Importance of Data to Small Businesses
Chris Emoghene has thirteen years banking experience across public sector,…
The business environment and competitive landscape is becoming increasingly dynamic. What is considered to be a competitive advantage to one company or even industry today may be a non-issue tomorrow. Innovation and disruptions are constantly changing business operations and defining their survival. In Nigeria, for instance, what was largely the exclusive reserve of traditional banks a few years ago is currently being preyed upon by the Fin-techs. Who would have thought that one could stay in the comfort his/her home and hail a taxi instead of staying under the scorching sun waiting to flag the next driver? And I bet you, we aren’t even started yet.
At the center of all these changes is data. The good news is that a plethora of data is being generated by both human and natural activities on a daily basis, such that individuals and businesses have to carefully sift through the available data in order to collect and analyze only relevant ones. However, effective collection and analysis of useful data maybe expensive, and that explains why only companies with big financial war chest appear to be benefiting more from big data analytics and their application to various business segments.
Nevertheless, Micro, Small & Medium Enterprises (MSMEs) with little budget can also key into the wide range of opportunities and benefits embedded in targeted data collection, analyses and utilization, using the following strategies:
- Direct approach: Using the direct approach strategy, companies can ask both customers and prospects relevant questions depending on the intended use of such data. Here, the data can be collected by oral questioning or administration of hard copy or online questionnaires. For example, a local retail pharmacy store seeking to establish a new outlet can collect and analyze such data as addresses/location of its existing customers, frequently purchased products, their purchasing powers, price sensitivity, among other data in order to take informed decisions.
- Indirect method: The indirect method of data collection can be broken down into tracking of targets (customers and prospects) and sourcing data from third party. In the case of tracking customers and prospects activities, data is usually obtained by observing behaviors, trends and patterns; both online and offline. For instance, players in the fashion industry can use social media such as Instagram and Facebook to track fashion trends for different age brackets with a view to being in tune with what their customers or prospective customers might demand.
- The other indirect method data collection entails sourcing relevant data from third parties. Here, small businesses can collaborate with research agencies or other businesses with huge useful data.
Importance of Data to Small Businesses
- Improved customer experience: It was Roy H. Williams who said, “The first step in exceeding your customer’s expectations is to know those expectations.” and in the words of Jerry Gregoire, “The customer experience is the next competitive battleground.” Therefore, the place of relevant data collection and analysis in constantly improving small businesses’ customer experiences cannot be overemphasized, as every appropriate customer’s data can reveal his/her taste, preferences and purchasing power. Armed with that information, the business will be able to serve the customers better.
- Efficient allocation of resources: With appropriate data, small businesses can engaged in target marketing and advertisement, thereby significantly reducing the cost per new customer acquired or existing one served. Also, relevant data about customers can lead to tailored products and services, and reduce overall operational cost. You may also see understanding basic financial ratios for informed business decisions.
- Better management: Data about customers and competition can aid management of small business to take important decisions as business remodeling, budgeting, process improvements, and so on, for effective service delivery to both internal and external customers. Data collection and analysis can also help small businesses in talent recruitment and management.
- Growth in profitability: With improved customer experiences, efficient allocation of resources and better management derivable from effective data collection, analysis and application, small businesses can consistently churn out profits every year.
Chris Emoghene can be reached via email@example.com or @emochris1