How to Be the Nate Silver of Your Small Business & Use Big Data to Predict Success
One could say that the other big winner in Tuesday’s presidential election was Nate Silver. Silver is a US statistician and New York Times blogger who accurately predicted this year’s election results. In fact, he correctly predicted the results of all 50 states. How did he do it? Well, he did it in a way that’s a little more sophisticated than using paper cups and aptly-named ice cream flavors (although we applaud you, enthusiastic small businesses).
If this is your first time hearing the term, or if you’ve been on the verge of Googling it but haven’t, “big data” basically refers to a massive set of data that can be too big to handle, interpret, and read without the help of technology.
The base data set that Silver used to predict the presidential election results came from existing poll data from all 50 states. But he didn’t stop there, though many pundits did. He incorporated variables like demographics, economic considerations and registration figures. Then he looked at trends, and watched to see where influential states were leaning, which often creates a domino effect for other states.
Using sophisticated modeling software, Silver “ran thousands of mock elections, flipping a virtual coin (weighted according to the state-level models) for each of the 50 states, and counted the electoral votes. It was this process that led him to forecast a high probability of an Obama win.”
Have you ever stopped to think about how important data is to your small business? Silver was able to predict the president of the United States by looking at numbers, trends and voter data. Businesses have similar data building up right in front of them in the form of payment data that shows who the customers are and what they are most likely to buy.
If you can gather this data, there’s no need to be Nate Silver and break out the spreadsheets or buy expensive modeling software. The data that small businesses are using to grow and build loyalty can tell you:
- What percentage of your customers are male, female, married, single, young, old, parents and members of other demographics
- How much revenue you lose (or gain) on rainy days versus sunny days
- How customers are spending their money in your neighborhood versus how they’re spending it with you
- Which days of the week you’re most profitable (and which days could use a good promotion)
- What percentage of customers are repeat customers, versus which are new
- Who your best customers are and how much they’re worth to you over the course of a month, year or longer
- Whether your loyalty incentives and other marketing initiatives are bringing customers back
- Which sales patterns are prevalent and how you can capitalize on what your customers want
Fifty years ago, Nate Silver would have been a guy with a calculator, a big chalkboard and a typewriter full of notes. He probably wouldn’t have been able to predict the presidential election by knocking door to door and asking people to scribble in the dots on hundreds of surveys.
Small businesses would be just as lost, still collecting loyalty “data” through paper punch cards and sales receipts. In 2012 we have the advantage of an entire world of data to source from. There was a time when only big businesses could afford to organize and parse that data, but that’s no longer the case.
If you switch over to Swipely and ask us to start processing your credit card payments, we’ll gather, organize and deliver this information to you for free. After all, why should it be kept hostage when there’s so much you can learn from it? Swipely gives small businesses access to their most important data set: Their customers’ buying habits.