Editor’s Note: ‘4 Ways to Use Data to Grow A Small Business’ is a guest article written by the 9Spokes team.
Gathering and analysing business data can help you better understand your customers and your business performance. With knowledge comes the power to make informed decisions that drive your business forward. The challenge is knowing how to use the data you have.
Data can tell us what we need to do next. Analysing data can surface historical trends — exposing efficiencies and inefficiencies alike. It reveals truths in terms of performance, shining a light on areas for improvement and opportunity. But with all power comes responsibility. You need to be able to use it in the right way for your business.
Big data for small business
If you use HR, finance, point of sale, marketing software and apps to run your business, you’re collecting data. Accruing information about your people, financial and sales position, your customers, user habits, and more.
According to “State of BI & Analytics Report 2020“, 55% of businesses surveyed use data to improve efficiency and predict changes and outcomes. Forty-seven percent use data to improve customer interactions. While 45% leverage data to predict business outcomes. Generally more agile, small businesses are well-placed to leverage data to take informed action quickly.
4 ways to use data in your small business
Monitoring data generated by your business yields information you can use to manage your business more effectively. Here are four ways you can leverage data in your business.
1. Financial data to increase profitability in a small business
Analysing your financial data helps you optimise your business and focus on reaching performance goals. It’s not just about monitoring cash flow; it’s about informing your wider business strategy – from investments to customer acquisition and labour strategies.
Having in-depth knowledge of your financial position helps inform short and longer-term decisions. From quickly shifting resources to bring a product to market to guiding growth plans, understanding financial performance is critical.
Analysing financial data — factoring in variables and historical data — can help project annual sales and profitability. Depending on your predictions, you can adapt sales and marketing strategies to ensure you’re on track to reach sales goals.
Setting KPIs and monitoring the relevant financial metrics is fundamental to ensuring your business operates at its full economic potential. Tracking those KPIs doesn’t have to be complicated. Dashboards such as 9Spokes allow you to easily monitor and track performance across your business in one place so that you can focus on day-to-day operations.
Connecting accounting software such as QuickBooks, Xero, or FreeAgent gives you a financial snapshot by surfacing key snippets of data. Armed with these insights, you can make quick, informed decisions for your business.
2. Customer data to understand behaviour
Data brings you closer to your customers and your market. Get insights into customer engagement across your website, marketing campaigns, and social channels to understand the efficacy of your activities. Learn customers’ buying behaviour – including why they buy, how they shop, and the value of spend versus profit margin.
Tools such as Google Analytics can teach who your customers are — tracking user demographics, behaviour flows and providing cohort analysis. Similarly, monitoring social media activities against key metrics gives you a view of engagement with your content and brand.
If you use point of sale (POS) software, you can drill down into how customers are shopping with you. For example, what are they purchasing? Or, where do they fall off the buying journey? All knowledge that enables you to make considered changes that drive sales to your customers’ journey.
Connecting your POS software and Google Analytics to a business dashboard lets you quickly assess your sales, product, and website performance in one place.
Reading your sales revenue alongside product performance, helps you identify which products contribute most to revenue – your most profitable sellers. This insight can inform your sales and marketing strategies. So, if a product performs particularly well, you’ll need to consider how you can optimise it to boost your bottom line. Knowing which pages of your site generate the most traffic helps you strategically place and promote products to get the most eyes and the greatest conversion rate.
3. Performance data to drive improvement
Having a firm understanding of your data removes the guesswork, which can help prompt necessary changes. Monitoring performance across all business areas – from finance, HR, and sales to marketing – helps identify trends and take assertive action.
For example, retail businesses can optimise stock by tracking stock on hand, product performance, and average sales. Align these insights with campaign performance for a more complete picture of what’s delivering the greatest return on investment.
Making data-based predictions ensures you’re stocked with well-performing products and using cross-selling tactics to increase your average spend per sale. Further, you can hone marketing activities to ensure you’re reaching your audience and surfacing channels and content that are performing.
4. Employee data to accelerate productivity in a small business
Most businesses generate a wealth of HR data — from people on leave and absenteeism to productivity and employee satisfaction data. Analysing your HR data can help you see how effectively your people resource is managed across your company. These insights help you identify gaps, optimise processes and labour costs, and hire the right talent at the right time.
For example, you may want to focus on employee performance. Although you have a review system in place, are you tracking revenue per employee to measure staff efficacy? What time tracking measures do you use? Knowing the hours employees work — from over time to absenteeism — determines the distribution of work and operating capacity.
Bringing your data together for your small business
It’s not enough to collect finance, customer, performance, and HR data. Data needs to be managed and transformed into meaningful metrics that help you to visualise and monitor performance. Effective data is actionable data.
A business dashboard brings together data from various sources and business areas. With a single view across your business, your business goals are always front and centre. With the ability to concurrently assess your finance, sales, HR, and marketing data, you can make quick, sharp decisions. Harnessing the power of your in this way can help set your small business on course for growth.