What Is the 'First Law of Big Data Usefulness'?
C-store retailers question relevance of increasing amounts of data, analytics
ARLINGTON, Va. & NEW YORK -- Convenience store retailers examining ways to better use transactional, promotional and loyalty data may eventually reach a point of diminishing returns, said at least two observers openly contemplating the importance of data analytics.
Part of gaining valuable insight from "big data" is deciding what types of data streams could combine to provide insight. Jim Manzi of the analytics firm Applied Predictive Technologies, Arlington, Va., told CSP Daily News that if retailers want to understand how certain business choices affect the bottom line, here's what to prioritize.
- Customer data
- Transaction log data
- Weather information
- Area demographics
- Competitor fuel pricing
What's less important:
- Full-motion video from all stores
- High-volume website clickstreams
- Raw Twitter feeds
Manzi said that things like Twitter feeds are less valuable for analysis because they cannot be used directly to find out the cause-and-effect on key metrics. For example, a change in store hours may lead to more Twitter activity, but unless it also leads to more traffic in those extended hours, the tweets themselves are only marginally valuable.
A contributing editor at Forbes magazine also took on the topic this week. In the article "When Is Big Data Analytics a Waste of Time?", Adrian Bridgwater wrote about the onslaught of information currently produced by social media, point-of-sale (POS) registers and digital cameras and eventually wearable technology, refrigerators and door bells. But while the ability to produce data is increasing, should the need to collect it, store it and then analyze it be a priority as well?
Probably not. In his mind, much of that data will have no value--at least for now.
There is a "first law of big data usefulness," according to Bridgwatger. It says, "The degree to which we take the exact depth of big data analytics is directly determined by the corresponding level of insight it produces and where we can still say that we gain 'productive incremental value' from doing so."
Bringing up the German soccer team that won the World Cup final this year, Bridgwater said the team did an extensive amount of video analytics and data research to better plan the run to the finals. But the team did not use all the information it gathered, focusing on data that could enhance players' performances.
Businesses like convenience stores gather a lot of information for regulatory purposes, which could ultimately be analyzed as people grow in their technological sophistication, Bridgwater said.
"This almost suggests that some data has latent value, which lies suppressed and dormant until it is unlocked," he said.
Watch for more on big data in the September issue of CSP magazine.