by BuyFi Team
The Importance of Data for Small Business
The “Mom and Pop” shops of yesteryear are dying off, or rather, being killed off by national retailers such as Wal-Mart, McDonald’s, and other national chains. On the surface, it might seem that this death is because of name brand recognition, but is this really all that is happening? After all, our neighborhoods still have the older generations who know and recommend these small businesses, and yet the larger merchants get the majority of the business. Much of this comes down to one crucial detail: the big merchants know their customers better.
These national chains learn what their customers buy, when they buy it, and what they buy to go along with it. They know how to entice their customers to buy more than they had originally planned, and they know how to keep their customers loyal. Why do small businesses not know how to keep the loyalty of their customers and build up their own customer base? It cannot be solely due to television commercials and radio spots, because small businesses take advantage of advertising opportunities, too, and still suffer.
It all boils down to knowing the customer, and that can only be accomplished through the use of analytics. Jim Collins, business consultant and author of the best-selling book Good to Great, had this to say about the importance of analytics:
We make excellent use of data, metrics and hard tangible evidence to assess external threats and internal weakness. We make particularly good use of trend lines (to see where we are declining) and comparative statistics (to see where we are falling behind others) to discover and highlight brutal facts.
This is where small business is falling behind, is in the use of analytics. The information provided by analytics is what helps companies such as Starbucks gauge how successful their loyalty programs are, and what changes need to be made. Analytics provides key figures that retailers like Wal-Mart and Best Buy rely upon to determine what products to put on sale and when to put them on sale.
Certainly, some of this knowledge is common sense: you put garden hoses on sale when people are more likely to buy them, but how do you know what length of garden hose is selling the best? This is handled through the careful manipulation of data analytics, and most small businesses just are not doing that correctly, if they’re analyzing their data at all.
Without the careful use of data analytics, small businesses will continue to fail. Our society will become ruled by national franchises, and the entrepreneurship that was one of the highlights of the American Dream will cease to exist. Spreadsheets and vanity metrics, such as how many likes your business’s Facebook page has, aren’t good enough. You need to be able to track all of the critical data that a customer’s credit card purchase can unlock, if you have the technology to do so. BuyFi can help with that, with its state-of-the-art cloud payment analytics tools.