For those of you who have met with some degree of success as a business owner, congratulations! There are few professions that demand as many skills and talents as being an entrepreneur; you not only have to run your business, but you have to be able to work every single position successfully. Being able to juggle everything at once is a talent that takes years of practice, which makes it a wonder that the person is able to focus on anything at all. This is sometimes apparent when business owners become so absorbed in the smaller details of their business that they forget some of the most basic parts of what it takes to be successful.
Attracting customers to your business is essential to your survival as an independent operation; without customers, nothing else exists. In older days, businesses would attract customers through advertising and word-of-mouth. While this is still the approach taken today, it’s a lot less reliable than it used to be. The advent of the internet has completely changed the dynamic between customers and businesses – no longer are people limited to one small geographic region to purchase their products. Coupled with the wealth of information available at their fingertips and you’re having to deal with people that are far better equipped to make informed decisions than twenty years ago. The response from businesses is to meticulously track, analyze, and predict future customer behavior through the use of powerful statistical tools and data collection. The use of this data to predict and adapt to changes in customer behavior is known as analytics.
Analytics have been in use for some time, but the level of depth and sophistication of these tools vastly exceeds what was once in use. When you shop for a specific product and then start seeing advertisements for them pop up in your browser, that’s analytics at work. When you receive personalized offers in the email pertaining to goods and services that you regularly purchase, analytics made it possible to accurately predict what your needs and wants would be as a customer.
It’s not necessary to understand the math behind analytics to make use of them. As a small business owner, identifying and securing your desired demographic is incredibly important. The following three tips will help explain why analytics can be such a powerful tool.
1) You can adjust and formulate your marketing strategies more easily
It’s not difficult to think of a time a company lost money due to a poorly-conceived marketing campaign. The failure of the Arch Deluxe is a particularly notable example; in 1996, this “adult” burger was unveiled to a complete jack of fanfare, largely owing to its portrayal as a burger that children would not like. The failure of McDonald’s to understand the wants and needs of its customer base largely accounted for that. McDonald’s customers don’t want fancy, they want food that is quick, cheap, and accessible. The use of analytics allows you to better understand and predict your customer’s desired products.
2) You can easily break down the behavior of each demographic
Demographics can be sliced up any way you want, but most businesses and polling organizations break customer demographics down by three criteria: age, race, and gender. The use of analytical tools allows you to see exactly what each demographic purchases, when they purchase it, and what they respond strongest to. Hollywood will often tailor their advertising campaigns for newly released movies to the expected target demographic. What you’ll see promoted in a romantic comedy is very different from what you’d see a Fast and Furious film. By tracking the behavior of each relevant demographic, you’ll be able to get a better sense of who your customers are and what they want from you as a business owner.
3) You can quickly respond to changes in customer sentiment
Analytics are merely a tool – they arm you with a detailed statistical breakdown of every purchase made and everything said about your business to help you make better informed decisions. They cannot guide your behavior, only influence it. While it seems logical for business owners to keep very close track of their customer’s behaviors, a lot of business owners are unaware of the most basic details of their desired demographics. With analytics, you will not fly blind: you will know exactly the effect each decision you make has on your overall performance. This is especially important for new businesses who have yet to establish a reliable clientele. If you see a sudden increase or decrease or business, analytical tools will give you all the information to see what has and hasn’t changed. This in turn will make it much easier to make well-informed decisions based on facts rather than supposition.