How Data Analysis Can Work For Small to Medium Businesses
The Point of Sale News ™ spoke with Krish Mantripragada, SVP, Information and Analytics Solutions, First Data, about how data analysis could help small and medium sized businesses.
Question: How can data analysis help small- to medium-sized businesses (SMBs)?
Answer: We have actually found that most SMB owners would tell you they are too busy running their businesses and don’t have much time for data analysis, which has typically been time-consuming and costly. What SMB owners do want, however, is to learn how they can grow and improve their business. That’s one of the reasons First Data launched its InsighticsSM solution. Analytics can provide extremely compelling insight that can help businesses, especially SMBs, grow. Today, there are infinite opportunities for an SMB to easily use data analysis to help them turn clients into loyal advocates, to boost average ticket sales or to run the right promotion.
Let’s say for example that Robert stops by his local coffee shop, Coffee Queen, each Wednesday morning for a double latte with soy milk. Coffee Queen’s owner, Mary, can track how often Robert places orders and what items he purchases. Using such data allows business owners to make more strategic decisions (perhaps the drive-thru line needs a second lane to accommodate the morning coffee rush), compare performance to similar businesses (how are Coffee Queen’s peak morning sales in comparison to other area coffee shops, for example) and make informed decisions on a daily basis from real-time data and analysis (should a hot promotion be extended or repeated on slower days and times?) Today’s data-driven world means that SMBs must keep up with larger corporations that have access to vast resources – as well as like-sized competitors looking for ways to stay ahead in the battle for customer sales and loyalty.
The great news is that today, SMBs can take advantage of analytics like never before to improve their bottom line and establish a competitive edge while staying on top of evolving consumer demands. There are three primary benefits for SMB owners who use data analysis:
· Provides a deeper understanding of customer spending behaviors and supports evolving consumer preferences in real time with actionable data
· Empowers decision makers to better manage performance and mitigate risks
· Enables businesses to derive more value from marketing and loyalty programs
Question: Many SMB owners think data analysis is too complicated or difficult to understand. Is this true?
Answer: This indeed has been true historically for most analytics offerings. But things have changed dramatically. Many small business owners are intimidated by the thought of data analysis because they think it’s is too complicated, or their business isn’t complex enough to need analytics solutions. However, today’s business analytics are extremely easy-to-use and can quickly provide businesses with meaningful and immediate insights. For example, Mary can review yesterday’s Coffee Queen sales at the click of a button, compare those sales to the same day last month or week and she can also quickly identify specific trends regarding the most or least popular food and drink items. Today’s solutions are built to be sophisticated yet simple enough for any SMB owner to use.
Question: How accessible are data analysis tools to small businesses with limited time and budgets?
Answer: In the past, analytics solutions were designed specifically for large organizations that could afford customized data analysis programs so accessibility by SMBs was not the norm. That has changed significantly. Today’s technology can be utilized by SMBs conveniently and affordably and the cloud has made accessibility a non-issue. A store owner, like Mary, could go on a vacation to the Bahamas and still have access to Coffee Queen’s sales data and other metrics like what was purchased and when, how many customers visited and more. She can confidently enjoy her vacation and know that her business is running smoothly and growing while she’s away. Some solutions, like Insightics, take an even broader view of accessibility and can push key pieces of information to the SMB owner without the need to log into a system.
Question: Is business data the only type of data that results in useful analysis and recommendations for a small business?
Answer: There’s lots of compelling data beyond business data that can SMBs can use to enhance their business. For example, there are macroeconomic indicators that measure U.S. consumer spending and can highlight key consumer trends which can be very useful. Perhaps discretionary spending is expected to be strong in the upcoming holiday season and your business is located next to a mall. You could add staffing and plan additional promotions, knowing that more foot traffic and sales are anticipated.
The power of analytics doesn’t end there though. Let’s talk about how we can go even a step further.
For instance, if we look at our Coffee Queen example, hot weather could result in decreased sales as fewer customers want to drink hot coffee when the weather is warm. Beyond this more obvious insight, what if you had insight that told you that each time the weather is warmer than 85 degrees, revenues at other businesses in your neighborhood drop by 20%? And what if you knew what type of promotions are most effective at driving business in your area during these conditions? Knowing this could be a great reason to promote a new iced coffee drink.
There is also a lot of external data (such as data on local events, upcoming holidays, new area store openings or closings, population trends) which can augment business data to provide even more value. By understanding the factors driving these trends, SMB owners can makebetter-informed decisions related to forecasting, sales performance, benchmarking, inventory levels and marketing.
Question: How can I, as a small business owner, use data analysis to make my business more profitable?
Answer: No one knows a particular company better than its owners. Even still, there are certain factors when it comes to consumer spending and customer behavior that a business decision maker may not be able to identify on his or her own. This is where data analysis comes in—by helping SMB owners better understand the needs of their customers, they can anticipate customer behavior to act more strategically and profitably and ultimately grow their businesses. Think again about Coffee Queen. With analytics, Mary can see the full scope of what days and times she typically conducts the most business. This allows her to better determine employee schedules, ensure she has adequate supplies and even set promotions during slower hours to increase sales and track peer performance and proactively schedule a promotion. By consistently using data analysis to make those decisions, SMBs can be more effective with the dollars spent on operating costs and marketing, which can result in higher profitability. With the addition of social data, which allows SMBs to see what their customers are saying about them on Facebook, Twitter and Yelp, etc., shop owners like Mary have complete control on how to manage and grow their businesses.
Actively leveraging effective business data, in combination with social and external data (like economic performance, weather and seasonal events), can provide SMBs with a clear picture of their current business situation and highlight what decisions need to be made to become more profitable.
About First Data
Around the world, every second of every day, First Data simplifies the connections that make commerce possible for merchants, financial institutions and their customers. First Data leverages its vast product portfolio and expertise to drive client revenue and profitability. Whether the choice of payment is by debit or credit card, gift card, check or mobile phone, online or at the checkout counter, First Data takes every opportunity to go beyond the transaction.
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