Every company has Big Data in its future and every company will eventually be in the data business. Fortunately, many companies have realized this already and they understand the new business and financial opportunities that big data provides. In short, Big Data can make companies rich!!!
And that is why modern companies are collecting big data to improve their business model. But using big data is not only about collecting the data but more about utilizing it to gain actionable insights. Big Data Analytics is much more objective than the older methods and companies can make the correct business decisions using these insights. They can even use these insights to make better products, make more informed business decisions, predict customer behavior and so on. And the modern analytical systems are fast as well which gives a competitive advantage to companies. This means they can also gain a financial advantage! So in this article, we will discuss 5 methods by which companies can make money using big data and some actual examples of companies that use these methods.
So without further ado, let’s get started!!!
1. Using Big Data in Product Development
What would you do if you wanted to create a product? Well, normally you would develop the product idea and then move into production. But how do you know your product idea is good? According to statistics, 66% of product ideas fail in the first two years. In this situation, Big Data is a big help and can save a lot of money!!!
So companies normally begin the product development process by collecting as much data on the possible product and its demand in the market. They calculate whether the customers want this product or not, the possible competition in the market, whether the product is profitable, etc. before investing any money. Then they use big data analytics to ensure that the product is tailored exactly to customer needs so that they can make money out of the product.
An example of a big company that uses Big Data is Macy’s, an American Luxury department store chain. They are miles ahead of their competitors as they use Big Data Analytics to target their customers on an individual level. They have separate teams for Customer Insights and Data Analytics which allow them to understand their customer preferences while creating a product.
2. Increasing Sales Using Big Data
Sales is a very important department in any company. How else would a company earn profit without sales? And Big Data can help a company maximize its sales and hit the yearly targets! So smart companies ensure that the sales department has detailed customer data so that they can identify the customer needs and convert them into sales leads. Using big data analytics, the sales department can pitch the company products better to customers, provide personalized customer service and give more options for products the customers may like to buy. In this way, the company gains more customers which leads to more money as a direct result of data analytics.
Amazon is a tech giant that increases their sales using big data analytics. Customers often get recommendations for items to buy on Amazon based on their browsing history or the items they have bought recently. Amazon also analyses all the purchases that are commonly made together by millions of customers and then recommends them in the “frequently bought together” category. In this way, Amazon can make more sales by recommending you items you might want to buy using big data.
3. Using Big Data in Marketing and Advertising
Many big companies have invested millions in marketing campaigns and yet they failed badly leading to huge monetary losses. But why does this happen? Why do some companies fail in marketing despite having huge resources? Well, this may happen if these companies don’t use big data analytics at its full potential. In that situation, Big Data is the only help!!!
Companies can monitor their online activity, their consumer base, and current customer trends before launching a marketing campaign. Collecting all this data and analyzing it correctly will ensure a focused marketing campaign that targets current customers and also potential future customers. This may give the highest monetary returns and be very beneficial for the company.
Netflix is a good example of a company that uses Big Data in Marketing and Advertising. It collects the searching habits and watch history of all its 100 million subscribers and then provides targeted adverts. So you may get recommendations for the movies you should watch next based on your past choices of movies.
4. Selling Big Data to Various Companies
The most obvious way to make money from Big Data is to sell it! Companies these days understand that data is an important asset to obtain customers and become bigger. So they are ready to buy data from companies that are in a position to obtain it from a large number of consumers. This means that big companies can sell their data to third party companies and earn much more money directly from it. This practice of selling their big data is most prevalent in the telecommunication industry with around 50% of the companies selling their data at some point.
One of the biggest companies that sell consumer data to other companies to use in their marketing campaigns is Acxiom in the USA. Acxiom is described as “the biggest company you’ve never heard of” and it started its business model of collecting data on people and then selling it to various banks and retailers in the 1980s. Currently, this company claims to hold data on almost all people living in the USA with its data used to make 12% of the country’s marketing decisions directly.
5. Using Big Data for Risk Management
Is there any business without a risk? No, there’s not!!! But the main question is how to minimize the risk? Basically, risk management is important for all companies as this is the only way to get profits and earn more money. And big data analytics has contributed a lot to risk management. It has made the risk management models used by companies much better as it takes into account all the data generated by the company such as production levels, consumer base, finances, etc. All in all, this insane amount of data available in the company reduces any guesswork and clearly shows the ramifications of any business decision which in turn reduces the risk factor.
Starbucks is one such company that uses big data analytics to reduce the risk associated with the business. They normally open shops very close to other coffee houses and still manage to get a high success rate. That’s because they collect data like the location data, customer preferences, demographic data, traffic levels, etc. of any place they plan to open a shop and only do it if the chances of success are high and the associated risk is minimal. So they can choose locations that would give them the most money and reduce risk at the same time.