A new survey has revealed the type of insight retailers are looking to get fromRead More
How marketers can turn big data into big profits
Being able to efficiently harness the power of big data can bring huge benefits to a company, but the most successful firms will be those that understand how to use the insight they gain from these platforms and turn it into actions that have a clear and measurable impact on their bottom line.
A new infographic by the McKinsey Group reveals just what a difference a strong strategy in this area can make to personnel in marketing departments. It found that the global spend in this area equates to around $1 trillion a year, but better analytics can improve the returns businesses get from this by between ten and 20 percent.
Being able to use big data analytics will be vital if marketing professionals are to cope with the increased pressure they are under in today's environment. The infographic noted that dealing with the growing amount of information is a particularly important issue for businesses in the retail sector, as they stand well-placed to make the most of new technologies that gather data.
For instance, 61 percent of customers around the world use digital channels during the buying process and every action they take on these devices increases the information available to businesses, enabling them to study consumer buying behaviour, demographics and other key information.
It will also be crucial that retailers recognise emerging sources of data, such as mobile gadgets. McKinsey observed that in Europe, 42 percent of consumers carry out web searches via a handset while in store, providing opportunities for personalised, location-based marketing that did not exist a few years ago.
Despite this potential, the majority of marketers are still not using data analytics effectively enough. A survey of chief marketing officers highlighted by the infographic revealed 63 percent of projects do not include marketing analytics to inform decision-making. Four out of five firms also do not measure the return on investment for social media campaigns, which could leave them blind as to what strategies are working and where they need to focus their attentions.
But if firms can take control of their information, the rewards will be clear. Companies across all sectors stand to see improvements, but for retailers, the difference will be even more pronounced.
Between 1999 and 2009, McKinsey noted that the average compound annual growth rate for retailers that did not employ big data effectively stood at around six percent. However, for big data leaders, that figure was 19 percent.
With new advanced technologies emerging in recent years, it is now easier than ever for companies to deploy big data affordably to improve their operations. Innovations such as in-memory computing and real-time analytics also mean that queries that would once have taken hours to complete can now turn out results in a matter of minutes.
McKinsey found that on average, big data leaders see five percent higher productivity compared with other companies and their profits are six percent higher.
One way in which these benefits are achieved is with improved targeting of campaigns. Without analytics, firms using direct mail typically have to rely on generic messages that may not be of interest to a large majority of their audience. With the insight gained from big data analytics, however, they can replace these with more numerous, smaller campaigns that offer more relevant information.
This results in customers receiving less unwanted spam and boosts the profits gained from promoted products by an average of 288 percent, McKinsey said.