Improving the CX with Small Data

Welcome to the Dove Direct Print and Marketing Blog. Today's post, "Improving the CX with Small Data," examines the importance and value of differentiating customer experiences (CX) at a granular level. Although big data has been the focus of most organizations, small data can deliver customer nuances at the ground level. These are the findings from a 2019 Harvard Business Review: Analytic Services, Beyond Big Data.

For starters, brands are investing in creating a better CX because most now realize that the customer experience is a competitive differentiator. With customers exhibiting a holistic mindset, brands that want to increase revenue and improve profitability must combine big data with small data. Big data will continue to provide volume, variety, and velocity; and be the backbone of any enterprise, large or small. Yet, it is the small data and analysis that enables the brand to speak to customers from the customer viewpoint versus a brand's perspective.

Where We're At

When we combine the all hands on deck approach to integrating small data with big data, the whole CX and CXM directives become crystal clear. For one, there is more to understand about customers, mainly being able to understand what customers want, and conversely, what they don't want. In Adobe CMOs look back at 25 years of digital advertising, they highlight all of the technologies that are driving the industry. "The growing use of artificial intelligence, IoT, and other digital tech introduces new frontiers for marketing and advertising. This includes understanding behavior at broader and deeper levels, and delivering more personalized contextually relevant advertising." According to Adobe, we are now managing the second phase of the customer experience. "Customer experience management (CXM) is top-of-mind for companies. This second phase of digital transformation is defined as orchestrating and personalizing the entire end-to-end customer experience, moment to moment, at scale, on any channel, in real-time."

Why Go Beyond Big Data

Regardless of the amount of customer data organizations are amassing, brands continue to struggle with correctly understanding their customers. Advanced technology, such as high volume clickstream and transactional data, can produce high velocity and a greater variety of customer information. This is big data collection at its finest. However, big data falls short as the data mostly imparts what customers are doing, but fails to address why they are doing what they do. Uncovering detailed customer behavior is the key to unlocking the "why."

Small data customer research can help brands deliver the why. Bite-sized, small data acquired via interviews, focus groups, surveys, and even diaries address the why factor. Michael Tamayo, client experience lead at MD Financial, explains it this way. "It is the most important data the CX practitioner can use to help the organization understand—what are customers trying to accomplish when using a product or service, and why?" Adding another perspective regarding the value of small data is Martin Lindstrom, founder and chairman of the Lindstrom Company and author of Small Data: The Tiny Clues That Uncover Huge Trends. "The biggest problem with corporate data today is that everyone is so obsessed with getting big data solutions on board. But you have to get your hands dirty to see the world from the customer's point of view. You have to put yourself in their shoes and feel what they feel. Then you have something valuable."

Small Data Changes the Game

Big data will continue to be a mainstay among brands and marketers for the foreseeable future. However, for brands to raise their competitive advantage, the addition of small data in no small part changes the game. Lindstrom continues and describes small data as "the seemingly insignificant observations" about people that can have a profound impact on the customer experience.

Small data not only delivers more in-depth insight, according to Lindstrom, but can set an organization apart from its competitors who may be overly focused on big data. Big data can capture a billion clicks that reveal how millions of customers flow through digital interactions." On the other hand, according to Gerry Murray, research director at IDC's marketing and sales technology service, small data can capture a thousand insights that reveal what they like or dislike about specific moments in the journey. By putting the two together, brands can improve existing marketing programs and discover opportunities for innovation that would otherwise be missed."

Overcoming Product Commoditization and Low Brand Loyalty

In today's business world, products and services have become commodities, which in turn can erode brand loyalty. Therefore it is incumbent upon every organization to dig below the big data to gain real customer insight. For example, Katie Lechner, Gap's head of global consumer insight, whose teams have been tethered to the company's brand divisions for the last two years, states, "We have pockets of success. Certain parts of the organization understand the value of this and seek it out. They know it produces better outputs and competitive advantage. But to consistently have that happen across our portfolio of brands has been a challenge. Our job is to help people see the value of it and incorporate a customer-led approach to solving problems and creating good experiences."

The job of Lechner's insight group is to validate or challenge the assumptions made based upon big data. "The tendency is to leap to a solution, but first, you need to understand what customers actually need." Lechner's point drives home the mistake that many brands make when they jump to conclusions because they assume that big data has consumer answers. Instead, brands need to gather the small data which will provide a hypothesis and then integrate those findings into the big data points.

The Net-Net

Regardless of whichever industry you serve, small data makes all the difference in understanding your customers' needs and wants. Further, small data also provides pain points and what turns customers and prospects away. In short, the small data points uncover the all-important "why" that is behind the customers' behavior. From this perspective, small data can go a long way toward increasing the ROI when marketing and communications include holistically sensitive customer preferences. Thanks for reading "Improving the CX with Small Data."

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