Big Data: Small Business

An Article By: David Tan, Chief Technology Officer, CHIPS Technology Group

The internet was buzzing earlier this week in the wake of what was either a blundering mistake or a genius marketing ploy. Netflix “accidentally” released the third season of their hit program House of Cards 2 weeks before the February 27th official launch date, and if you were able to find out about it and get logged in during the 27 minute window, you got an early sneak peak at the latest exploits of Frank Underwood. Call me a cynic, but I find it hard to believe it was a mistake. On the other hand, House of Cards is a runaway smash hit so do they really need more buzz? I guess you can never really have too much buildup to a show launch, and 2 weeks is plenty of time for the people who only keep their subscriptions active long enough to binge watch an entire season of the political drama to get back in the fold. So right about now you’re probably wondering why I’m going on about Netflix and House of Cards and what this has to do with technology. Well marketing plans and political back-stabbing are interesting, don’t get me wrong, but it’s not the thing I find most interesting about this show. What I find most interesting is that Netflix committed $100 million to the first season of the show without blinking an eye and they knew before a single line was written or camera rolled that they were going to have a hit show on their hands. How did they know this? Data!

In 2012, more hours of movies were watched via some form of online streaming (Netflix, iTunes, etc) than on physical devices like DVDs or BluRays. Combine that with the fact that Netflix accounted for more than 35% or ALL internet traffic in the second half of last year, and you can conclude they have pretty good statistics on viewing habits. How did they use this data? Pretty simple and genius. They studied years of viewing patterns and chose to license an incredibly popular 90s BBC miniseries for a remake. They then found a pattern of viewers who liked this miniseries also loving movies starring Kevin Spacey and movies directed by David Fincher. At that point, it’s simple, combine all the elements and people are going to watch. Marketing it was genius as well. They created 10 different trailers, and based on what you watched on Netflix, you got a custom trailer. For example, if you watch Kevin Spacey movies, you get scenes featuring him exclusively. Big fan of the director? That means your trailer featured elements of the show heavily influenced by his work. Maybe you’re just a big fan of political drama – there was a version for you too. Netflix has mastered the art of data analysis and quite possibly changed the creative process forever.

So why is this important to you? Yes, it’s extremely interesting and I can go on and on about the geekdom behind determining that people in warm weather states watch more comedies on weekends than cold weather states or whatever other crazy statistics they may be putting together (I made that one up by the way), but I want to stop and talk about how this relates to the average small business. To do that, I’m going to use an internal example from here at CHIPS. We have been using the same database to track all our service tickets since 2004. 10 years and over 500,000 tickets later, we have a goldmine data that we needed to harvest better. We needed to use this data to optimize help desk staffing levels. To do this, we plotted the creation time and day of the week of every service ticket to determine peak load times so we could match working hours appropriately. What was incredible is that we found no matter how we sliced and diced the data, no matter whether the sample size was large or small, the graph always looked identical. It was exactly what you’d expect. Larger volumes in the mornings and earlier in the weeks, less as the day and week moves on. We also saw larger than expected call volumes on Saturdays, and enough volume after 6 PM to rationalize a late shift. All this has led to working on reorganizing work days and hours and making sure we are finding the best ways to serve our clients.

This might not be as sexy as what Netflix is doing, but it’s the same concept and it has an equally profound effect on our business and our clients.

So the real question is what gold is hidden inside your hills of data? If you have been in business for any period of time, you most definitely have data you can mine to optimize what you do. Whether you can use the data to predict peak demand times, speed up the sales process, or just smooth out the traditional ebbs and flows of day to day operations, a small investment can go very far. The question is what data is important and how do you get at it? Well, let me give you a few tips to think about and get started.

The first is obvious. Financial data is always key to the success of any business. Analyzing revenue, expenses, and profits needs to be part of your DNA if you are a business owner. The trick is correlating it to something else important. For example, you may know you have a seasonal business and you may expect the increase and decrease of revenues. Is the other side of your P&L statement going up and down at the same rate? If your costs of doing business stay flat while revenue rises and falls, you are robbing yourself of profits. Look for ways to optimize costs in down times. We have several clients who use cloud services for all their technology and we can shut down or scale way back on resources during slow seasons so they can cut back on costs. There are lots of tricks you can use if you see the patterns.

The second critical data point is customers. If you don’t know everything there is to know about your clients and how they interact then you are missing a golden opportunity. Generally speaking the definitive source for this is some sort of CRM package. Just keeping names and numbers in Outlook doesn’t cut it in 2015. You need to really understand the client relationship in order to service your clients no matter what business you are in.

The third one I like to look at is sales. There is a tremendous amount of data generated around the sales process at most companies and finding ways to analyze and optimize it can be a real windfall. Imagine being able to cut 20% of the time off the sales process, or increase your close rate by 30%? How much would that benefit your organization? Understanding the how, when, where, and why of customers buying from you might be the single biggest untapped opportunity of data mining in the small business.

This is just scratching the surface. The data you have collected on and about your business over the years is the foundation you need to use to grow it moving forward. You hear lots of companies talking about Big Data and most of them frame it in the context of huge enterprises and massive data analytics projects. That doesn’t have to be the case. Every single small business can benefit from spending a little time looking deep into the database and connecting the digital dots.