By Lucy Boyle
Generally, the statistics regarding startups are not that great. According to one study, 90% of startups ultimately fail. Much of this is due to inexperience. Another factor is lack of available data to help steer decision making. Fortunately, this is changing due to the availability of big data even for startups still in their infancy.
How Startups Can Acquire Data
Startups don’t necessarily have to start from scratch in terms of data acquisition. New businesses can start on the right footing by investing in third-party data, acquired from services that sell industry-specific data. Startups need to invest in marketing, and big data is every part of that. Third-party data consists of consumer information from customers that heavily matches your demographic.
You can also collect your own data before the launch of your business. You should already be accumulating a social media presence months in advance. Reach out to your followers and have them fill out surveys and questionnaires. This will give you an abundance of structured and unstructured data. Plug them into your business intelligence software, and you will acquire a full predictive analytics report.
Focus on the Three V’s of Big Data
However startups acquire the data, they should focus on the threes V’s: volume, velocity, and variety.
- Volume – Acquire as much data as you can. More data means a bigger sampling for more accurate and reliable results.
- Velocity – How fast can you accumulate data? This can be tricky for a startup, but with good SEO and social media engagement, you can gather ample data in a short time-span.
- Variety – A variety of data sets mean more different metrics and key performance indicators for predictive analytics in various fields (e.g. sales, retention, trial signups).
How Startups Can Leverage Data
Wondering how you can use big data in your startups? Try the three ways detailed here.
1. Understand Website Visitor Behavior
Your data should include patterns regarding how visitors browse your site. For starters, you should know:
- The average visiting time for first time visitors
- The revisit rate within a seven-day period for first-time visitors
- Click-through rate of specific products
- Peak visiting hours according to time and day of the week
Armed with this knowledge, you can make educated and informed decisions. If a particular product is getting a higher click rate compared to others, then perhaps you can invest more heavily in related products or provide offers on products not getting as many clicks.
2. Leverage HR Data
Startups especially need to focus on diverse data sets and not just consumer data. This includes a huge emphasis on human resource data. HR resources comprise of a large bulk of overhead spending. Unbeknownst to most startups, recruitment is an extremely expensive undertaking. One study showed that it costs an average $3,328 just to replace a single employee in a position that pays $10.00 an hour.
This means that a high turnover can prove to be costly. Startups might not have the budget to recuperate from a high turnover rate if employees quit within months of the business taking off. Leverage HR data to find employees likely to stick around. The data should reveal patterns of applicants at a higher risk of quitting. Data to examine in this instance may include:
- An applicant’s average length of employment in previous jobs
- High remarks, or the lack of them, from previous employers
- The length of time the applicant was unemployed between jobs
3. Targeted Marketing
Marketing is another huge overhead expense. For the most part, marketing is a trial and error process. Marketers learn which keywords, calls-to-action, and email copywriting styles work best through numerous trials. This is a valuable process because by learning what doesn’t work, marketers are able to narrow down the best strategy for a given campaign. The process, unfortunately, is also expensive.
With big data at your disposal, you’ll have the latest predictive analytic information at your fingertips. You’ll immediately see which keywords perform best for that PPC ad, or which subject line for an email newsletter generates the most clicks. There will still be some trial and error, but the data will help you make the best decisions based on objective metrics and key performance indicators.
Startups are clearly at a disadvantage when it comes to big data. However, there are ways to gather data in the early stages of a business. When that data is the catalyst for important decision making, then young companies stand a much better chance of sticking around for the long-term.
