Forget big data, small data is where the action is

• Contextualisation and personalisation only come from small data
• The IoT can help you understand customers better, increase margins

 
BIG data is the big buzzword of the times, with companies and governments alike pouring enormous resources into it. Businesses have been told that to understand how their customers actually feel about their companies and products, they need to get on the big data bandwagon.
 
But that’s only one part of the equation, argues one industry executive: Big data merely gives direction and correlation but not necessarily the right customer insights, according to S. Pranatharthi Haran, SAP Hybris head of business for South-East Asia.
 
“The problem is that correlation does not equal causation – you don’t know why something happens, and that’s a critical piece,” he says, speaking to Digital News Asia (DNA) in Singapore recently.
 
Hybris is German software giant SAP SE’s multichannel e-commerce and product content management software subsidiary.
 
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It’s kind of like missing the forest for the trees, with big data giving you the big picture, but customers actually increasingly making decisions in the ‘micro-moment,’ according to an Accenture study.
 
Responding to these micro-moments – essentially about instant gratification whenever a decision is made – is the challenge companies will face, according to Pranatharthi.
 
“They [companies] can spend a lot of time looking at data and correlation, and guessing what the causes might be,” he says.
 
“But by the time you come up with a solution, people will have moved on – unless you react and contextualise your response, it’s going to be hard to capture the customer,” he adds.
 
While having the big picture from big data is important, getting a customer snapshot from the small data is just as important in responding to customer needs … and this small data can be hiding within ‘dark data’ as well – operational data that companies rarely use.
 
All this makes up for “a wealth of data” that organisations can harness, Pranatharthi argues.
 
Understanding big data can help you with a strategy to promote your products or services, “but contextually personalising responses from small data can actually capture someone at that point of time,” he says.
 
Big and small, extrinsic and intrinsic
 

 
Essentially, big data and small data can correlate to extrinsic and intrinsic behaviour. Over the last 10 years, companies have become good at collecting and looking at extrinsic data, according to Pranatharthi (pic above).
 
“Extrinsic behaviour is something that you can do today, from logins and tracking clicks to feedback forms,” he says.
 
Companies are missing out on intrinsic data and behaviour however, he argues.
 
This is when a consumer goes to a website and hovers over a particular product link, but doesn’t click on it or add that product to his or her shopping cart. The transaction is never completed, and therefore no data is collected.
 
But the intrinsic behaviour of a customer is what drives immediate ROI (return on investment), according to Pranatharthi. And this behaviour is changing, driven by a few factors.
 
The first is smartphones. “The power of smartphones in peoples’ hands is an important differentiator in these times,” he says.
 
The second is the younger generation which has a completely different approach to buying. “They really don’t care about walking into a retail store before they buy, they are perfectly happy to buy stuff on their phones,” he says.
 
“That’s the big difference – the 16- to 30-year-olds will buy anything online,” he adds.
 
Then there is competition – it’s so easy and much cheaper to set up an online store that there are just too many choices out there, which have led to many comparison sites. People tend to compare online prices more.
 
“No-one buys a product without checking reviews or checking in with their social networks,” says Pranatharthi.
 
The people part of the IoT
 

 
One way of getting this intrinsic data would be to harness Internet of Things (IoT) technology. It is no longer an esoteric technology, but few are using it for commerce. It’s a big missing piece, according to Pranatharthi.
 
A grocery store could use it to upsell, for example. “You are trying to buy wine at a grocery store, and you see there are 20 different types,” he says.
 
“If the retailer has an app, you can go to the wine shelf and read the QR code with the app which can give more details on each wine.
 
“It doesn’t stop there – the app then says this wine goes well with curry, for example, and can offer a sample menu whose ingredients the store can also offer at a discount,” he adds.
 
The IoT opportunity can not only allow companies to understand their customers better, it can increase their margins, he suggests.
 
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