CUSTOMER SERVICE

4 Reasons Why Big Brother Is Your Friend

With Mr. Big Data watching your every move, it will be increasingly more important for small businesses to manage their own customer information.
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True story.

The other night, I received curious e-mail solicitation that managed to make it past the spam filter. It was an advertisement for a Caribbean cruise, the first I had ever received. I found it curious, since I had never been on a cruise or even contemplated it. I deleted the advert, finished reading e-mail, and casually strolled to the kitchen for cup of tea.

There, I found my wife researching Disney cruises for the kids.

Knowing this woman was married to me, was Big Brother (or Big Data, as he is known in some circles) responsible for the cruise advertisement I received? Did he push it through my spam filter?

I am inclined to believe this was not a coincidence.

If you have not realized it by now, your every move online (and seeming offline at times) is being tracked, monitored, analyzed, and disseminated by anybody and everybody that can get a hold of your data. It happens in a number of different ways.

First, there is the obvious exchange of information, such as your updates on Facebook, check-ins on Foursquare, or topics that you happen to be searching in Google. This information is pretty clean cut, and unless you are encrypting your status updates, you are putting information about you right out into the Internet ether.

I know what you are thinking, but emoticons are not considered encryption.

The other exchanges of information are less obvious. Pictures, for instance, are encrypted with a great deal of data, such as the type of camera or editing application used, the photo settings, and even GPS encrypted location services. Often, you can encrypt data into a photo without even knowing it. Every time you post a picture, you are loading cyberspace with mountains of information about yourself.

Aside from target advertising (which doesn't always work), why should entrepreneurs care?

Netflix provides a great example of how this data can be utilized to improve a business. The company scoured the data generated by its 33 million subscribers, which not only included preferences, ratings, and films viewed, but also how people interacted (repeat watchers, pausing, or rewinding shows, etc.) What Netflix found was that their subscribers really enjoyed political dramas. They also knew that movies starring Kevin Spacey (big fan) or directed by David Fincher (Fight Club) seemed to be very popular and highly rated. Using this data intelligence, the company that was in the movie delivery business launched into the movie making business and developed its first exclusive show, a political drama called House of Cards. After it launched in February, it became the most streamed piece of content on Netflix.

The company is doing the same thing with their first animated kids service, Turbo: F.A.S.T, which will be produced in partnership with Dreamworks Animation. Again, knowing the viewing habits and behavior of its subscribers, the show has a massive head start over other animated series.

It almost seems unfair.

Now, Netflix is a huge organization with vast resources. Most small businesses don't have these resources. I understand. Regardless, collecting and managing customer data must be in the long term strategy for entrepreneurs, especially if they anticipate growing and competing.

Here are four reasons even small businesses need to manage their own data:

1. Other people's data is expensive and unreliable.

Anyone who has ever looked at buying customer lists in order to promote their business knows it is expensive and, often, the lists are unreliable. Services that offer to promote your business through their customer lists are also costly, and in the end, you are left with only a miserable ROI.

2. Customer relationships are a priority.

Managing your relationships with your customers is easier with data. Using CRM software and services are one way, although you must respect privacy and op-outs.  At Wild Creations, we've found that providing our customers with great content with promotions seems to keep them coming back for more.

3. Tools will become ubiquitous and affordable.

Right now, there are numerous software companies entering the space of data management. The largest players, such as SalesForce, Infusionsoft (whom we utilize at Wild Creations), and Meltwater Press are great, but they can be cost prohibitive for small companies. As well, new players continue to enter the market with more services that better meet the needs of small businesses. Eventually, the dust will settle and we will see the best services rising to the top. Regardless of who you go with, be certain that your agreement states that YOU own the data.

4. Data will soon become an asset.

The more (good and valid) customer information you have, the more valuable this asset will become. At Wild Creations, we pride ourselves on organically growing our loyal customer base and keeping them happy with a steady stream of useful content. When we talk to inventors with new products, we use this as a selling point and negotiation tool. All businesses will someday leverage this valuable asset.

With the mountains of data being generated and available, it can be intimidating to try to tackle it yourself. Agencies will argue that you will lose focus on your core business by trying to manage your own data, and you should leave it up to the experts. Personally, I think companies MUST manage their own data, and even if it is a long term outlook, the best time to start is now. One need look no further than Sears' data systems service called Metascale as an example of a company seeing the light.

In the end, as long as you are being watched by Big Brother, you might as well control the information he sees.

Uh, I mean Big Data. Mr. Big Data that is.

What do you think about the growing use of data in business? Leave your comments below!

IMAGE: joeadonis/DeviantArt
Last updated: Apr 12, 2013

PETER GASCA | Columnist | Co-founder of WildCreations.com

Peter Gasca is the co-founder of Wild Creations, an Inc 5000 company that focuses on kid-related products and supports kid entrepreneurs. He is also a small-business consultant, youth entrepreneur mentor, and business adjunct lecturer.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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