Data & Analytics for Small Businesses
When small business owners think about data and analytics, they may envision a veritable “mission control” of supercomputers, oversized monitors, and rows of analysts crunching the latest sales numbers. In reality, using data to guide important business decisions simply complements the planning process already familiar to many companies.
Even if the topic of data and analytics is new to you, you’re probably already tracking key metrics around sales, inventory, staffing, and other everyday concerns. There are a variety of user-friendly analytics programs available to help business owners turn that raw data into valuable insights. Before we explore how small businesses can use data and analytics to improve their operations, it’s important to define what the two terms mean in this context.
What Is Business Data?
In the broadest sense, business data is information about sales, purchases, customers, vendors, competitors, and the overall economic outlook. Business data can be expressed numerically or as text and includes:
- Sales figures: details about individual purchases, including transaction amounts, customer information, and returns
- Website metrics: visits, page views, time-on-site, and conversions
- Current inventory: a record of products in stock
- Leads lists: names, titles, phone numbers, email addresses, and other details about sales contacts
- Business credit scores and ratings: reports generated by business credit bureaus based upon a wide variety of inputs, including trade references, legal records, and financial documents
Given business data’s expansive nature, even a small B2B company can generate a sizable amount in a short period of time. Business owners usually keep a keen eye on their income and expenses, but few can examine all the data. That brings us to our next item: business analytics.
What Is Business Analytics?
The term “business analytics” describes the process of reviewing and transforming raw data into understandable charts, graphs, spreadsheets, or reports. This is accomplished through the use of business analytics software. These applications often ingest data from sources like your website or customer relationship management (CRM) tool, then present it in a dashboard. Data can be reviewed at a glance, and many programs include filters that allow you to easily explore the information. Analytics programs can help business owners make data-driven decisions about nearly every aspect of their operation.
How Small Businesses Use Data and Analytics
Now that we understand the difference between data and analytics, we can explore how they help small businesses achieve growth and manage risk. Here are three examples that are relevant to B2B business owners:
1. Customer Segmentation: A business can gain a more nuanced view of its customers by sorting them according to demographic, geographic, or firmographic criteria. For example, a manufacturer might use a web analytics program to identify shared characteristics of his best customers online. Perhaps the largest purchases are made by mid-size retailers in New England, with relatively little business coming from mom-and-pop shops or national chains. Such insights could help the manufacturer better understand who is interested in his products and make changes to meet their needs.
2. Marketing Allocation: Most small businesses can’t afford to spend freely on marketing and advertising campaigns. Every dollar spent purchasing digital, print, TV, or radio ads needs to attract customers. Business analytics programs can help measure your ROI in various ways. Google made its fortunes on connecting businesses with paying customers, and tools like Google Analytics and AdWords help target qualified buyers. You can see which ads and webpages result in the most conversions, then redirect resources from less productive campaigns.
Data and analytics can also help you understand how offline campaigns perform. Charting your sales figures alongside the dates you ran ads can reveal spikes in transactions. Conversely, flat or falling sales might suggest a campaign isn’t delivering results.
3. Risk Management: Data and analytics are capable of much more than helping you understand your business – they can also provide information about partners, competitors, and overall market trends. These insights are available from third-party sources such as Dun & Bradstreet. For example, suppliers can consult business credit files to help establish lending terms or evaluate the financial health of potential customers. Business owners can even check in on their closest competitors by pulling a variety of reports. While this data comes from a third party, many providers have tools that allow you to append your own records with their insights.
How to Get Started With Small Business Data and Analytics
The best analytics program for your business is the one you’ll actually use. To that end, here are several things to think about when evaluating tools:
- What data am I already collecting, and can it be integrated into the new analytics program?
- Which business problems am I trying to solve, and how does this tool help me do that?
- Does the analytics program display data in a format I can easily understand?
- How much training will be necessary before I become proficient in using the software?
- Does the software provider offer technical support?
The biggest companies in the world are taking advantage of advances in data and analytics – there’s no reason for small businesses to be left behind. Give yourself the competitive advantages that come with easy access to information.
Photo Credit: photosum, Twenty20