The Big Power of Small Data

We have all been so bombarded in recent years with information about 'Big Data' that the value of 'Small Data' is sometimes forgotten. Small data, defined as data that is within the capability of a single person to absorb, is crucial for making good decisions, and is vital to the running of millions of businesses around the world.

Martin Lindstrom, author of the book ‘Small Data’, says:

“Big Data is all about finding correlations, but Small Data is all about finding the causation, the reason why…we become so obsessed with Big Data we forget about the creativity”.

If ‘Big Data’ is a mountain of rubbish that need endless sifting to find occasional rare nuggets of value, then ‘Small Data’ is a market garden that if tended carefully will deliver repeated harvests.

Small Data at Aston Martin

Aston Martin is a good example of a situation where small data is key to the business model. The company makes luxury high-performance cars that sell in a fraction of the volumes by sold by the likes of Nissan or Toyota. Their buyers (like James Bond) tend to be older and more demanding than average, with excellent knowledge of cars, and an expectation of premium quality and service. Aston Martin's decisions about the development of new features and new models is heavily influenced by the feedback it gets from customers, meaning that detailed knowledge of its customer's lifestyles and driving habits is crucial to sustained growth.

Aston Martin works hard to create and maintain strong relationships with its clientele. The expense and frequent customization involved in purchasing one of their cars means that the buying process is more involved and protracted than most. Agents interact with customers repeatedly over an extended period, and a relationship develops. As the agent learns more about the buyer they become better able to anticipate their needs and to make recommendations about models and options that will suit them best.

Aston Martin also provide an attentive after-sales service, and owners may receive marketing materials, event invitations, and previews of new models. These post-sales activities ensure that customer association with the brand remains strong, and that Aston Martin can get the detailed feedback about their products that allows them to plan for the future.

At a bigger manufacturer, the volume of cars and customers would make these actions mammoth undertakings. It would be far beyond the capacity of customer service staff at most brands to gather information, let alone to assess it and to understand individual customers to the point where they could provide reliable advice, and it would be prohibitively expensive to provide such individualised attention either pre- or post-sale.

It is the smallness of the data that gives Aston Martin the edge. With global annual sales of around 6,000 vehicles, their agents can act upon detailed information about individual customers, keeping customer satisfaction high, and generating a lifetime of repeat-sales and word-of-mouth goodwill.

However, until the mid-2010’s the inefficiencies of doing this in traditional ways were still too high. With critical knowledge in the heads of their sales reps it was difficult to scale up without degrading customer service and losing sales, and the dependency on individuals meant that relationships suffered when staff retired or moved on.

“We had various systems, surveys, and datasets but they weren’t connected, so there was no single view of a customer. People had to ask for information, and it could take days or weeks to get it.” - Dan Balmer, Director Global Marketing at Aston Martin.

Faced with on-going losses, the company invested to escape the corner it was in, introducing a new CRM system in 2015 and working hard on BI to develop better ways of summarising, automating and presenting information. Centralising and standardising the data allowed the company to increase production and sales volumes without degrading the all-important customer experience, one of many initiatives that helped turn the company's financial situation around, transforming losses of ￡163m in 2016 into profits of ￡87m by 2018.

Conclusion

Harvard psychologist George A. Miller studied cognitive ability and found that the number of objects an average human can hold in short-term memory is 7 ± 2, a factor decision-makers need to take account of, lest they be overwhelmed.

An efficient, managed approach to gathering and processing information is essential to ensuring that managers can access the data they need but are not overwhelmed.

Business Intelligence (BI), the craft of taking large, complex data sets and using techniques such as organisation, summarisation and visualisation to turn them into small data, is an essential catalyst in turning solid information into sound decisions.

As the experience of Aston Martin and many other firms proves, the importance of small data and the power of effective BI to leverage it should resonate with business leaders everywhere.

John Thompson is a Director with EY's Technology Consulting practice. His primary focus for many years has been the effective design and management of enterprise data systems.