Data driven decisions result in better sales results and more efficient spends. Are you making fact-based decisions that drive your business forward, or are you making intuitive guesses that work out some days, and result in minor or major catastrophes on other days?
In today’s gritty, competitive world, it’s especially important that even small businesses become more data driven. I meet a lot of business owners, and the more successful ones seem to be tuned-in to what’s happening in their industries. On the other hand, there is another group that rely on gut instincts about what their customers need and want, and who they think their customers are. It’s rare that I see small businesses that plan using a data-driven model. It’s unfortunate. The data is out there and available and it’s SO important to add smart planning and solid execution to your process. The only way I know to maximize return on investment is to eliminate as many unknowns and as many poor decisions as possible. Just because this is the realm of large corporate decision making doesn’t mean it can’t be achieved by small businesses. The fact that it reduces risk makes it all the more necessary to acquire a better approach to planning and decision making.
Let’s begin by reviewing the kinds of consumer data available. Of course, there are demographic data sets out there. (That word cost me ten bucks to learn in B-school – so stoked I’ve finally an occasion to use it!) Demographics is the kind of information about customers that can be acquired through observation. It includes age, ethnicity, income, level of education, geographic location and so on. Psychographics, on the other hand, includes information about the way consumers think, and the social factors that affect how they see the world. We’re really talking about consumers’ attitudes, interests, beliefs, their culture, their lifestyles and so on.
A lot of demographic and psychographic information can be found on line. Spend enough time searching, and you can find enormous amounts of either totally free or at least relatively inexpensive information. One source is the Pew Research Center. Pew annually compiles and publishes the demographic profiles for people who regularly use each of the major social media networks.
Small businesses can acquire a lot of the psychographic information they need by surveying their active customers. For example, Survey Monkey, a web-based market research company allows customers to use their software to create, distribute and analyze surveys for FREE – as long as the surveys are not longer than ten questions each. Over time, even a small company can assemble a solid database of consumer insights (that word only cost me $5.00). This database should be maintained, updated, reviewed regularly, and shared with key decision makers throughout the company. Many companies are now using CRM (customer relationship management) systems that contain all the important information about each customer. The best companies regularly reference this information when communicating with their customers, when making decisions about new changes in their product offerings, and this kind of information can be used to direct unique promotion offers to each customer, based on that customer’s prior purchase history!
If your company has a little more money, focus groups are an excellent way to learn more about your consumers and the way they think about your products, your company, your competition, and the way your market might respond to new product offerings, promotions, brand name extensions and so on. A focus group consists of a consumer panel that represents your total target market from a demographic basis, and if possible a psychographic basis too. A paid moderator leads the panel through a guided conversation around predetermined research questions. A separate room allows managers to observe the conversation without disturbing the panelists or the moderator (a two-way mirror separate the management team from the focus group participants). Often, a video camera captures the entire meeting for future review.
Your company probably has several receiving points for customer comments and conversations about your brand and your organization. These may include your customer service department, customer conversations occurring in social media, information captured in your CRM system etc. Since listening is a hugely important part of selling, smart companies are now collecting and using all that input to make better decisions. Social media marketers refer to the LARA framework – listen, analyze, relate and act. Listening occurs when a business is actively collecting all that consumer input. Analysis occurs when managers in the business are looking closely at all this information to understand the sentiment of the comments, which products are of most interest, and what are the prevalent concerns, and what are common consumer interests. Relating occurs when managers in the business are able to connect specific issues within the company to the trending information that is picked up in the Listen and Analyze phases. Finally, Acting is the process of developing strategies and internal responses to all the information that has been collected and analyzed.