If you’re interested in learning how data can help you grow your business, it’s helpful to understand what the different types of data are and what each one is used for. While the word data simply means facts and statistics collected for reference, that’s not enough of a definition to help you make sense of the many different tools and strategies that are available.
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Data comes in a variety of formats, and they’re not all equally relevant to the small business owner. With that in mind, here’s a very brief introduction to the four types of data you need to know about:
Big Data: This is the data that captures all the headlines. Major retailers and other large organizations can track, record and analyze the demographics, behaviors, preferences and more of entire populations – hundreds of thousands, even millions of people. Big data analysis identifies patterns and trends. This is extremely useful – it’s what Jeff Bezos used to build Amazon – but for the typical small business owner, it’s not accessible or affordable.
Small Data: As a business owner, you’re much more likely to benefit from small data. These are the insights and observations captured by your website, social media, POS system, and other data capture tools. Small data tracks customer behavior and makes it easier to segment your audience effectively. Small data is also known as objective data.
Thick Data: While Small Data tells us what our customers are doing, Thick Data explains why they are doing it. Thick Data records customer emotions and intentions. Thick Data is often gathered by direct observation. That’s why it’s called observational data.
Smart Data: Smart Data is a select, filtered combination of small data and thick data observations and insights. By filtering out the noise and focusing on those data points most useful to the business owner’s goals and objectives, Smart Data allows for more informed, efficient decision making. Putting observational and objective data together is a game changer.