Every business generates a wealth of information as it operates. Without a strategy for collecting and analyzing this information, you won’t be able to effectively apply it to the decisions you’ll need to make as a business owner. Often there is much more data-related insight available than entrepreneurs immediately realize, and much of it relates to your most valuable resource: your customer. How much information are you capturing (or planning to capture)?
In this blog, we’ll explore some simple ways you can improve your collection of customer data and how it can apply to the decisions you have to make every day.
How to Collect Valuable Information
Methods for collecting information are wide ranging. There is a lot of digital support in this realm, in the form of accounting and financial software (more on this a bit later), website hosting services, and customer resource management (CRM) software to name a few. Most of the accounting programs that businesses commonly use can produce effective reports. CRMs are more complex software that should be chosen carefully.
While these programs will create a great deal of data, it will only be useful if you have a specific decision or problem that the data can help you make or solve. It’s important to gain a solid understanding of what kind of information will be valuable to your situation specifically. Therefore, don’t discount good old-fashioned observation. Count and describe the customers that come to your store hour by hour, engage them in conversation and ask them questions about themselves. Don’t overlook the power of gathering information this way. Be perceptive, and record whenever you can!
Surveys are a very common method, but it’s easy to underestimate the effort and expense you may incur pursuing good information this way. There is a danger of misleading yourself, so they should be undertaken very thoughtfully. In this article, we’ll stick to discussing more passive methods of information gathering.
1. Understand your Customer Demographics
This type of customer information is probably quite familiar. Age, location, education level, gender identity, or marital status are just some examples of demographic categories. Anything that can be quantified and aggregated is a potential demographic data point. You’ve probably identified some of these points already in describing your target market, or ideal customer. But have the assumptions you’ve made about your target customer or client been confirmed by the people buying from you? If you feel your business appeals to people with children, it would be a good idea to know how many of your customers have children! If your business is online, using Google Analytics is an easy way to gauge some of the demographic information available about your site visitors, offering you some insight into who your customers are. If you haven’t already, you’ll want to set this up to understand who is visiting your website.
Checking whether assumptions you’ve made about who you market your services toward are accurate greatly increases the effectiveness of your marketing efforts. Demographic data allows us to effectively narrow communications to those who are most likely to make a purchase.
2. Get To Know Their Behaviors
Tracking your customer behaviours can be a little trickier than tracking demographics. Behaviours are the choices people make day-to-day. For example, will your clients typically drive to your store, or walk? There are MANY behaviours you can observe in your customers. Are they predominantly online shoppers? Do they like to read novels? Is fashion an important part of their identity?
Think about all the questions you have about your customers’ behaviours and imagine ways you might determine answers. Look for trends. You might count the number of cars in a parking lot and compare them to the total transactions. If you find not many people arrive at your business by car, perhaps you can sublease your parking area to a nearby business. Your Google Analytics data can also identify behaviours that your online visitors are engaging in on your website, offering yet another look at your customers’ behaviors and the choices they are making. Are they browsing your full product range when they are shopping online? Particular items more than others? Knowing a bit more about your customers’ behaviours will give more insight into how your products or services are meeting their needs.
3. Analyze your Financial Data
This is the most concrete form of information of the three listed, as it is specifically measured, and a good financial record-keeping system will put it at your fingertips. Financial information offers insight into more specific behaviours that your customers exhibit. Don’t let math scare you away from this! By analyzing the information your accounting software tracks, you’ll be able to learn things like: what time of day your customers shop most, what products they prefer, correlations between product/service purchases, whether their spending per invoice is trending up or down, and much more. Knowing these things will allow you to precisely refine your offerings and operations and allow you to maximize your profitability.
It is relatively common to be reluctant to gather much data out of fear of contravening privacy laws, but it’s important not to use this as an excuse to not collect any information at all. Information you gather that does not allow for an individual to be identified does not have any regulation, and in some ways is more useful. You’re likely collecting more information than you know through your current website or social media analytics, so it’s worth taking a look at what information the platforms you’re currently using (Hootsuite, Google Analytics, Facebook, or any other social media platforms) provide.
None of the data we’ve discussed here is personally identifying. If you collect identifying info, you should be sure you make yourself aware of the regulations around this.
The key to gathering good information is to first ask questions you don’t know (or simply assume) the answer to, then to engage in the above methods to gain some insight. You won’t find certainty, that rarely exists in business, but you will be able to consider the information you gather when you are making business decisions. By doing this, your decisions will be that much more effective, and your business will be in a better position to thrive!