Big Data is Just Beginning to Explode
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Everything’s Free on the Internet, Isn’t It?
Potential clients often ask me—“Well, isn’t it all free on the internet?” The answer, of course, is yes and no. There is a great deal of free information out there, if you know where to look and how to interpret it. In the interest of letting you know what is indeed “out there” here are some free tools to get you started.
Six Free Tools and an IPAD app
1. Search prospects on MANTA
If you can’t afford Dun & Bradstreet for prospect lists give MANTA a try. Manta is a free tool that accesses many of the same data sources as Dun & Bradstreet and Hoover’s. It has access to information on both closely held and publicly traded companies, just type in your criteria or search by company name and you are good to go. The downside is that you can’t print the lists you pull. But, it is a nice tool to begin building your own prospect list. You can claim your own company on MANTA and make sure your own information is being accurately reported.
2. Use Linked-In Search for prospecting
Linked-In has a search option which can be used to identify contact people within an organization. Go to the search tab and choose company, then hit the search button without entering a company name. Detailed search will show up on the left of the screen. Enter parameters and you will get a list of companies that meet the selected parameters. Zero in on a company and you will get a list of their employees who are on Linked-In, both inside and outside your network.
3. Census Data
U.S. Census Data is available online, at the American Fact Finder. This is the official source for U.S. Census Data on populations, communities and economic trends. Tutorials in how to download the tables and access the information are available at the site.
4. ESRI Tapestry/Market Segmentation
ESRI collects demographic, lifestyle segmentation, consumer spending, and business data for profiling customers, analyzing markets, evaluating competitors and identifying opportunities. Although, there is a fee for software and reports, the Tapestry Segmentation page gives a unique perspective on the characteristics of a population in any U.S. zip code. Just type in the zip code and you will get some interesting demographics on that area as well as the top three lifestyle segmentation categories.
5. There’s no such thing as a free lunch, except when there is.
Freelunch.com is an excellent source if you want to get your feet wet in economic trend reporting. They have a number of free data series which you can view or download into Excel. This is general data used to identify trends, such as changes in unemployment by zip code. Their free data is pulled from other free sources, but it is nice to have them all in one place.
6. City Forward/Cloud based research
City Forward is another trend analysis tool that uses free data government data. Searches, called Explorations, are saved so that you can begin your search by building from what other members of the City Forward community have created. This is a good example of a tool that is traditionally used by city managers and Economic Development professionals, but has great potential for small business.
And last but not least, Wisdom for the Ipad
This is another crowd sourced application that pulls from the massive amounts of data that Facebook has collected. You can filter the data by a number of demographic and psychographic keys for customer analysis. The data is confined to data collected from FB, rather than the general population, but with close to 900,000 million FB users it is a robust source.
So there you have it. My top seven go to choices for doing business research for free on the internet. All it costs is your time.
beth plutchak consulting llc
business intelligence for the rest of us
The Difference Between Demographics and Psychographics
The Big Five of Demographics
You are probably familiar with the big five of demographic data: income, education, age, gender and race. The Census Bureau collects this data and makes it available by census tract. But, what if you have individuals with identical demographic stats who have very different buying habits? For instance, I live in a rural community, not far from Madison, WI. A woman who has my demographic characteristics, but lives on Madison’s Isthmus will have very different spending patterns than I do. Our different interests are evident in where we choose to live. In the Era of Big Data, companies are using psychographic data to dig deeper into spending patterns.
A few years ago my sister-in-law became a part owner of a Gymboree Play and Music franchise. The parent company offers demographic research to their franchisees, among other supports. Lynn and her partner flew out to California for training. They were given site selection help for opening their Alabama location.
Gymboree had quite a few locations in California, but few in the Southern United States, at the time. The new franchisees were given demographic information based on what had been successful for California franchises. Lynn and her partner located in a suburb with married couples of an age likely to have young children.
Customer Research—Demographics Alone Are Not Enough
Demographics suggested that the higher the income and education of the parents, the more likely they were to spend disposable income on enrichment classes for their children. Since this is not a day care or a preschool, at least one parent needed to have enough leisure time to transport their child and wait for the classes to end.
In early 2010 sales for the Alabama franchise were not what they’d hoped, but the new franchisees did not blame it on the poor economy, they took a closer look at their customers. When their lease was up they moved location, based on experiences which did not match the parent company’s assumptions.
They found they had a large number of Hispanic clients whose demographics on income were lower than their original target. It turns out that parents in the nearby Hispanic neighborhood place a high value on family, children and enrichment. They were likely to spend more of their disposable income on children’s enrichment than neighboring non-Hispanic parents.
It would be a mistake to think that simply adding a demographic search by ethnic identity would tell the whole story. According the Hispanic Chamber of Commerce there are over twenty different countries and sub-cultures represented in Spanish speaking communities. Lynn and her partner needed to understand their core customers. Demographics alone are not enough.
Data Research Tools
One of the tools I use is the Tapestry Data tool supplied by ESRI. According to their website: “Tapestry classifies U.S. residential neighborhoods into 65 unique market segments based on socioeconomic and demographic characteristics.” For my customers, I am able to put together reports and GIS maps which give a clear picture of actual customer spending patterns. This information can be used for site selection and marketing, by companies that are not big enough to collect this kind of robust data on their existing customers. It can also be cross-checked with existing company data, to give an edge that helps with decision making. Play around with their free tool, which gives you a snapshot of what Tapestry results are for any zip code.
How well do you know your customers? What additional information would give you the competitive edge?
Four Questions Small Businesses need to ask in the Era of Big Data
McKinsey & Company and the New York Times have declared this the era of big data, but don’t think Big Data is only for Big Companies.
Here are four questions even small to mid-size companies can get answers to:
1. How well do you know your customers?
You may think your customers are local, but there are a couple of quick tests you can use to determine where your customers actually come from. If you do not have a point of sale mechanism to collect this data, you can do your own test by asking customers to share their home zip code when they shop. When our local hospital did a zip code test and had a GIS map run on the results they were surprised to find that they had a number of people who came from the northern counties in the state, bypassing a more conveniently located hospital in Wausau and a large medical center in Madison. This opened up opportunities to take a closer look at their specialties and their marketing strategy.
2. How well do you know your competitors?
Most Business Owners have a good idea of who they are losing sales to. What they may not know is why. It is easy to make an assumption that you are losing on price, but solid competitor research can determine if that is true. It can also identify the niche areas where you can focus and protect your pricing. Recently a local retailer saw a large sporting goods chain enter their market. Not only was this competitor able to offer many of the same products at a cheaper price, they would be able to sustain that price for a longer period of time. A competitor analysis was able to show where the big players saw their largest margin items, and what products and services they were ignoring to pursue these higher margin items. Combined with customer research, this competitor research revealed a niche area that the small retailer could enter and charge a premium.
3. How well do you know your trade area?
A good trade area analysis is specific to a company, its industry, and its geographic area. Companies thrive by being able to respond to local market conditions, particularly if they are at odds with the national picture. After the start of the Great Recession the restaurant business in general took a big hit. In Madison local restaurateurs were able to take advantage of Wisconsin’s status as an agricultural state and the presence of a strong local culinary school at Madison Area Technical College to become early entrants in the local food movement. Today Madison has a thriving Restaurant Sector which is gaining national attention.
4. What has changed for small business?
Business research used to come in two flavors, market research which was mainly for consumer companies and consisted of local surveys and focus groups, and business analytics which was a game for large companies which collected massive amounts of internal data and used expensive software and analysts to quantify. Medium sized B2B companies could also subscribe to Hoover’s databases and industry analysis from a source such as IBIS or First Research, for a costly annual fee.
Pricing for these tools have come down considerably in the last five years, and additional pricing options are available such as per report pricing or daily subscriptions. Beth Plutchak Consulting has access to a host of research tools, as well as the trained staff to use these tools and provide the analytics.
Small businesses need an edge to protect their margins and protect their pricing. Don’t think that the era of Big Data is only for Big Companies.
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Differentiate Your Small Business
I recently attended a presentation by one of the former owners of the Penda Bedliner Company. Now, in order for you to understand his story you need to understand the meaning that the name Penda once had to pick-up truck owners. Personally, I used to think a car was just a car, a means of transportation, and that people who went on and on about their vehicle were just, well, silly.
At least I thought that until I bought my first pick-up truck. It was a lipstick red, Dodge Ram. It was not a girly vehicle, but then I’ve never been a girly, girl. I bought it the day I was promoted from Credit Analyst to Ag Lender. It symbolized my making a leap into a job which few women held and which I’d worked very hard to obtain. To my customers it symbolized that I was willing to work hard for them and get my boots dirty. Oh, and it was lots of fun to drive. (Do you know the big trucks rule? Big trucks rule!)
Once you make that emotional commitment to your pick-up truck the next thing you need to do is figure out how to trick her out. I spent hours poring over the accessories catalogs trying to decide whether I needed the practicality of sure grip running boards or the flair of ovals. It was next to impossible to pick between the tri-fold or the snap down tonneau cover. But, there was no question I had to have a Penda Bedliner. Penda’s were the best, and I wanted only the best for Alice. (Oh, yes, I named my pick-up truck).
Toby and Buckaroo Banzai in the Twenty-First Century
When The Best Isn’t Good Enough
In 2006 pick-up truck sales hit a peak. They were not only being purchased by hard-working contractors and farmers, they had also become a recreational vehicle of choice. Accessories for working trucks needed to be practical, but most accessories for recreational trucks were for show. Dozens of new accessory makers entered the market and a funny thing started happening to the sales of Penda Bedliners.
New entrants to a market often try to gain market share based on price, and all the new producers deeply undercut Penda. Penda management expected sales to come back when people found out that the quality was not comparable. But, sales of Penda Bedliners never regained their former levels. Penda had run into a truism of consumer sales – sometimes the best cannot compete with good enough. The lowest price point did not capture the greatest market share. Consumers did want quality, but after a certain level of quality they were not willing to pay a premium.
The first question I ask companies is “What differentiates you from your competition?” If they answer “quality” I try to not visibly cringe. Customers have a minimum expectation of quality. Under that minimum they will not buy no matter how low the price. But, the range from the minimum to good enough is generally fairly narrow. Competition in that narrow band is fierce. True differentiation is something that you do that your competitors don’t, and that it would be very difficult for them to copy. What your differentiator is today may not be the same as it is tomorrow. It often needs to change if you want to stay ahead of your competition.
The team who owned and managed Penda at the height of market dominance, eventually sold out their shares of the company. The company still exists and if you do a Google search you find that they are repositioning themselves on their skill at custom heavy-gauge thermoforming. People still do buy Penda Bedliners, but the company is pursuing market share based on all of their strengths, and finding new ways to differentiate itself.
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How I Invented “The Cloud”
Image via Wikipedia
Science Fiction Writers are often asked where they get their ideas. Almost all of them hate this question. One SF writer even famously quipped, “They get mailed to me by a gentleman who lives in Schenectady.” The truth is, ideas are easy. It is implementation that is hard. At the same time there are a couple of obstacles to an entrepreneur’s ability to implement a great idea, which at first blush seem out of the entrepreneur’s control – timing and connections.
To illustrate let me tell you how I invented “the cloud”, “the cloud” that now ubiquitous ability to work collaboratively across the internet, and to store documents where they can be easily accessed by multiple users across multiple platforms.
In 1988 I was working as a credit analyst in a regional bank. Our department had recently installed desktop computers for all of the analysts. At $4,000 a pop, having a desktop at home was something lowly credit analysts could only dream of. I was working on a loan presentation for a small publisher that had branched out into educational software. Their target market was the home user and they had failed to meet projections for three quarters running.
“Well”, I thought, “no wonder. They are trying to sell this stuff to young families who can’t afford the hardware.”
A large part of the price of the hardware was the cost of computer memory. Another large component was the cost of buying and upgrading software. The software and files at the bank were stored on central servers. It was not a big leap to think that software companies could offer to store files on their central servers and hardware companies could sell bare bones machines at a much reduced cost.
In hindsight, “the cloud” became ubiquitous after the cost of hardware came down and after the Great Recession, when many down-sized and laid off workers started their own businesses and a new market for cloud computing emerged.
I would bet dollars to donuts that people in the industry had the same thoughts about cloud computing that I did in 1988. Maybe, they even thought it would solve precisely the same problem, although in the end it solves a different business problem. Rather than helping to bring down hardware cost, it makes file sharing easier.
Ideas often come before their time and it is not always easy to see which steps will be necessary to implement the idea. Many ideas are dismissed out of hand because the path to implementation is not clear. Companies that succeed can’t afford to do this. Successful companies have a culture that fosters innovation, that allows people to make mistakes and that is flexible enough to hold onto their great ideas until technology catches up.
One of the things that distinguishes true entrepreneurs from other business owners, is that entrepreneurs have the ability to dream products and services out of their ideas. Barriers to implementation are not seen as reasons to trash the idea but problems waiting for a solution. Implementation becomes the process of working through these problems to become first on the market with a new idea. So, it’s all in the timing, but more of the timing is in your control than you might think.
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Strategic Thinking or The Garage Door Problem
Dan, my husband is what you’d call a detail person and I’m more of a big picture thinker. I usually get home from work before he does and a couple of years ago I listened as he pulled into the driveway. I heard the garage door go up and then a big Thunk. I waited a few minutes and then heard a string of language coming from the garage that I am not accustomed to hearing. At that point I went out into the garage to see what the heck was going on.
The motor for the garage door was hanging from the electrical cable, the fixture holding it in place pulled out of the ceiling. Dan came home from work and all he wanted to do was put the car away and close the garage door. Instead, he had one hand stretched over his head holding up the sagging rigging while he was reaching for an out of reach step ladder with the other. I pulled the ladder over for him and while he scrambled up it went in search of the duct tape.
A little later he scrambled down the ladder and while I yelled “No, no, no,” he went to close the garage door. What he hadn’t taken into account was the way the motor connected to the door itself. As soon as the door moved, it would move the whole system and the motor would no longer be stabilized.
Sometimes events are not made up of their parts, but are dependent upon the way the parts are interconnected. It is the same in business. The very skills that you need to deal with the day to day issues of running a business, both stand in the way of seeing potential long-term problems and impact those very problems in hard to predict ways. Not only that, the people who are the very best at the detail level are often hard-wired to be the worst at the big picture or system level.
Business management needs to be able to think sharply in a number of directions. They need to be able to put out the day to day fires of customer service, quality control, supply chain emergencies, what have you, all of this while being aware how these small decisions are impacting short and long term strategies and goals. Sometimes this is accomplished by making sure you have a good mix of personality types on your management team. Sometimes it is accomplished by making review of your goals and procedures a frequent recurrence.
Biologists like to say that change happens at the edge of chaos. That doesn’t mean that we as business owners can’t control those changes. It means we have to be ready to see the implications of all of our decision making at a moment’s notice, right when we are reaching over to close the garage door.
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