Many companies rely too much on big data and analytics in their hunt for strategic insights. They’d do better if they actually went out and talked to their customers instead, as Toyota and Adobe do, because data is too rooted in what managers already think their customers are interested in.
The ability to gather and process intimate, granular detail on a mass scale promises to uncover unimaginable relationships within a market. But does “detail” actually equate to “insight”?
Many decision makers clearly believe it does. In Australia, for instance, the big four banks Westpac, National, ANZ and Commonwealth are spending large on churning through mountains of customer data that relate one set of variables — gender, age, and occupation, for instance — to a range of banking products and services. Australia’s largest bank, the Commonwealth, has announced its big data push.
Like the big banks, Australia’s two largest supermarket chains, Woolworths and Coles, are scouring customer data and applying the massive computer power now available, and needed, with statistical techniques in the search for “insights.” This could involve the combination of web browsing activity, with social media use, with purchasing patterns and so on — complex analysis across diverse platforms.
While applying correlation and regression analysis (among other tools) to truckloads of data has its place, I have a real concern that — once again — CEOs and senior executives will retreat to their suites satisfied that the IT department will now do all the heavy lifting when it comes to listening to the customer.
To peek into the deceptive appeal of numbers, let’s review how one business hid behind its data for years.
Keith is the CEO of a wealth management business focused on high-net-worth individuals. It assists them with their investments by providing products, portfolio solutions, financial planning advice and real estate opportunities.
Like its competitors Keith’s company employed surveys to gather data on how the business was performing. But Keith and his executive team came to realize that dredging through these details was not producing insights that management might use in strategy development.
So, Keith’s team decided on a different path. One that really did involve listening to the customer. They conducted a series of client interviews structured in a way that allowed the customer to do the talking and the company to do the listening. What Keith and his executives discovered really shocked them.
The first was that their data was based on nonsense. This came about because the questions they’d been asking were built on managers’ perceptions of what clients needed to answer. They weren’t constructed on what clients wanted to express. This resulted in data that didn’t reflect clients’ real requirements. The list of priorities obtained via client interviews compared to management’s assumed client priorities coincided a mere 50 percent of the time.
Keith’s business is not alone in this as studies have shown that big data is often “precisely inaccurate.
