Future-proof Your Small Business with a Data Strategy
The phrase, “Data is the new oil,” is attributed to Clive Humby, the British mathematician and architect of the Tesco Clubcard, the supermarket reward program. Without going too far down the rabbit hole of metaphor-shopping, suffice it to say that distilling and wielding data well will become a competitive advantage for most business – large and small.
Data management can feel out of reach for many small businesses. It may not be the sweet spot of many business owners. It may also seem so tech-heavy and complex that it is really reserved for large businesses with “people who do that.”
Mastering your business’ data – customer data, product and service data, financial data and the relationship between each – is possible and practical. Data is the road to creating more compelling products and services, to efficiently marketing to acquire the best customers and building loyal and high-value customers.
Start by Answering Valuable Questions
“How can I know who my most valuable customers are?”
“How can I optimize the value to and from my existing customers? How can I get them to buy more and more often?”
“Can I more efficiently acquire new, high-value customers?”
“Should I be looking to my less-loyal, periodic customers for increased purchases?”
“Can I stimulate more referrals and customer advocacy to keep my marketing costs down?”
“How can I design only those products and services that will sell well and be profitable?”
“How can I predict my cash flow going into the future?”
These are all classic questions for any size business. Pick the one that matters most to you right now for your type of business. If you are a health spa, you may want to optimize the revenue from your existing customers and have more insight into which of them are your most profitable. If you are a graphic design firm, you may want to focus on efficient new customer acquisition. If you create back-office software, you want a more efficient way to integrate sales and marketing.
Define most profitable channels – How do you know whether your Facebook ad program, your PR event or your customer referral program nets the most high-value customers. By tracking inquiries and actual sales back to engagements from various channels you can understand through evidence how these different channels contribute to new customer acquisition.
Sustain custom advertising audiences – Facebook, Google and, increasingly, Amazon, are staple ad channels for many businesses. They are the answer for reaching most people in the US. The downside is that they are considered “walled gardens” when it comes to data. You simply cannot get all that much data out of them beyond what you learn from testing. Set up your own custom audiences – people who fit your ideal customer profile – and then use all of your channels to reach and optimize those audiences. That targeting data and what you learn by doing can quickly become a competitive advantage.
Integrate marketing and sales – Marketing creates leads; sales nurtures and converts. Of course, what really happens is marketing is seen as generating ‘crap leads’ and sales is seen as unwilling to follow up on perfectly good leads. You should sidestep all of this and use collaboratively-generated prospect lists, market to them using account-level targeting data (see Account Based Marketing) and pass data to the sales CRM process.
Create more valuable engagements – How many emails should you send to customers to stimulate cross-sell? Understanding how many touchpoints create a sticky, profitable relationship with customers will help you optimize your meager resources. Combining customer marketing and engagement data with actual sales data will give you answers that were hard to come by before. Darcy Kurtz from MailChimp talks about the importance of data-driven automation,
“As you learn more about your audience and what works for engaging them, make sure you’re making these insights scalable by setting up automations to trigger personalized messages based on different demographic or behavioral data.”
Streamline processes – All of your customer experience is compared to Amazon or AirBnB regardless of how far away these examples are from what your business sells. Every business needs to be constantly streamlining the effort it takes a customer to do business with you. Data reveals the pain points – when customers give up on you – and the high points – those moments they value more (survey data can reveal this). This can all have a direct impact on retention and additional sales.
Sustain flow of customer insights – Most small business people pride themselves on knowing their customers well. Here’s where a little humility can go a long way. Feedback and data from customers that reveals what matters most to them almost always reveals new insights.
Product and Service Development
Combine market and customer insights to inform products and services – Just as you want to listen to customers to improve experience, you also want their feedback to inform product and service development. Data management can help you collect this in a more comprehensive way and aviod the pitfalls of the anecdotal comments via the sales people. Combine that customer insight with what is going on in the market (e.g. more housing starts, rising energy prices, or trade war tariffs) and you have more data to make business decisions.
Test new offers early and often – The best way to know what customers want is to test your product and service enhancement before you have sunk a ton of dough into it. Capturing test data can give you confidence that you are on the right track. It can also be used to influence financial backers that you are responding to real demand.
Smartly reduce the cost of production or service delivery – Over the course of your supply and manufacturing chain, where are your big expenses? Using data, you can identify the costliest steps and actively seek ways to drive down expense to improve your margin.
Get Started Now
Using data productively takes effort and time. Rather then try and elevate your data practices all at once, decide what is most important to get done now based upon the impact it can have on your business today and the competitive advantage it will deliver tomorrow. In short, decide which questions you want data strategy and management to answer and get going.