3 Ways Data Can Improve ROI
y virtue of its name, the term big data implies vast, virtual storehouses of consumer information mined by tech-savvy mega-companies with budgets to match. Yet the same principles being used by Intel, Walgreens, Amazon, and Kroger (not to mention professional sports teams, top universities, and leading marketing firms) are just as relevant for small and mid-sized businesses.
In this post, we provide suggestions for how you can use your own data to optimize ROI. It doesn’t matter whether you are just getting started with data mining, or you’re ready to supercharge your efforts with predictive modeling, these examples will spark your creativity and inspire new growth:
1. Build Your Social Capital
Social media is a boon for businesses when it comes to building trust and spreading the word about products and promotions. But for as much time as companies spend monitoring, commenting, and creating content, many are still sitting atop untapped wells of profitable information.
“Data is collected from every action that’s performed on an Internet-connected network,” writes Megan Totka for SmallBizTrends. “Sending an email or tweet, posting to Facebook or a blog, commenting or rating, updating a profile, shopping online, using a cell phone or tablet, even swiping a credit card at a physical store… every action generates a digital footprint that’s stored somewhere in the ether”.
One of the reasons that social media data may go unparsed is because it resides within individual platforms, e.g. Facebook’s and Instagram’s Insights, or Twitter’s and LinkedIn’s Analytics. But getting to it is easy, and you shouldn’t pass up the chance to make good use of these free and personalized resources. All you really need to get started is your company’s key performance indicators (KPIs). With those in hand, you can quickly zero in on relevant data points within each set of social analytics.
KPIs vary from field to field, and even from business to business. For example, if your goal is to differentiate your company by providing unparalleled customer service, then your social KPIs might include response times and mentions. Or if creating brand awareness and buzz are your top objectives, you’ll want to focus instead on growing your follower base and stimulating shares.
Once you’ve determined your social KPIs, your next step could involve the use of monitoring tools to help you cast a wider net. “Tools like Social Mention, Twilert, or Kurrently enable you to set up alerts and notifications so that whenever a subject is mentioned online like what your business offers (keywords), [you’ll be notified]” says Totka. “Once you start tracking these mentions, you can tailor your responses and conversations, build buzz/generate interest, and improve customer satisfaction.”
If you’d like to learn more about how to mine your social media data for a better ROI, we recommend this user-friendly overview courtesy of Sprout Social.
2. Identify Relevant Trends
Even a business with just a few years of history can improve their bottom line with existing data. In a recent article about how small businesses are using big data, Inc Magazine wrote about family-owned Twiddy & Company, a real estate management firm in the Outer Banks of North Carolina.
Frustrated by the knowledge that they had years of operational data “trapped” within their company’s spreadsheets, marketing director Ross Twiddy enlisted the help of business analytic tools to extract and distill the company’s spreadsheets into a flexible layout that they could analyze and share. One of the first things he noticed was that property rentals consistently plummeted the week after the Fourth of July holiday. Equipped with this knowledge, the company suggested that homeowners fine-tune their prices for that week, which led to a 10 percent increase in inventory and more customer recommendations for them as property managers.
Twiddy also cut costs 15% by comparing maintenance charges, identifying and eliminating invoice processing errors, and automating service schedules. Those savings alone freed up $50,000 in the company's budget over the past two years.
"When we saw that happen for us, it was like tasting ice cream for the first time,” he tells Inc. “It's something you never forget."
Another of Inc’s examples involves a zoo’s attempts to save money by forecasting attendance.
Located in the fiercely changeable climate of the Pacific Northwest, Tacoma’s Port Defiance Zoo & Aquarium faces an onerous task in trying to predict turnout and in parallel, appropriate staffing.
"Zoos live and breathe through their attendance," reports Donna Powell, the zoo's business and administration service manager. "We needed to understand how that ebbs and flows, and when and why it shifts."
With the help of predictive modeling software and a business analytics firm, Point Defiance compared years of attendance records against local climate data amassed by the National Weather Service. This approach yielded insights that helped the zoo predict the number of patrons who would visit on a particular weekend—with astonishing precision. In turn, these data-driven extrapolations helped the zoo determine, down to the hour, how many employees should be staffing myriad locations throughout the park on peak days.
“The first time [we succeeded with it], some employees still thought it was a fluke”, says Powell. “But we've done it over and over again."
3. The Pay-Offs of Personalization
You may know Kroger as the largest grocer in the U.S., but did you also know that the Ohio-based company has become the nation’s 2nd largest retailer? According to Fortune Magazine, only Walmart is bigger.
The empire’s humble beginnings date to 1883, when founder Barney Kroger opened his first location in downtown Cincinnati. Over the years, Kroger grew exponentially due to strategies that included in-store innovation (the chain was the first to boast in-store bakeries) and shrewd acquisitions (recent purchases include regional chain Harris Teeter, vitamin e-tailer Vitacost.com, and digital coupon company You Technology)*.
These days, the food/gas/jewelry juggernaut has turned to predictive modeling for its next generation of growth. Sandy Skrovan of Grocery Dive reports that the company recently started leveraging customer data from their Plus Card loyalty program to deliver more than 6 million unique and customized offers to its Plus Card.
To do so, Kroger’s analytics team used past purchase history to build predictive models that accurately forecasted when and what items individual customers might want to buy. Using those results, the company then provided those same customers with personalized promotions. The strategy resulted in 30% growth in digital customers and a more than 30% increase of digital visits in just one fiscal quarter.
“Kroger’s focus on personalized pricing through e-coupons and mobile app offers helps keep it price-competitive against Walmart and a host of value retailers like dollar stores as well as Aldi and Lidl,” asserts Skrovan “The personalized deals also strongly resonate with shoppers and help the retailer not only retain its best shoppers, but keep them loyal and spending more in its stores”.
Whether you’re just starting out or competing with industry giants, the examples above show how smart leaders are using existing data to fuel innovation and profits. Start by reviewing your company’s unique goals and KPIs, then bring business analytics and predictive modeling into the mix to help pinpoint new opportunities and forecast gains. Before long, you’ll be sharing your success with the C-suite and happy shareholders.