In today’s competitive landscape, your business has to make use of every available edge at its disposal just to keep its head above water.
An excellent case in point is how Nokia, the cell phone manufacturer that dominated the market in the 90s and early 2000s, was put out of business and acquired by Microsoft in 2013 as a result of its inability to compete with Apple’s superior technology.
In fact, as the company was being sold, Nokia’s then CEO said, “We did nothing wrong, but somehow we lost.”
Bearing that in mind, keep your eyes glued to the horizon, looking for any new method you can use to enhance your operations and thicken your margins.
Today, that edge can come from harnessing the power of big data analytics, and companies are scrambling to be the first to the party.
Big Data Analytics Can Help You Better Understand Your Customers
Every time you interact with one of your customers, be it online or in real life, you gain valuable information about them, data points that you can use to understand them better.
And, if your business serves multiple customer segments, it is even more important that you understand how these segments differ regarding their values and purchasing habits, allowing you to tailor your offering according to the segment at hand.
So, which data matters?
Well, all of it really. However, you should first start with knowing the basic demographics of your customers:
- How old is your average customer?
- Are most of them male or female?
- Are they married?
- Where do they live?
- What do they do for a living?
- What’s their socioeconomic background?
Once you’ve collected the essentials, try to move on to more specific things:
- What are your customers’ goals in life?
- What are their hobbies and interests?
- Are their purchasing decisions influenced by any external forces?
Finally, armed with an idea of who your customers are, aim to understand what you represent to them, i.e. how they see you:
- Why do your customers interact with you and not your competitors?
- What are their expectations every time they interact with you?
- How do they use your product and service?
- How do they respond to your attempts to interact with them?
Answering all these questions will enable you to build a persona for your customer, a profile that will thrust your customer in the middle of all of your decisions moving forward.
1. Increase Customer Acquisition and Retention
The minute you understand what your customers are looking for, you can focus on the parts of your business that matter.
You’ll be able to attract more people from your target market.
It is usually cheaper to keep old customers than to attract new ones. So, the happier you make your customers, the more likely they will be to come back.
2. Understand Your Customers’ Behaviors
Not only will big data help you delight your customers, but it will also enable you to predict their decisions and behavior.
When you keep collecting a large amount of data, you are bound to find useful patterns hidden there, patterns that repeat themselves and tell you a story about how your customers like to interact with you.
For example, several businesses have already optimized their websites based on millions of interactions they have had with previous clients.
Similarly, some companies have figured out the ideal location for their business based on the customer data they collected.
Big Data Also Allows You to Optimize Your Business Operations
Besides helping you understand your customers, big data can prove instrumental in improving your business operations and making them more efficient than they already are.
This should come as no surprise as business operations have always been revolutionized whenever a company found a better way to serve its market.
For example, when Ford realized that he could attract a larger market by lowering his prices, he introduced several innovations and improvements to his assembly line and standardized all the cars coming out of his factory.
To show the lengths he would go to, Ford is credited with saying, “A customer can have a car painted any color he wants as long as it is black,” and he insisted on this just because black paint dried the fastest.
1. Manage The Risks Associated With Your Business’s Operations
Thanks to big data, your business can now predict the likelihood of certain events happening with much more accuracy than before.
Using advanced risks models, a business can foresee a demand shortage before it happens and prepare whether that means reducing a factory’s production or minimizing the number of new hires being brought on board.
Another type of risk that can be tackled with big data is fraud, something any business has to deal with now and then; if your business works in the finance sector, you are even more at risk than the rest of us.
With big data, you can easily spot the patterns most scammers follow and spot them a mile away.
2. Supply Chain Management
Given the greater accuracy and stronger insights big data can provide your business, you can better manage your supply chain and inventory according to the amount of demand you predict.
Otherwise, your business risks having a surplus of stock, which can be costly, or running out of stock when demand is high, so all those missed sales become lost opportunities.
Big data is disrupting business practices as we know it, and those who don’t capitalize on this technology are bound to go the way of the dinosaurs (or the way of Nokia to use a more modern example).
We must point out that even though big data can help you understand your customers better and expect their wants and needs, you still need to go out and talk to your patrons to understand their underlying motivations.
After all, there is a world of difference between knowing how someone behaves and understanding why they behave in that fashion.
Guest Author bio:
Jen McKenzie is an independent business consultant from New York. She writes extensively on business, education and human resource topics. When Jennifer is not at her desk working, you can usually find her hiking or taking a road trip with her two dogs. You can reach Jennifer @jenmcknzie