Information. There’s a lot of it and sometimes we don’t know what to do with it all. Each day we sift through huge amounts, trying to determine what we should dismiss and what we should probe further.
News is a good example. We scan headlines, read the first few sentences of a few articles, but end up fully reading less than that. We filter information this way so we can more quickly hone in on what is relevant and useful to us, and hopefully gain a better understanding of what is going on.
It is assumed in economic theory that consumers and producers have perfect information about each other and the market, meaning that producers and consumers have perfect knowledge of what something should cost and how much happiness they’ll get from it.
Economic models need to be reliable and useful, but the assumption that both consumers and producers have perfect information doesn’t actually hold true in real life. Even so, it illustrates the important principal that consumers and businesses do need to understand more about each other, which has given rise to behavioural economics as a field of study, and a growing one at that.
Online reviews, product comparisons and marketplace intermediaries give consumers access to more information than ever, and means consumers have a greater potential impact on brand and reputation than ever.
CoreData’s 2017 Digital Intimacy report shows that close to all (98.2 per cent) consumers look to online reviews when considering a product or service. And 94.8 per cent of consumers believe an online review effects the likelihood of making a purchase. Online reviews allow consumers to cut through the noise of marketing and advertising and the perceived independence and objectivity of reviews builds trust in the review platform.
Businesses, too, must effectively deal with masses of information. Their objective is to learn what consumers want, and how to reflect that back to consumers to encourage them to act – to buy a product or service. Businesses are faced with filtering a plethora of data and information, and big data allows them to move towards having perfect information on consumers, giving them insight to guide product design, service propositions, strategy and even content.
It’s been estimated that of all the data that exists across the world today only 1 per cent has been meaningfully analysed, largely due to slow uptake by business of data analytics. There’s a lot more information and data to get through, and new data is being created all the time.
Data needs to accurately represent reality to be truly useful, to businesses and consumers alike. Purposeful data analytics and research is critical to closing the information gap. By closing this gap, businesses can make better decisions, articulate value more effectively and serve consumers better.
But it takes work. Sifting through the sheer volume of available data and cutting through the noise takes time, needs the right people and requires intelligent collaboration.