Data is often described as the currency of the digital age. But that probably doesn’t mean a lot for a small business owner. After all, you don’t pay your staff and suppliers with data, writes Ben White.
But when used to its best effect, data can prove to be a valuable asset for small business owners. Data can describe the performance of a business, or the trends shaping the marketplace within which it competes. When read the right way, data can provide key insights into not just how a business performs today, but how it will fare in the weeks and months ahead.
Most small businesses already rely on data today, but many don’t know it. Transaction details, stock movements, website traffic, and even weather reports can all describe and predict the performance of a business.
Like currency, the more data you have, the better off you might be. However, not every business takes advantage of the data available to it, thus many miss out on the opportunity to make more informed decisions.
One of the most simple means of using data is AB testing – a practice commonly used in marketing to test how customers might respond to different offerings. By running two different offers for different customer groups a business can monitor the resulting data and then quickly switch all customers over the preferred result. The experiment is done relatively quickly and easily, particularly when applied to digital marketing.
Social media also provides a wealth of data regarding people’s behaviour and sentiment, just waiting to be analysed and used for the benefits of business when it comes to planning new products and services and analysing customer engagement. A deep dive into what your Insta and Twitter followers like may provide low-cost insights into what entices customers to make a purchase – and shows the way to increasing revenue.
The Internet of Things (IoT) offers small businesses a new way of gaining access to even greater pools of data. IoT describes a means of deploying lots of different data gathering tools – sometimes called sensors – that can bring back useful data about everything from the number of customers in a store to the movement of goods in a supply chain to the ideal ambient temperature for selling dessert. Businesses are finding that, through the smart deployment of IoT sensors, they can gain access to a wealth of operational data that better describes the factors that contribute to smarter business decisions.
It is also worth remembering that Australia hosts some pretty massive data sources – many of which are freely available. Australian governments have made great strides in making their data sets available through initiatives such as the NSW Government’s data.nsw.gov.au site, which brings together more than 3000 NSW Government datasets into one searchable location for public use.
For data to be useful, it must be refined, just as crude oil needs to be converted into petrol to power a car.
But unlike oil, the same data can be used over and over again. The most common form of refining data takes place today in spreadsheets, but rows, columns and simple graphs don’t always tell the most compelling story. Hence, numerous tools exist now to help translate data into visual stories, such as Domo and Tableau, which are suitable for even non-technical small business owners. These tools can be fed with data from a variety of sources, and many software packages contain their own tools for helping translate data into insights.
When combined properly, different sources of data can prove to be an invaluable tool for creating customer loyalty, identifying opportunities and increasing sales. When a business learns to harvest and analyse data, even more powerfully if done in real-time, it can provide immediate insight into the impact of decisions and go a long way to taking the risk out of changes under consideration.
Data might be the new currency of business, but extracting value from it does take an effort in learning how to connect up various sources and analyse their outputs. But when harnessed correctly, it can provide invaluable insights into a business’ performance, and put more “cha-ching” into the bottom line.