Harnessing the Power of Data for Small Business

Share this article with your followers:

Harnessing the power of dataBy now, as a small business owner, you know that that identifying, understanding, targeting and connecting with your customers requires data. A seemingly simple, four-letter word that is anything but. For all of us, businesses included, data has come to mean virtually limitless types of and uses for information, with a whole universe of implications and questions for the future.

But for now, data should be a driver of your business. Which means you need to have processes in place for somehow collecting it, keeping it, analyzing it, and above all, using it. Data in and of itself is of little use until it is effectively put to work. One of the biggest challenges, especially for small businesses with limited resources, is bringing order to the volatile and ever-changing world of data.

According to Yahoo! Small Business Advisor, there’s a process called CHARGE that provides structure and methodology to data. CHARGE is an acronym, standing for:

Collect
Hold
Analyze
Refine
Generate
Execute


Not only does it provide a series of steps to follow, but it also helps maximize using data to acquire more customers or build a better experience for keeping them.

Data is a broad subject about which (literally) millions of pages are written. But key data issues revolve around identifying and tapping into appropriate data sources for your business. You’re probably generating data at the point of sale, for instance. But there’s also third-party data, as well as online engagement and marketing-related data.

Writing on forbes.com, contributor Marc Compeau explains the basics of data collection. There are three flavors of data: Local, static/third party and dynamic third/party. Local (or primary) data is collected by the business owner—through tools like surveys, focus groups or even observation and conversations. Third party static is data is purchased in bulk without a specific purpose. Buying data in this way is often overkill: It’s tough to wade through it, and there’s generally way more than you need. Third party dynamic, on the other hand, is collected through a third-party process for a specific purpose. It brings an immediacy in that it’s very close to real time. But the big drawback, Compeau says, is that it’s very expensive.

Experts, Compeau says, recommend asking at least three fundamental questions to determine where your business should go for data. These have to do with your timeline, your projected ROI and whether this is a one-time event or part of a larger effort. Most small businesses want data quickly, to use repeatedly over time. And for relatively little money. If you’re in this majority, you’d be best served by collecting primary data. On your data journey, Compeau says, start small—with a survey, perhaps, that you can keep simple and focused—and master before you move on to other primary collection vehicles.
Somewhere down the road, third-party data may be the way to go. But there are potential pitfalls as well as benefits, says Yahoo! Small Business Advisor. Third-party data is nothing new. But the depth and breadth of data available is like nothing we’ve seen before, and it continues to expand. This kind of robust data allows businesses to understand customers’ likes, dislikes, and preferences, browsing and purchasing behaviors and more in order to deliver more specific and targeted experiences to them.

And now you’re not just responding to their immediate needs; you know what they’re also searching for or considering and what else they’re likely to buy or capable of buying. Because new data can constantly be combined with and layered onto existing data, profiles created are deep and granular in their detail and specificity.

The downside of this kind of third-party data is that it can be complicated, overwhelming and expensive. Business owners who tap into these data sources need to be clear on objectives and not slice customer segments too narrowly to make it worth your while or, at the other extreme, too broadly. Here the desirable middle ground is what’s scalable and will enable the most effective use of your resources.

Regardless of where data is sourced, business can’t overestimate its power and value. Yahoo! Small Business Advisor sums it up best:

Nothing makes an organization more nimble than a thorough understanding of the business environment in which it operates. Knowledge is power, and raw data is the key to creating the knowledge base for successful business navigation.


Image courtesy of suphakit73 / FreeDigitalPhotos.net


Categories