Most small businesses aren’t taking full advantage of big data.
It’s understandable. After all, small business owners have a lot on their plates. They may assume that only big corporations have the time, the money, and the know-how to develop a data-driven business strategy.
Well, that’s simply not true.
In fact, just about any organization can harness the power of data to cut costs and reduce inefficiency. A small investment can make a huge difference when it comes to anticipating consumer behavior and creating loyal customers. That’s the kind of change that any small business needs.
Data-Driven Small Businesses
Hotels and property managers can use data management to develop pricing strategies in line with customer demand. Even zoos can use data to boost attendance and develop an intelligent staffing policy.
But data science may be especially important for small retailers. That’s because retail is one of the industries that’s been the hardest hit by the rise of online marketplaces. For many small and medium stores, it’s become harder to compete against large retailers. It’s also become tougher to keep up with consumer’s expectation.
Retailers need to seize every advantage, and that means they need to take full advantage of data science. This article will explain how using data can revolutionize a small or mid-sized retailer.
Plenty of retailers are already gathering and using data. In fact, in a recent survey 81 percent of retailers reported that they are gathering and using data. But only 16 percent of those surveyed say that they’re confident in their use of data.
So, how can small retailers use data to their advantage?
Let’s start with what most retailers are already doing: gathering data. Most store owners already use a POS (point of sale) system. Often, retailers just use the POS to ring up sales.
POS systems can also generate a data-rich sales report. That report will tell you exactly which products are driving sales. It will also tell you what times of day those sales are made and, in the long-term, which weeks, months, and seasons are busier for your business.
Sure, you probably have a basic sense of what your most popular products are, and when your busy times are. But a sales report can drill down and give you the data week to week, month to month, and year to year. Memories are faulty, but data doesn’t lie.
The data in a sales report can help retailers decide when to order inventory, how heavily to staff their store, and how to price their products.
Other Data Sources
Customer loyalty programs are great tools for tracking customer behavior. Loyalty programs can pinpoint exactly which types of items create loyal customers. They can also provide data on how regularly loyal customers come back, which items they buy, and when they show signs of leaving.
Email marketing is another reliable way to generate information about customers. Which emails get the most clicks? Which offers generate clicks? Which emails go un-opened?
Retailers can also gather actionable data from social media. Tools like Social Mention, Twilert, and Kurrently can alert business owners every time their store is mentioned; retailers can also set up alerts for mentions of topics within their industry. Staying competitive means keeping on top of the trends and knowing what customers are interested in.
Other tools, like CRM software and website analytics, can provide data to give you a fuller picture of your customers and their likely behavior.
Putting Data to Work
Many retailers are already good at gathering data – but many report that they’re not sure how to put the information to use.
We’ve already seen that sales data can help retailers with pricing, inventory, and marketing decisions.
Perhaps your sales data shows you that ice cream machines simply don’t sell well in the wintertime – but sales always pick up when temperatures rise. That insight can help home goods stores decide when to order inventory – and when to offer a steep discount.
Data can also be used to trouble-shoot for problems, identify problem areas, and figure out what customers would love to see improve. And data can be invaluable in making decisions about a whole range of issues, from what types of deals to offer, to how to organize the retail space.
Even the smallest mom-and-pop retailer is competing on a global stage, these days. It’s time to embrace that reality and make the most of the tools that data science provides.