Every time I come in contact with a small business owner, I never fail to ask them how they use data. And the most prevalent response I get, is one mistake startups and small businesses keep making – they trivialize data.
Data is extremely important to the growth of any business, but my experience is that startups and small businesses often trivialize its importance.
From the outset of a startup, a smart way to save cost, manage customers, achieve repeat sales, and reduce the need for expensive marketing, is to use data effectively.
Using data does not have to have sophistication whatsoever, all it requires is common sense. I asked a fashion designer who’s been in business for about five years if she had a list or a database of her customers and she said ‘no’, in a way that made it sound like, ‘why do I even need that’.
Data is an actual currency in business. If I review your business and you don’t have or use data, I can as well correctly assume many other things you don’t do so well in your business. The difference between small businesses that use data and those that don’t becomes clear overtime.
Here’s what I mean…
From your first customer, keep a smart list of details that can help you make future decisions. Data is easily collected at sale points, and customers are more easily disposed to releasing data at sales or service points than at any other time that you may need them.
The data you collect from your customers can be as basic as names, email and phone numbers. Depending on what industry you play in and the nature of product or service you sell; your data collection may extend to more personal data as date of birth, wedding anniversaries, home addresses and so on.
Why should you take the pain to necessarily collect these data? That’s the difference between smart businesses and average businesses. The answer to the foregoing lies in the answers to the following:
How do you introduce new products to your existing customers if you don’t have a list of them in one place?
How do you achieve repeat sales if you don’t touch base and become top of the mind with your customers?
How do you reach your customers in the event of an urgent need to pass a crucial information?
How do you relate with your customers, keep them happy and receive feedback from them, without their data?
How do you make your customers stick to your business?
How do you monitor trends of customer patterns and preferences, without customer data?
How do you make informed product development decisions, without customer data?
How do you know the best strategy for marketing if you cannot analyze the profiles of your customer?
How do you reward customers, without a credible list?
The tragedy is that small businesses and startups rarely think about these, because they think of them as sophisticated or elitist considerations, but therein lies the difference between businesses that will thrive and those that will just exist to meet owners’ needs.
If you consider that 66% of startups will close shop in the first three years and it will take another two years for the ones that remain to become cashflow-positive, then you will reckon with the need to use data and effectively so too.
Too many businesses struggle and wonder why they do, because they fail to use what they have customer data. And these businesses then go ahead to spend more resources marketing new customers each time.
While I agree that new customer acquisition is as important as customer retention; startups must, as a matter of strategy, begin to use data smartly, without any unnecessary sophistication that may increase cost.
Every time as a business, you sell to customers and watch them leave, without smartly collecting useful data, it’s like spending your pension today.
A school of thought actually believes that it costs five times more to acquire new customers than it is to keep existing ones returning.
Whatever business you do, data is your friend, data is family, data is currency, data is cheap, and data works. Businesses that ignore data and its effective use do so to their own peril.