Making Sense of Too Much Information
Most companies have done a great job of collecting every tiny bit of data on customer transactions, interactions, opinions, etc. The trick now is to transform that wealth of knowledge into actionable information.
A recent study by UC Berkeley reports that since 1999 there has been a 30 percent increase in the amount of data in the world. "The world's total production of information amounts to about 250 megabytes for each man, woman, and child on earth," Peter Lyman and Hal Varian, senior researchers at Berkeley, write in their report. "It is clear that we are all drowning in a sea of information. The challenge is to learn to swim in that sea, rather than drown in it. Better understanding and better tools are desperately needed if we are to take full advantage of the ever increasing supply of information."
The report posits that in total between one and two exabytes (an exabyte is one billion gigabytes) of information are produced per year. An exabyte is so large that all printed documents made in one year comprise about .03 percent of the total amount of data produced, the report says.
"We do a great job of collecting things, but a poor job of actually using them," says Erin Kinikin, vice president and research leader at Giga/Forrester Research. "The driver for analytics is business insight--we're not making more analytic widgets because the information is available, we're making analytics because it's required by the business. If 'if we build it they will come' didn't work with two terabytes of data, there's no reason to expect it to work with three terabytes."
So, what can companies do to swim instead of sink in the face of so much data? Mark Schwartz, managing consultant with Accelerated Consulting Group, agrees with Kinikin that now more than ever, companies need business intelligence tools.
Analytics tools are needed not just because of the amount of data, but because businesses are not using the data correctly, Kinikin says. "Thirty percent more data just means a bigger data basement of underutilized information," she says.
Schwartz says that one strategy is to add analytics tools that allow users to look at large amounts of transactional data in an aggregate form and see only the exceptions. "For example, when sales rise or drop unexpectedly, you can analyze the key data and then take action," Schwartz says. "The tools allow you to drop down in detail from the trend to the individual customer records, and manage the exact causes for changes in business."
Putting analytics tools in the hands of marketers is a growing trend that helps organizations increase their use of such strategies as segmentation and predictive modeling.
Another trend is to pull "disparate types of data together to provide that coveted 360-degree view of the customer," says Colin Shearer, vice president of customer analytics at SPSS.
Nelle Schantz agrees. To create effective intelligence organizations should analyze data across all touch points, according to Schantz, global strategist and program director for CRM solutions at SAS Institute. Schantz says the results will provide knowledge about customer value, cross-sell and upsell opportunities, and retention potential.
This information can often translate into ROI for firms' CRM initiatives, putting data to truly good use.
4 Reasons for Wasted Data
Why are so few companies taking advantage of customer knowledge? According to Eric Lesser, an associate partner of IBM's Institute for Business Value, there are four main reasons:
1. A lack of time, attention, or training needed to collect and use available knowledge.
2. No time or resources allocated to analyze data collected.
3. Knowledge transfer is limited by lack of trust, internal politics, etc.
4. Leaders are weakly committed.