Big data has a long tail, and it has value

Many depict big data as a huge data creature which is difficult to understand and very hard to control. What many don’t know however is that this creature has a very long tail, and a Value(able) one as well!

Organisations tend to segment customers with several variables, and the more variables added the more customer groups are created. As the number of these groups increase, the longer the tail of big data becomes. What does this mean?

The figure above shows the traditional Marketing Targeting Model organisations usually employ to segment and target customers. Generally, since marketing costs need to be used efficiently, the most targeted customer segments are the biggest and the ones that generate most revenue. Although organisations care for the other customer segments as well, they do not have enough resources to analyse and develop the necessary marketing campaigns for the other minor segments. That is, not without big data.

So where does big data and tails fit?

With the exponential increase of data generation, we can get to know customers far more than we know them today. If the right big data tools and analysis are used with this data, the cost of targeting is decreased and more customers residing in the long tail (the smaller customer segments) can be served (Target Segments in diagram below). On top of this, the more organisations get to know their customers, the more they can encourage them to share preferences and information. Marketing efforts would therefore continuously decrease (cost line decrease in diagram below) and more specialised products and services can be developed to accommodate and benefit them. This would benefit the organisation in both customer retention and acquiring new customers, whilst also increasing the company’s reputation.

Figure 2: Data-enabled marketing model (Schmarzo, 2014 )

How do you get to know your customers?

The data is already there, it’s just finding the means to get the value out of it that is the problem. We live in a time where data is constantly being radiated from our bodies. Check-ins, online purchases, social media engagement, these are all data that organisations can mine in order to understand what customer segments make up the long tail of big data. Once the data mining process is in place and the tail defined, marketers can analyse this information without investing time and resources to manually do it themselves.

Marketers can take advantage of this by targeting marketing campaigns to the ones that would be most effective. Furthermore, once a lead is identified, s/he can be automatically clustered and targeted with those products or services that would be of most interest to him/her according to the customer segment identified.

If you would like to learn more about big data long tails and how to apply this to marketing segmentation and targeting, we are only a click away… just feel free to get in touch.