Without Good Analysis, Big Data Is Just a Big Trash Dump

Focusing on Big Data can be a big waste of time and money if you don't know how to mine it.

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By Vin Gupta

Opinions expressed by Entrepreneur contributors are their own.

Big Data, Mega Data or Meta Data are the buzzwords in corporate lingo. It is like a bunch of high school boys bragging in the locker room. But "Big Data" can be a "big pile of trash," unless mined by geniuses. This whole new phenomenon seems like nothing but job security for data nerds who want to protect their huge budgets.

For example, Walmart has probably one of the biggest databases ever created on their products, prices, competitors, customers, and you name it. They probably spend over a billion dollars per year on what I call "Meta Data." But their revenue is not growing. Why is that? I don't think even they know why. So what good is this big database if they cannot grow their sales?

Second example is Best Buy. They spend a lot of money on Big Data and their revenue is declining because they have a clunky website and they are being eaten alive by Amazon's superior technology. So what good is this "Big Data?"

Third example is our own government, which has the largest database of people. They are listening to phone calls, looking at emails, but they could not prevent the bombing at the Boston Marathon. Therefore, you really wonder about the value of this so called "Big Data" we are mesmerized with.

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A few months ago I was talking to a CEO of a large retail and e-commerce organization and he was explaining to me how they use Big Data to reach their customers and find them even if they are walking in a mall.

He bragged to me that they had spent millions of dollars on software and so-called expert data miners to identify the high-value customers and use social media to create buzz and generate revenue from these customers.

I then asked the CEO why his company's revenue wasn't growing. In fact, it had been decreasing. He gave me a long-winded answer about changing demographics, shifting customer psychology and the effect of Obamacare. The bottom line is, they spent a lot of money on big data analytics and expensive data miners, but they had nothing to show for it. When I tried their website, it was horrible, and customer service was non-existent. I don't think their CEO ever tried to buy from his own website and eat his own cooking. He was too busy bragging to the analysts.

"Big Data" is the buzzword today. Every software or analytics company is trying to sell the best and most sophisticated software for efficient marketing. A lot of experts are offering their services as expert data miners, like gold miners in San Francisco. In my opinion it is all hogwash unless people are really smart enough to analyze Big Data to find the nuggets. These people are hard to find. The good ones are already in their own business and making a bundle.

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Big Data is like a big trash dump. You have to know how to find the nuggets so it's profitable.

Corporations are collecting data on their products, their customers, and customer's buying habits from many different sources such as from point of sale, from online surveys, vendors, and social media. You name it, they get it. Once they have all this data, then someone has to be a genius to analyze it. That is where the rubber meets the road. Most of the time these corporations don't have those geniuses analyzing it and finding the nuggets. The data just sits there getting old and worthless. Corporations will spend millions of dollars to analyze worthless data for worthless results. These expensive, arrogant data miners will create big reports, complicated analytics, but when you look at their results in sales growth or profitability, they have nothing to show for it.

When I was going through business school many years ago, I had a professor who used to profess "less is more." Collect less data, but collect relevant data. Talk to your customers face-to-face. See the customers who have left you and try to find out why. Less data, but relevant data, will help you improve your product, customer service, and your pricing strategy.

My suggestion to entrepreneurs and CEO's is don't get mesmerized by big-data mentality and waste money on that because it is nothing more than job security for data-mining nerds. It is better to collect less information, but something more relevant and then use it to improve your business model.

In most cases problems are very simple, and the answers are simple, too, like answering the phone by a live person, helping customers right away, and treating them like family.

Finally, at the end of the day, you have to see if your sales and profits are growing or not. If your sales are growing that means you have done something right. If they are not, then your Big Data is worthless.

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Vin Gupta

Founder of Infofree.com and DatabaseUSA.com

Vin Gupta is the founder of San Mateo, Calif.-based InfoFree.com, which provides sales leads to salespeople and small businesses, and Database USA, a provider of big databases and database marketing to enterprise customers. He also founded Infousa and SalesGenie, which he sold in 2010.

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