There is a lot going on beneath the bonnet of a business on a daily basis. The data and information flowing through its systems hold the key to understanding profitability, customer requirements, and opportunities for growth. Yet these secrets can often remain hidden, with many small business owners and managers hard pushed for time to take a meaningful peek under.
We hear a lot about so-called ‘big data’, an on-trend term that is generally used in a ‘big business’ context. These organisations are fortunate to be able to digitally collect and store vast amounts of information, and in turn analyse it to reveal patterns and trends. This might seem out of reach for a smaller company, but SMEs should also be looking to data to drive decision-making.
Analysing and making sense of the data your business produces can provide you with many new, and even unexpected, insights and opportunities. These might span from ideas for how to make the business more operationally efficient, to the basis for developing super-targeted marketing initiatives or the foundation for a growth plan.
Business planning and strategy
Whether your business is a new start-up or an organisation that is familiar with annual business planning, data should underpin the plans and strategies that will lead you to achieve the goals you have set for yourself. Setting out a coherent and strategic business plan for the financial year ahead is crucial for growth, particularly as it can lead to securing additional financial support which can often mean the difference between success and failure.
Sitting down to develop your business plan shouldn’t be about blue-sky-thinking and fantasies, forecast in “an ideal world”. A robust business plan should rely on facts, truths and realistic goals backed up by data. Even with a wealth of business acumen and entrepreneurial spirit, any financier will struggle to be able to invest in you if the numbers don’t add up.
The next time you sit down to develop your business plan, challenge yourself to eliminate any assumptions. What is ‘gut feel’, and what can be backed up? A granular and specific view into past performance, and an honest lens on what has been successful or not, will be critical.
Streamline your operations
Becoming more operationally efficient means less hassle for you and your staff. The key here, is the ability to view data in real time. Having live access to data insights while the cogs of the enterprise are still turning gives you the ability to be reactive to the needs of your business and your customers. Stock management is a great example – a view of live stock levels will help you quickly see when certain items are running low, allowing you to re-stock in good time, and before customers are irritated by a lack of availability.
This view of your business doesn’t mean being ‘on the shop floor’ 24 hours a day. With Cloud technology, you can log into and touch base with the business remotely from any device. Gone are the days when productivity was measured simply by ‘hours clocked’. Running a business requires near constant attention, though clever use of technology means that owners and managers needn’t sacrifice work life balance to achieve this. Despite these advantages, a recent survey we conducted revealed that 48% of SMEs still don’t make use of the flexibility and convenience that Cloud technology brings.
Add more strings to your bow
An understanding of data is also crucially important for understanding your customers – the stock they are looking for, how they prefer to pay, and how you should market to them. Our research shows that 50% of SMEs feel that they only know their customers “fairly well”. A further 42% of SMEs say they tend to go on ‘feel’ rather than using data-led insights to understand their customers’ purchasing behaviour. Needless to say, this is information that small business owners should have at their fingertips.
As if there weren’t already enough skills required of an SME owner, running your own business also requires you to become a proficient marketer. To do this, it is important that you understand not only your customers profile and demographic, but have a good understanding of their buying behaviour and preferences. This will allow you to accurately segment customers, to create targeted in-store and email promotions, as well as forming the basis for loyalty schemes that will help drum up new business and keep existing customers coming back.
Understand what makes customers loyal
When we asked consumers why they would leave a store without making a purchase, 69% cited poor customer service as a major factor. The Customer Index Survey (2016) goes further, revealing that 79% of customers would take their business to a competitor within a week of experiencing poor customer service. Nowadays retailing is a merciless business, customers have an extraordinary range of choice – between shopping online and the high street – as to where to spend their money, so independent retailers cannot afford to be complacent.
With this in mind, retailers should be well aware that customer experience doesn’t start nor end when a potential customer walks onto the shop floor. They want to feel special, and that their custom is uniquely valued, rather than feeling part of a mass targeted group of consumers. By delving into the data the business is collecting, independent businesses can build an accurate picture of their customer base and connect with them in a much more personalised way. When the facts are at your fingertips, there is no reason to make speculative business decisions.
Create a loyalty scheme customers will love
Having mastered data collection and analysis, independent retailers can start thinking about how to use data to drive sales. Most consumers are used to having products pushed by the retail giants, like 241 offers on items they’ll never need, which is a really thinly veiled way of shifting products that have been over ordered. Smaller, more nimble businesses are in a more fortunate position to tailor the offers they provide to their customers, giving the retail giants a real run for their money.
Independent retailers can create a loyalty scheme unique to each customer’s buying behaviour, for instance; if your data is showing you that one of your customers comes into your store for the same product every fortnight, you could think about offering them every third purchase at a discounted rate. This is genuinely appreciated by the customer as it’s something they shop regularly for, rather than pushing them to spend on items they don’t need.
Businesses need to be prepared to delve into data, analyse and understand it, and then react quickly to reap the rewards. This insight will help business owners plan more effectively, become more operationally sound and be more strategically informed to increase sales and drive growth. The good news for small businesses is that this understanding isn’t the reserve of big businesses – the tools are at hand to help you tap into this data, lighten the load of day to day business management, and ensure that your business reaches its full potential.
Raj Sond, General Manager, First Data
Image Credit: Alexskopje / Shutterstock