However, even if SME bosses don’t have large IT departments, they should still put their data to work, according to Neil Carden, director of business development at data analytics company Aquila Insight.
Carden has sliced and diced the data of companies of all sizes throughout his working life and he finds that although SMEs feel sure that they know customers, each might be labouring under a misapprehension.
“SME founders have often bootstrapped the business, relied on contacts to make the first few sales and worn out the address book chasing up leads,” he said. “All well and good but do they really know these customers? Have their needs changed as the business has grown? Throw into the mix new customers that they’ve never met and the clarity of their insight becomes even muddier. Everyone can benefit from understanding their customers better.”
Blue chip companies know this and for some time now have been hailing big data as the key to unlocking this information. Why, wonders Carden, don’t the majority of SMEs do the same?
A stumbling block is just the word “big”, he argued. But a smaller company need to realise that its sample will almost certainly contain the same information within it that the large companies look for and is just as useful.
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Expertise, resources and cost will be the next on the list of reasons smaller companies give for not analysing data, according to Carden. “There have been big changes in the data analytics industry,” he said. “Insight is no longer the preserve of big companies who have built dedicated teams and tools. A variety of tools are available such as Google Analytics that most people will be able to use. In theory anyone who can use Excel should be able to shape and read data analysis at a basic level.”
If an SME wants to dive deeper into the “hardcore” analytics, each should look at companies which now offer this service at affordable rates. “The advantage of this route is that the SME will not have to get its hands dirty and will benefit from an expert who can separate the wheat from the chaff,” he explained.
However, SMEs should start to look at the “small data” that is already owned – the rough and ready immediate insights each can get from being at the sharp end of their business on a daily basis. These are findings that should be apparent in a matter of hours to a small company.
“The advantage of being smaller is that you can be more agile and make changes much faster than a corporation can,” said Carden. “SMEs also need learn to ask the right questions of data whatever the sample size. The big players may layer on more complexity in reporting, but the key questions remain the same. Who are my most valuable customers? Why are they coming to me? What makes me special? What should I talk to them about? The answers to these questions are the fundamentals of insight whatever the size of company.”
Startups and SMEs should start to make good use of free resources like the big players do, he argued. Market data is readily available free on the internet and should the company feel the need to bolster their sample size there’s even free data in the market place. He also urged more SME to consider “good old fashioned market research”, which is cheap, usually quick to do and can pay dividends.
SMEs should also look at the Nectar model. Nectar collates information from Sainsburys, BP and Argos among many others, producing a bank of highly targeted data. Smaller companies could in theory partner up with other like-minded businesses to generate a bigger sample size, believes Carden.
So an SME has taken all this on board, collected data and now understand the basics of data analytics. What insight should it now be looking for? Again, each should follow the example of the big players.
This includes segmentation – smaller companies should keep it simple and identify two or three different customer types. Having done this, it is then possible to build up customer profiles to target potential customers and sales more efficiently.
“They should use data to understand when people are buying and at what time of the day,” said Carden. “Is there a seasonal pattern to the sales data? Also what is the emotional trigger prompting them to commit? You can then capitalise on this in your marketing. Next, you have your profile and an understanding of the behaviours, now you need to know how to interact best with your customer. Is it social media or email for example? Also interacting with your customer in a more spatial sense whether virtual or physical, what are the ‘hot’ shelves?”
Big data can be intimidating for SMEs, Carden accepted, but it needn’t be. Once smaller companies and startups see the insights that can be gained, bosses will be convinced of its value, he argued.
“The first step is trusting someone with your data and allowing them to manipulate it,” he said. “And like the big companies SMEs need to learn to blend the experience, instinct and expertise that they will have in abundance with data analysis.”
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