Appearing in In The Black, November 2016
Why small data is big news for business
Tapping into small data, the minutiae that underpin consumers’ lives, will give companies the edge, says branding expert Martin Lindstrom.
On his quest for small data, branding consultant Martin Lindstrom spends about 300 days a year visiting people’s homes, sometimes even moving in with them. He looks in their kitchens and bedrooms, checks out the contents of their refrigerators and goes through their wallets. He also rifles through people’s rubbish in the course of his work.
Lindstrom’s analysis of the personal information he discovers has delivered many critical insights.
In future, successful companies will explore the minutiae of consumers’ lives to build a bigger social picture, insists Lindstrom, author of the book, Small Data: The Tiny Clues That Uncover Huge Trends.
Small data and big data serve different purposes, he says. Big data is about finding correlations, while small data is about understanding causes. Small data keeps companies connected to the true nature of consumers, rather than defining them by their transactions.
Global brand LEGO is a good example. After the arrival of the internet, the LEGO Group management assumed children would no longer have the patience to build with small LEGO bricks, so it switched to larger blocks to speed up building time, only to see sales plummet. By 2002, the company was almost bankrupt.
It was an 11-year-old German boy’s admission of pride in his worn-out sneakers that helped LEGO turn things around. The wear and tear from thousands of hours of skating was proof that he was the best skater in town. This insight helped LEGO understand that “digital natives” would spend as long as it takes to achieve what they want.
“This piece of small data resulted in LEGO reverting to a smaller brick and ultimately becoming the largest toy manufacturer in the world,” says Lindstrom.
In another case, Lindstrom studied the placement of fridge magnets in Russian households. There’s a ritual in which the mother always puts the first one in the centre, and everyone else places theirs around hers.
This demonstrates the key role of the mother and wife in Russian society, claims Lindstrom, who subsequently advised an entrepreneurial client to create a website for Russian mothers. The Mum’s Place site became one of Russia’s fastest-growing e-commerce sites.
From his forays into small data, Lindstrom also discovered that fear has become a dominant theme in the US, creating a society where safety is now a driving force.
“Look at American hotel rooms – locked windows and four times the number of safety warnings than anywhere else in the world,” he says.
Fear is also a factor behind the rise of political correctness, as many Americans have become afraid of saying what they think, finds Lindstrom. One response to this has been the rise of “retro psychologically transformative” spaces where people feel free to relax and be themselves.
Lindstrom spotted the potential for these when customers of US supermarket chain Lowes confided that the only thing they liked about the stores was the smell of roasting chicken, which reminded them of their childhood.
“In the future,” he predicts, “brands, products, companies, celebrities and politicians who counteract fear and political correctness will become more dominant by catering to people’s true desires.”
Developing the skill set
Martin Lindstrom has some advice for businesses seeking to develop awareness from small data:
“Being fully present is key to a successful small data mindset – seeing things people normally wouldn’t see, drawing conclusions from those things and reacting to them.
“It takes time to learn this skill set, but once you’re there, you hold a clear competitive advantage.”