As someone who studies business success and failure patterns, I find that lessons from entrepreneurial success can apply to larger, more established companies. Additionally, I have a background in data analysis going back to my early career. So, when I read the June 2015 Marketing News article “Size Matters” by Molly Soat, I felt it made some very good points.
The article emphasizes the role of small data. It describes small data as customer specific information, either from purchase histories or from other trackable behaviors from sources such as tech devices.
In a way, reading Soat’s article brought back memories of a peer reviewed article titled “Database Marketing Research” that I wrote for Marketing Research Magazine’s fall of 1994 issue. Back then, we didn’t have mobile phones and today’s trackable tech devices. Yet, the concept of making greater use of sources like purchase data, as I advocated in my article, was valuable even back then.
Thus, I believe Soat’s article is so right in saying that companies should leverage the information they already have. I see that as one more way that companies can build on past foundations. And, as I’ve said many times in my writing that appears here on my website, building on past foundations is important for business success.
As Soat’s article points out, small businesses often have been doing this. The article says, “Small businesses have smaller customer bases, so they are more able to tap into their institutional knowledge of individual customer needs and preferences, even if they do so informally…All companies could benefit from such customer specific insights.”
That’s so true. But, as I see it, the key point is not just whether you look at individual customer specific information. The key point is that, with fewer customers, small businesses can find it easier to be much closer to those customers, and may be able to understand them better than a large company that tries to piece together knowledge entirely from data.
Of course, it’s not just small companies that can be close to their customers. Big company staff at the local level may have valuable knowledge of individual customers. In addition, big companies may have sophisticated capabilities to tap data as a resource, and knowledge gleaned from that data can yield valuable insights. All of this can help understand the customer. And, truly understanding the knowledge you have about your customers helps drive success.
That’s why it’s so crucial for companies that make use of data to understand what the data really means. Soat’s article quoted Gary Drenik, CEO of Prosper Technologies, saying, “What small data does is look at individuals to understand people better. The question marketers really want answered is not ‘What?’ but ‘Why?’…” As I see it, understanding why is ever so important today, since Big Data advocates have said that correlations in the data will reveal valuable knowledge so we don’t need to know about the why. Unlike what some Big Data advocates have said, understanding why can be valuable. In fact, understanding what the knowledge means is crucial, whether the knowledge comes from big data or small data, since even customer specific small data can be misunderstood.
So, as I see it, the most important take-away from Soat’s “Size Matters” article is not that small data yields better insights than Big Data. The most important take-away is that it’s crucial to understand what the information really means, regardless of whether it comes from Big Data or from customer specific small data. Understanding what it means can make a valuable contribution to business success.
