Understanding Data: The Pros and Cons of Observational Data

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One way to really understand observational data is to listen to Tricia Wang’s TED talk. Wang’s employer, a large cell phone company, had a question many business owners face: was it time to expand their business, and if so, was the market they were considering the right one to try to enter? Wang spent months making observations in the target marketplace, having conversations with people and developing a deeper understanding of how they lived and what was important to them. Her employer didn’t listen to what Wang had learned through this process, but it turns out that she was right: when the competition tried to enter that same market, they met with resounding success.

Observational data is also known as Thick Data – data that focuses on understanding the customer’s emotions and intentions. While objective data tells us what customers are doing, observational data focus on the why. Many retailers, who are highly motivated to understand what will lead someone to visit their store and make a purchase, have a superior observational data capture and analysis skills.

The Upside of Observational Data

Observational data relies on the observer’s ability to discern important details and draw accurate insights based on what they see. This is a skill that can be learned, and individuals become better at it over time, especially if they focus on doing a good job. Observational data can be very detailed and is a rich source of material for creative content. In a perfect world, observational data will be recorded and organized, so the insights gathered can be used for a long time.

The Downside of Observational Data

The dependence on individual perception that makes observational data users can also make it useless – if an observer isn’t skilled, is distracted, or is having their judgment influenced by outside factors, the insights gathered are of questionable value.  Data consistency between individuals varies: the observations an experienced business owner makes can be very different than those made by a new employee. Finally, observational data is seldom, if ever, recorded.

Making the Most of Observational Data

To get full value from your observational data, use it in combination with the objective data collected by your website, social media, POS system, and other data capture tools. This is called Smart Data and it’s what you need to grow your business!

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Understanding Data: The Pros and Cons of Observational Data
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Understanding Data: The Pros and Cons of Observational Data
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Observational Data focuses on understanding the customer’s emotions and intentions. While it is useful, there are some downsides as well.
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