5 ways Big Data promotes business growth
In such a quickly evolving business world, data equalizes knowledge, opportunities and competitive advantage.
However, if we compare traditional data and Big data, it is indisputable that Big data offers much more hidden opportunities, complex insights, and solutions to key organizational issues. And this is the reason why the collection of such data has become a huge trend in recent years. According to IDC, “Revenues for Big Data and Business Analytics Solutions Forecast to Reach $260 Billion in 2022, Led by the Banking and Manufacturing Industries”.
Businesses generate tons of data on a daily (and even hourly) basis, but only the collection of those huge sets of information cannot give enough understanding or opportunity for growth and company development. Analyzing, interpreting, turning the existing data into actionable analytics and deriving insights, are the key activities, which give numerous benefits to the business entities. But what are those particular advantages? How exactly Big data promotes organizational growth in all kinds of industries: from manufacturing to retail?
Supports the optimization of operations
IoT devices make it easy to collect huge amounts of data, coming from interconnected devices, such as machines, assembly lines, mobile and tracking devices, sensors, cars, elevators, and others. Being able to extract meaningful, valuable and useful information about the efficiency of those devices, provides key opportunity to effectively optimize the working processes, enhance the level of both machine and employee productivity, and establish operational sustainability.
We can recognize that the business processes are successfully optimized if any positive and measurable results are evident. Some examples are:
- Increased number of sales or products manufactured
- Reduced monthly fixed and variable costs
- Slower asset depreciation
- Higher turnover rate
- Decreased time for conducting key tasks from start to finish
Moreover, making each work process simpler (with less unnecessary tasks involved) contributes indirectly to a rise in the level of employee satisfaction. And the level of employees happiness is proportional to their motivation to work: the higher the satisfaction, the higher the productivity.
An example of successfully optimized business operations is the case of the Empire State Building in New York. After interpreting its collected Big data sets, and applying smart, data-driven solutions, it achieved a 38% reduction in its energy consumption, without implementing any energy-saving devices. This, combined with overall variable cost reductions on a monthly basis, led to financial savings of about 4.5$ billion.
Improves CX and customer understanding
Without understanding the buying behavior of our customers, and without knowing their needs, desires, and motivations to buy our product or service, we are unable to properly “give solution to their problem”, neither to provide them with a satisfying CX. On the other hand, the various types of clients (depending on the stage in their buying journey) require a different approach:
- The potential (future) customers need to be effectively attracted to the particular product we sell, in order to convert them into paying clients;
- The clients which are buying our products for the first time need to be provided with proper attention and satisfying Point of Sale (POS) experience, in order to stimulate them to become loyal to our brand;
- Our loyal clients need high-quality aftercare customer service to offer them continuous satisfaction and to retain their allegiance.
All of this sounds very complex and confusing. Nonetheless, thanks to the collection, proper analysis, and interpretation of Big Data, managers, marketers and salespeople have the possibility to observe, evaluate and “study” the behavior of both their potential, actual and loyal customers. By identifying tendencies, patterns, and motives behind the actions, responses, and reactions of the clients, businesses gain valuable information about how to improve their customer approach and enhance the CX quality.
This way they ensure increased conversion rates, a higher percentage of happy, returning and loyal users, and opportunity for word of mouth marketing.
One relevant example of cost savings, motivated by customer retention is the case of Netflix. It uses Big data to analyze its users' searches, rating, rewatched programs, preferred genres and others. This way Netflix “listens and understands” the needs of its users and continuously provides them with customized recommendations. Due to the proper customer approach, in 2016 the company generated 1$ billion from customer retention. We can only imagine what the number of those “savings” is in 2019 when Netflix's customer base has grown steadily.
Boosts product improvement
Apart from establishing high-quality CX and customer understanding, we should provide a high-quality product, with differentiating features to fulfill the needs and meet the quality criteria of the buyers. The reason for this is the fact that the product itself is just as important (if not more important) as appropriately interacting with the different customer segments.
If we offer a moderate-quality product, which has no distinctive features, and does not fulfill the needs of our clients on 100%, they will most probably switch to another company, which better suits their needs, and never return. And the other way around: if we offer a differentiated, competitive and high-quality product, our customer base will grow together with our profits.
Big Data allows us to derive useful insights about how we can improve the products or services that we sell so that they fully comply with the needs and desires of the buyers. The analysis of such big datasets is a key asset for R&D and product improvement. Adding innovative features, improving component functionality, changing the design, packaging or label, and removing or adding a component, are just a few examples of data-driven changes that can be made.
Facilitates planning and decision-making
As Big Data gives a detailed overview over the full set of day-to-day activities within a company, the management is given the opportunity to monitor and evaluate the effectiveness of those business operations: from supplying raw materials to after-care customer services.
As a result, Big Data enables the organizations to acquire more accurate SWOT (Strengths, Weaknesses, Opportunities, and Threats) and risk analysis results, as well as more efficient goals, priority setting, and planning processes. Management is able to quickly identify patterns, tendencies, and deviations in the work of the different departments and apply smart, data-based solutions in any of the determined areas, which need improvement.
In addition, entities benefit from well-informed, data-driven and customized decision-making process, instead of building their judgment on assumptions, past experience, and social trends. What is more, having access to such huge amounts of data motivates the generation of new business ideas, which contribute to a stronger competitive advantage.
Stimulates income growth
It is proven that optimized operations, increased customer understanding, improved CX, upgraded products and well-justified, data-driven decisions lead to profit growth. 73% of the businesses that have implemented Big Data analytics are seeing significant ROI, in the range of 1:10 to 1:100, if applied correctly. In other words, for 1$ spent, businesses gain from 10 to 100$ as revenue.
Together with the lower costs, the organizations have the opportunity to increase their net income tremendously.
Taking into account all the aspects mentioned above, we can conclude that Big Data enables the steady growth and development of the business entities. However, keep in mind that those datasets are not a magic wand that will transform your business instantly: time, analytics, planning, goal-setting, and KPI expertise is needed to efficiently take advantage of the appeared opportunities.