Data analytics is no longer just a tool for large corporations. Today, small and medium businesses can now use their data to:
- Reach new audiences.
- Improve operations.
- Fuel business growth.
This is thanks to new small business technology trends that have made large swaths of data available to everyone — from single-location boutiques to multi-location, growing franchises.
For a deeper understanding of small business data analytics, keep reading to learn:
- What data analytics is.
- The current state of small business data analytics.
- How data analytics can impact your small business.
- How to get started with small business data analytics.
- The role of data analytics in marketing.
Now, let’s jump in!
What is data analytics?
Data analytics generally describes the process of using information to discover new ways to improve your small business.
For small businesses, the process is fairly straightforward and can be broken up into four parts:
- Collect data about your business activities.
- Clean this data.
- Organize your data points to ensure they can be examined easily.
- Evaluate information to discover new ways to improve your operations.
Essentially, the goal of small business data analytics is to take your raw data and turn it into actionable insights that can be used for impactful change.
The current state of small business data analytics
Now that we’ve covered the foundation of what data analytics is, let’s look at how small businesses leverage data today.
According to Score, 51% of small business owners believe that big data is a must.
“51% of small business owners believe that big data is a must.”— Score, 2019.
Digging deeper, this research found that companies that leverage data analytics tools enjoy 15% more in sales than companies that don’t.
All in all, it’s clear that in 2021 and beyond small business data analytics are a key part of growing your business. Next, let’s look at why they’re so crucial for scaling businesses.
How can data analytics impact your small business?
One of the most common ways to use small business data analytics is to maximize the efficiency and effectiveness of your sales process.
By evaluating data from each step of your process, you can:
- Increase the efficiency of how you deliver services or create your product.
- Reduce shopping cart abandonment to maximize revenue.
- Save money by optimizing your marketing spend.
- Improve your employee experience and increase retention.
These benefits, however, are only possible if you ask the right questions about your data set.
Questions such as, “Which acquisition channels have the highest ROI?”, “How can we adjust our outreach to more effectively target audiences?”, and “Why are prospects abandoning us at that step in the sales process?” are just a few examples of questions that will provide you with valuable insights.
When it comes to small business data analytics, it’s important to understand not just what the data says but also the why and how behind it.
How to get started
First thing first: you need data to analyze. And while you may think you don’t have information worth analyzing, that likely isn’t the case.
Here’s an overview of tools you probably use that hold information you can include in your analysis:
- Customer relationship management (CRM) solution. This gives you a 360-degree view of every customer from their demographic details to order history. This is all information you can include in your analysis.
- Email marketing platform. This tool holds data such as customer communication habits and campaign performance. This is information you can use to examine your email communication tactics at scale and look at how they perform with different audiences.
- eCommerce tool. You can look here for data about your online buyers and the steps that lead them to make purchases with you. These are data points you can then use to refine your buyer personas and customer journey.
As you begin your data analysis, you’ll want to ask questions like:
- What patterns do you see in this data?
- What is causing these patterns?
- How can you use this information to improve your business?
Now that you have the right information, you’ll want to make sure your analysis uses data hygiene best practices. For those of you new to small business data analytics, data hygiene is “the ongoing processes involved in guaranteeing data is clean” or error-free.
The role of small business data analytics in your marketing efforts
Next, let’s look at how small business data analytics can impact your marketing performance.
#1: Maximize your customer retention rate
The benefits of strong customer retention are almost endless. From higher sales to a better bottom line, it makes financial sense to invest in the relationships you have with your existing customer base.
To improve your customer retention rate, you can use data analytics to:
- Discover which communication efforts are the most engaging for your customers. Then, replicate that style of messaging going forward.
- Segment your contact database to create personalized offers for different segments of your audiences.
And with 80% of buyers only shopping at businesses that provide them with personalized experiences, the above tactics are sure-fire ways to turn your customers into life-long, repeat purchasers.
#2: Expand into new markets
Next, let’s walk through the scenario of using small business data analytics to successfully expand into new markets. To start, here’s an example.
Imagine that you’re a small business that sells stationery.
In the past, you sold stationery to businesses in your surrounding zip codes but now, you’re looking to sell your product to businesses in other geographic areas.
In this example, the data-driven path forward is to analyze your customer data to determine who your ideal customer is and then build a strategy that targets this profile in other regions.
To do this, you need to examine your current customer base and look for the common characteristics your best customers share. Once you understand this, you can then determine who your ideal customer is and target audiences that match this persona.
Whether that’s through look-a-like ad campaigns or extremely targeted sales outreach, leveraging data analytics here helps you successfully break into new markets and grow your business faster.
Closing notes on small business data analytics
There’s no doubt that in 2021 small business data analytics are center stage and here to stay! No longer a tool that’s reserved for large corporations, it’s time for small businesses to shine as data-driven companies. Whether for marketing, product development, or internal optimization, analyzing your data is a great way to yield powerful insights and improve your operations.
And if you feel overwhelmed at the idea of incorporating data analytics into your strategy, fear not as there are partners that specialize in helping you do exactly that.
Whatever approach you take, we wish you the best of luck!
Looking to dive deeper into small business data analytics? Learn about the power of big data in business here.
Image credit: Campaign Creators via Unsplash