, you’re probably over the age of forty and you almost certainly don’t have teenagers at home. 

It’s an online media company renowned for its viral, shareable content: Ten shocking facts about the Kardashians. Twenty two struggles only a cat owner will understand. Fifteen life changing desserts that are better than a boyfriend. 

You may not care to read any of this stuff. But you cannot ignore what Buzzfeed is doing to the media and publishing world. While most newsrooms are downsizing or even closing, the company is skyrocketing. With more than six billion views a month and an audience that includes half of all millennials, Buzzfeed is widely touted as the future of journalism.

What’s its secret then?

Buzzfeed charges customers nothing for its content, and hosts no banner ads on its website. Yet it’s one of the fastest growing media companies in the world with hundreds of millions in annual revenue. 
Buzzfeed has hundreds of journalists all around the world making content, but what it understands is that all that content is virtually worthless without data. When that content is guided by data analytics to audiences that want to consume it, content becomes the premium currency of the digital world. 

Buzzfeed is a content creation factory, but their competitive advantage doesn’t lie in their creative teams. It’s in their analytics. The capability to manage, optimize and coordinate that content according to the data they collect about their audiences which creates value and builds competitive advantage. 
There’s a lesson here for every business operating today. The value of your product or service will be increased incrementally by data about your customers that allows you to see patterns in their behaviour that predict their next purchase. 
Jonah Peretti, the Buzzfeed CEO, distills the entire operation down to three words: “data, learning, dollars.” Those words should be echoing through every New Zealand business person’s head. 

Just look around. 

  • The world’s largest accommodation provider, AirBnB, owns no properties.
  • The largest taxi company, Uber, has no cars.
  •  Alibaba owns no inventory.
  •  Netflix has no cinemas. 

Each one of these companies has displaced its competitors by using data to understand customers. And the list is getting longer every day. 

The rise of data-driven business is as inevitable as the shift from steam to electricity which began 100 years ago. Someone will eventually find a way to do what you’re already doing, but with data they will do it smarter and more profitably, and without having to invest so much in plant, inventory or other overheads. Instead they’ll use publicly available technology to gain a deep understanding of your customers and build a platform that connects with them, engages them and rewards them more meaningfully than previously possible.

So here’s our prediction. Every product you sell and every service you provide will soon be a commodity, unless data analytics is embedded into every aspect of your operation. Data will spell the difference between commodity and premium sales, customer losses and gains, business success and failure. 

This is not just a trend for the marketing department. The new buzzword running through every area of business today is “datafication” - banishing gut feel-decision making and basing decisions on the analysis of data that’s collected ubiquitously these days. We’ve seen it in the car industry - mechanics used to listen to your engine to understand a problem, now they plug it into a computer. We’re also starting to see it in HR, where the most switched on operators are basing HR decisions on dispassionate data analysis. 
But what about the vast majority of businesses in New Zealand who are run by five people or fewer? How can they take advantage of the data age when they barely have time to run their operations? Is big data only for big business? 
Not at all. The idea of ‘big data’ brings to mind images of vast server rooms chewing through gigabytes of data and spitting out volumes of reports that no one without a degree in statistics could understand. But in reality, it simply means we have more data than ever before to tap into.

 Another myth around big data that needs busting is cost. Most data isn’t expensive, in fact most doesn’t cost at all. It’s either available to you on the systems you use already or it’s available to you via the systems you already use to connect with your customers.  

Just think about the number of connected devices you have at home, or carry around with you every day. Think about how much data you’re using on your phone compared to several years ago. You are generating big data every day. It isn’t scary. It’s about opportunity. 
Another myth around big data that needs busting is cost. Most data isn’t expensive, in fact most doesn’t cost at all. It’s either available to you on the systems you use already or it’s available to you via the systems you already use to connect with your customers.  

The proliferation of cloud computing services means small businesses can easily rent capacity and pay only when they are processing their data. This means no more requirement to pay for hardware which reduces cost considerably. 
Moreover, small business has an advantage over big business when it comes to leveraging data. They are far more agile, making them better suited to act on data insights with speed and efficiency. 

There’s a proliferation of tools that smaller businesses can access to harness the power of data. 
If you’re recruiting, Weirdly.co.nz is Kiwi-made online tool that uses data to filter job applicants to those who might match the culture of your business best.   
When it comes to online time, cost and project management, there are many systems available too. WorkFlow Max is another New Zealand-developed system that can give you a data edge. It’s part of the Xero eco-system of cloud based business tools that share data with Xero’s online accounting software.

Among its many benefits are the integration of staff time recording, invoicing and job quoting. This allows users to create a more accurate pictures of how much products or services actually cost to deliver, which gives users the ability to cost future jobs with much greater precision.
And then there are the tools that you probably have access to already, but most people don’t use to their potential. Most businesses have a website as a major marketing channel. By using the free information available through Google Analytics, you’ll be able to understand how many people visit your website, which pages are most read, where your visitors come from, how long your visitors stay on your site and how they found you. Using this data you can refine your website experience and target online advertising on productive source sites to grow your audiences. Similarly, if you use Facebook to reach your customers, there are powerful tools that allow you to target prospective customers based on their demographics. 

Case study: IAG

At Loyalty, we take this data centric approach to every aspect of our work. Recently, we were briefed by IAG, one of New Zealand’s leading insurance providers, to help them acquire new customers without losing any of their existing ones. It was the perfect opportunity to demonstrate putting the data-learning-dollars approach into practice. 
Traditionally, a company like IAG would look to mass media to get its messages out. But considering they already had a strong market share, this would be too blunt a tool to achieve their desired outcome. So we started with data, and built a map of the entire country, plotting the location of all potential customers based on things like whether they owned a home, what their incomes were and other attributes. 
The data itself came from a variety of sources - census figures, mortgage lodgement and car ownership information, among others. Once we had these prospects in a database, we were able to target them with relevant messages. This strategy brought in big results: policy sales in the campaign period increased by 17% compared with the previous four months, resulting in an overall ROI of over 600% – an outstanding result in anyone’s books.