“Big data” has been a term of note for a few years now — maybe going on a half-decade. Companies seem to love the idea of it, even though the C-Suite doesn’t completely understand it and schools aren’t necessarily teaching it. But just like another thing that corporations seemingly loved a few years ago — that being social media — the question now becomes: can you actually make money off Big Data?
Seemingly, you should be able to — after all, the underlying principle of “Big Data” is that you can accumulate information about your customers and potential customers in terms of what they actually want/need/are looking for, and then you can shape your strategy around that. There’s a big “way-we’ve-always-done-things” leap there in the sense of, a lot of people will still be more comfortable relying on their gut as opposed to data. Think about this: retail legends like Ron Johnson have gone on record saying that “Big Data” is a little bit overrated.
Here’s another voice in that chorus — former Google employee David Auerbach, now writing for Slate, notes this:
Why the trough? Because big data has yet to yield big money. For all the hype about the quantified self, the Internet of things, and data science, big data has yet to yield a true killer app. Google Flu Trends is a fascinating idea, but extrapolating flu incidents from Google searches on flu keywords has not produced reliable results. The New York Times recently published a piece by Sendhil Mullainathan wondering if search queries for “slow iPhone” might imply that Apple is intentionally slowing down older iPhones as new ones are released, but he concluded merely that big data doesn’t tell us enough to know for sure.
This is an interesting thing to think about: social really hasn’t been successful for many (some have done better than others) as a revenue generator. That’s going to change its perception in the next 5-10 years. It could become perceived as more of a niche PR / marketing channel if companies continue to struggle to tie it directly to revenue. Now you have to wonder: could the same thing happen to “Big Data?” Could it become more of an internally-focused element (that organizations use to track and monitor their own people) and less of a consumer-facing / consumer-acquisition strategy if it continues to not be linked directly to money in the bottom-line sense?
As with anything, some companies are doing it well. Check out Caesar’s Palace in Vegas and their use of analytics:
At Caesars Entertainment Corp.CZR -4.31%, the goal is to keep customers from leaving the gaming table and keep them spending money. Over 10 years, the company has developed real-time analytics software that helps it identify when customers are at a tipping point – what Ruben Sigala, the company’s chief analytics officer, calls “persuadable moments.”
Mr. Sigala says Caesars can now track 80% of gaming activity back to a specific customer – compared with 30% to 40% several years ago. “We’ve been at this for over a decade,” he says. This improvement means Caesars’ employees can reach out to customers having a poor run of luck at the blackjack table and offer them a meal or tickets to a show for the same night. “We can engage them in a way that goes beyond that one unlucky experience and remind them of the broader value proposition” of sticking around, he says.
Again, maybe not directly tied to revenue, but getting closer.
What do you think: could Big Data become a fad if its ties to bottom-line effectiveness can’t be proven directly?