In the quest to better understand their customers, companies are latching onto the idea of “big data” as a revolutionary tool with the potential to reshape their understanding of the market. In the past decade, the rapid proliferation of technology has exponentially increased the amount of searchable data that consumers generate. In fact, experts estimate that people generated more data in the year 2012 than in all of human history through 2010. This vast storehouse of digital data is a new frontier that marketers, manufacturers, and retailers hope to use in understanding their customers better than ever before.
“Big data” emerged as one of the most prominent themes at IIR’s 13th Annual Shopper Insights in Action conference held in Chicago on July 16-17, 2013. At this event, speakers explored ways to create a deeper, richer understanding of how consumers act, think, and shop. On one hand, speakers touted the opportunities afforded by “big data” and new paradigm required to fully leverage this tool. At the same time, some presenters avoided the “big data” concept entirely. These speakers instead emphasized time-tested practices of successful businesses including company values, corporate culture, and word-of-mouth advertising. In a world where “big data” offers seemingly limitless potential for market insights, companies must ensure that they are balancing a data-driven approach with a firm commitment to the more intangible elements of success.
Tapping the Potential of “Big Data”
Andreas Weigend, director of the Social Data Lab at Stanford University, opened the conference with a unique insight: “big data” was destroying traditional analytic concepts like market segmentation. Today, he argued, companies like Google, Facebook, and Amazon do not need to use customer segmentation as they have detailed information on each and every individual on their network. Using tools like implicit data (clicks), explicit data (user profiles or product reviews) and a user’s “social graph” (networks, friends and connections), these online giants understand their consumers to a degree that would have been unimaginable only a few years ago. This “social data” – which Weigend called “the new oil” – represents a tremendous new frontier for companies looking to better understand their customers.
Many other speakers explored the new frontiers of “big data.” Companies like Placed and Locately explained how they collect GPS location data from consumer smartphones, ushering in a new era of precise location analytics. At the same time, manufacturers like Red Bull and Whirlpool showcased their efforts to dissect the in-store shopping experience in order to maximise sales. Nearly every variable, from aisle length and location to lighting and special displays, are currently under the microscope in order to increase a retailer’s efficiency. Across the board, it was clear that the ever-growing digital presence of consumers is reshaping how companies market their products.
Don’t Forget the Values
Against this backdrop of hype surrounding “big data,” some speakers chose instead to extol more traditional methods of success in marketing. Jonah Berger, marketing professor at The University of Pennsylvania, made a strong case for advertising via word-of-mouth. Berger explained how a person’s trust in his/her friends leads word-of-mouth advertising between peers to be ten times more effective than traditional advertisements – which consumers regularly distrust. Even more interesting, 93% of word-of-mouth communication remains offline, even in our hyper-connected online world. For this reason, companies should focus on ensuring that their brands are the subject of discussion by fostering a “social currency” and “public image,” finding their “inner remarkability,” and telling a compelling story.
A few retailers also presented case studies supporting the idea that intangible elements of a business can be foundational to its success. Jenn Lim explained how the success of internet retailer Zappos.com is built upon the happiness of its employees and its customers. Zappos employees are treated with respect and are trained to build a “personal emotional connection” with customers. This commitment manifests itself in cases like a single 10.5-hour phone call with one customer, and has resulted in strong and growing sales. The same is true for Doug Rauch, former president of speciality supermarket chain Trader Joe’s. Using the provocative phrase “culture eats strategy for lunch,” Rauch explained how the foundation of Trader Joe’s success has been built on its unique story, narrative, and culture. These intangible elements cannot be copied by competitors and go beyond a simple slogan or marketing gimmick. Like Zappos, Trader Joe’s has also created a culture of trust among its employees that allow them to innovate and take new risks. Rauch argued that this unique sense of culture permeates throughout Trader Joe’s stores, creating a loyal base of shoppers and allowing it to thrive in the highly competitive grocery retail market.
The Future of “Big Data”
It is clear that “big data” will become an integral part of consumer research for companies in the future. The vast storehouse of data that is being produced every day from people shopping online, interacting with friends on social networks, using their smartphones for GPS location, and downloading digital content offers a new frontier for market research and analysis. The way that people live and interact is drastically changing, and companies must follow suit in trying to understand their customers.
This revolution in market insights, however, does not negate many of the intangible elements of successful businesses that remain as true today as ever before. Word-of-mouth advertising, company culture, and values can still help drive a business to success. Moving forward, companies must find ways to cut through “big data” in order to provide and create meaningful value for their customers.