Business Credit
3 business scenarios that need money to make money
You've probably heard of "big data - perhaps in an article investigating all the ways big corporations can use customer data in creative (and occasionally creepy!) ways to drive sales and boost growth.
Remember when Target famously used customers' shopping habits to identify and market to pregnant mothers - in some cases before they had even shared the news with their friends and family? More recently, even hit Broadway musicals like Hamilton have started leveraging data in pricing models to adjust ticket prices according to customer demand.
Consumer data, in short, is simply a collection of information about your customers. In what patterns do they typically make purchases? And how can you leverage that in your favor?
Not all data has the "big brother feel of beacons and heat maps, though. In fact, you might be surprised by how much customer information small businesses like yours already have - the question is whether you're utilizing it wisely.
Here are a few easy and inexpensive ways small business owners can use data to gather information about their customer base and put that knowledge to work.
First, take stock of what customer - and potential customer - data you already have. There's likely a lot of data already floating around your customer files, invoices, and payment histories - and even more that you can pull from Google Analytics (Google's free web traffic analytics tool) and your business' social media accounts.
This could include anything from their general demographics (like age and location) to information that could indicate their likelihood of becoming a customer, such as length of time they spend browsing your website or on the phone with your sales reps.
For example, a residential landscaping company could create a map of customer residences and later use that to evaluate what areas to focus their marketing on. They might even be able to layer that over information on residential lot sizes and land value in the area to determine effective pricing.
Once you've taken stock of the information you have available, the next step is to figure out the sort of picture it paints.
What does the information tell you about who your typical customer is? What do you know about that demographic? Moreover, how can this be used to your advantage?
Use this information to build personas, which are detailed representations of your key customer segments. For example, does your data indicate your typical customers are middle-aged women in the suburbs with children? College-aged adults living in major metropolitan areas? Once you confirm what types of customers you attract, dive deeper into your data to see if you can figure out how they find you and interact with your brand.
Look for the gaps: Is there anything that seems to be missing from the products or services you offer?
Or, on the flip side, is there anything you can't quite nail down about your customers that would be helpful information to have? Think in terms of both who your customers are (and what you do and don't know about them) but also in how you serve them - you may discover a related product or service that would make sense for you to feature.
Data is useful because it's a more scientific approach to decision making. But even with all the information you may have about your customers, there's still an element of "throw it at the wall and see what sticks. Once you've formed a hypothesis, what's next?
Knowing what you know now, think about how you could leverage the data for your business. Apply this information to your work - specific areas you advertise, how you target customers on social media, and other marketing strategies. Think practically about what you know about your customer, and evaluate the best methods to use to reach them. Test a couple different methods to see what works best and what is most cost-effective.
The real value of data is the ability to know your customer on a broader, deeper level and being able to use that to reach them in a more meaningful way in everything from your marketing materials to your products or services. And if you maximize your meaning to customers, you stand to maximize your profit margins, too!
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