May 9, 2016
Forget Big Data — Focus on Small Data
by Jon Picoult
Small data may sound quaint, but don’t be fooled. Using it can enhance customer experience without expensive overhead.
In their rush to jump on the big data bandwagon, many organizations have lost sight of a much simpler yet effective source of customer insight: “small data.”
Big data is about synthesizing, mining and analyzing mounds of seemingly unrelated information to derive actionable insights about your customer. It’s a complex science but one that can be leveraged to understand and engage customers in new, surprising and sometimes even creepy ways. (Consider the well-documented case where retailer Target figured out that a teenage girl was pregnant before her father even knew—merely by analyzing her purchase history data. See “The Challenges Around Big Data and the Lessons to Be Learned.”)
In contrast, small data is about listening to and observing your customers intently, picking up on simple cues that allow you to better personalize and customize your interactions with them.
Small data doesn’t require supercomputers to decipher. It’s not really a new concept, either—it’s just a new moniker for a tried and true approach that the best sales and service people have employed for decades, if not centuries.
That might make small data sound quaint and old-fashioned, but don’t be fooled. Using it can actually enhance your business’ customer experience in very material ways, without the expensive overhead associated with big data solutions.
See Also: To Go Big (Data), Try Starting Small
To get a flavor of how small data can influence your customer experience, consider these examples of the strategy put into practice:
• Delta Airlines’ 800-Line Greeting
Presuming a customer calls Delta from a phone number the airline has on record, the 800-line voice response system will skip the standard pleasantries and prompt you with a question such as “Are you calling about your delayed flight?” If the answer is yes, then Delta immediately routes the caller to an automated service or a live representative who can help, obviating the need to navigate through a series of menu options.
Once the incoming phone number is identified, Delta’s systems check to see if the customer has reservations coming up, or if perhaps a flight that day has been delayed or canceled.
That’s not a terribly complex undertaking from a data perspective, as it is a relatively simple look-up exercise, rather than a full-blown analytics task. Yet it yields a much better and more efficient customer experience, particularly at a time when passengers may be frazzled about unexpected changes in their travel plans.
• Ritz-Carlton’s Personalized Guest Experiences
The Ritz-Carlton luxury hotel chain is renowned for its ability to create highly personalized guest experiences. If the Ritz in Boston learns that a guest is allergic to feathers, then the Ritz in Dubai—half a world away—will de-feather that same guest’s room prior to arrival.
How does the company do that? Ritz staff are trained to listen carefully for guests’ likes, dislikes and general preferences. These are small pieces of data (such as a favorite newspaper or snack, or a preferred room location) that Ritz-Carlton employees dutifully record in a customer database dubbed “Mystique.”
They’re also trained to consult that database prior to a guest’s arrival and act on any relevant information they find. This helps ensure that any previously captured small data is used to create an unusually customized guest experience during subsequent visits.
These two examples are from outside of the insurance industry, but the approaches they illustrate are easily transferable. It’s simply a matter of putting your antennae up and looking for small pieces of data that can be used to deliver a more personalized, relevant and anticipatory customer experience.
Consider the small data that’s available to insurance carriers—data that, if captured and capitalized on, could generate some very positive customer impressions:
• Children’s Ages
By recording information about a customer’s children during an initial needs analysis, insurers can engage the policy owner to assist in stressful parenting periods, such as when a child approaches driving age.
While identifying households with youthful drivers isn’t a new idea for insurers, using that information to strengthen the customer relationship is. Historically, such data has been used by insurers to address situations where a new, uninsured driver may be behind the wheel (to adjust premiums).
However, the identification of a youthful household driver shouldn’t just be an exercise in rate adjustment. It’s also an opportunity for the insurer to demonstrate the value it provides—in this case, by communicating relevant information to parents that helps them navigate a difficult family transition (e.g., determining what resources are available to teach their son/daughter how to drive or how they can best ensure their child’s safety while they learn to drive).
Using small data in this way creates a customer experience that appears strikingly prescient to the policy owner, essentially addressing their concerns and questions before they even have a chance to raise them.
For certain types of commercial lines coverages, insurers have visibility into business performance measures for their clients (such as sales), which are recorded annually via premium audits.
Here again, as with youthful drivers, the industry has traditionally used such data exclusively to adjust premium rates for coverages that are tied to these business metrics. But this small data can be far more useful.
Consider the first time a commercial lines customer crosses over the $10 million revenue threshold. That’s a milestone that would be reflected in the small data most insurers collect, yet few do anything with it, other than raise premiums.
Imagine if that customer received a handwritten note from his insurer (or agent) a month after renewal, congratulating him on reaching that milestone. Imagine how that small token of recognition would make the customer feel.
Business owners, after all, don’t really care about their business insurance—but they do care about their business. When their business grows, that affords an opportunity to celebrate alongside them, to give them a “pat on the back” that they likely weren’t expecting from their insurance provider but will remember fondly.
• Recurring Information Requests
At Ritz-Carlton hotels, if a guest requests the same newspaper, snack or room location visit after visit, the staff will notice and use that small data to shape the customer’s future stays.
There is an analog for this in the insurance industry. Consider the reports and other information materials that a policy owner requests year after year—e.g., a commercial insured requesting updated certificates of insurance for her core set of clients, or a corporate risk manager requesting loss reports sorted by site.
Every recurring information request represents a piece of behavioral small data that can be used to customize the policy owner’s future experience.
Imagine if a policyholder didn’t even have to make those information requests, just as the Ritz-Carlton guest who’s allergic to feathers need not request a feather-free room.
Imagine if an insurance provider, based on a policyholder’s prior history of information requests, offered all of those reports and certificates to the customer at precisely the right time each year.
That would be the epitome of a more personalized and effortless customer experience, all made possible simply by acting on a piece of small data.
Small data may be less glamorous than its more buzz-worthy big data counterpart, but it’s no less important.
Big data has its merits, but as the “shiny new object” that every company covets it has unfairly eclipsed the value of simpler and more straightforward sources of customer insight.
Better understanding your customers and her needs doesn’t always require intense data crunching and sophisticated analytics. Often, what’s really needed is just a watchful eye, an attentive ear and the discipline to act on whatever insights you uncover.
Because when it comes to creating a positive, memorable and personalized customer experience, small data can have a really big impact.
This article first appeared at Carrier Management.