What is Big Data and how do we benefit from it?
There is a technology trend that no retailer can avoid: Big Data. Data analysis can help companies create better offerings for customers and increase sales. In the second part of our series "Looking outside the box", we focus on what Big Data is all about and what its potential is.
Big Data is the basis of AI applications like our robots Paul and Pepper.
The term "Big Data" first describes an enormous volume of data, both structured and unstructured, which, thanks to computer technology, is simply available for the time being. However, simply owning data is no use to anyone if you don't know what you can do with it. Therefore, the definition usually goes one step further.
Big Data is all about analysing and evaluating this data, which can then be used for strategic business decisions. That's why it's not so much the amount of data that counts, but what companies do with it. For retailers, this means that if used correctly, companies and customers can benefit from Big Data.
Improve customers' shopping experience
What does the customer want and how can he best fulfil his wishes? Exactly this question has always been the focus of a successful company. Big Data can help retailers get to know their customers better and find more accurate answers to these questions - for each individual customer.
Fashion retailers, for example, are already using Big Data to create personalized newsletters, purchase recommendations or styling tips. The evaluation of a wide variety of data records such as age and gender, purchasing history and frequency, season, current trends, online and offline purchasing behavior, place of residence and much more flow into individualized customer communication. Even today, customers benefit from outfits that were individually recommended to them on the basis of Big Data and that fit them perfectly.
Big Data analyses are also used for recommendations within the MediaMarkt Club or the Saturn Card to determine which products a customer finds exciting or less exciting. The following graphic shows how this could look like.
Studies show that companies that really know and understand their customers can both have happier customers and increase their profits by up to 25 percent. The connection is quickly explained: A personalized service leads to satisfied customers, thus to higher sales and finally to returning customers.
Big Data improves customer service
But Big Data can do more than just create personalized shopping experiences. The technology is also a real miracle weapon in customer service. No matter how carefully retailers pay attention to the quality of their products, problems can always arise. The decisive factor here is how quickly and efficiently you help your customers. This is exactly where Big Data can provide strong support to companies. Help can thus be provided much faster and more efficiently - and that is what the customer ultimately remembers more than his original problem. However, the positive effect for the company does not end with the satisfied customer. A study by the consulting agency McKinsey shows that good data-based customer service ensures that customers can recommend the company to others and even increase sales by up to 15 percent.
Improve internal business processes
However, retailers can benefit from Big Data not only in their exchange with customers, but also internally, within their own company. Data analysis can also be used to better understand and optimize internal processes. This ranges from the finance department to the human resources department to marketing. Big Data can uncover redundant processes and thus relieve employees or reveal hidden employee potential through data-oriented evaluation systems. After all, Big Data can also significantly improve marketing campaigns if you know through data analysis which target group wants to be addressed via which channel and how.
The great potential of Big Data
So it's not for nothing that Big Data is a big trend in retail. When used correctly, it has many advantages for retailers. This enables companies to personalise their customers' purchasing experience, improve customer service and optimise internal processes. This gives Big Data the potential to reduce costs, increase profits and improve customer satisfaction all at the same time - and this is what retail is all about.
Here you can see part 1 of our series "Looking outside the box": How successful are intelligent language assistants?