In the face of unprecedented challenges, it seems that change is the only thing small businesses can predict with any certainty. Last year’s technology breakthroughs are quickly outdated and replaced with the newest craze. If this isn’t enough to keep small businesses hopping, customer behavior is fickle, requiring continuous shifts in marketing strategy.
If only you had a crystal ball. Then you could anticipate trends, new technology, and shifting customer desires. As your business grows, change is inevitable. So, if you are in a holding pattern, operating your business the way you’ve always done it and selling the same products and/or services the same way you’ve always sold them, you are most likely going to fall behind. The quicker you can adapt to or, better yet, get ahead of changes in the market the better your chances are of succeeding.
You may be wondering how you can tell the difference between a fleeting fad and a legitimate trend. Louis Patler, market research guru for companies such as American Express and Dell, has spent years tracking emerging trends. Patler asserts that successfully piloting a business in the years ahead will require new ways of thinking. Hanging onto traditional approaches will only hold you back.
Patler suggests in his new book, “The Consistent Consumer: Predicting Future Behavior Through Lasting Values” that values, not just past behavior, will help you better define and understand today’s diverse consumer groups and more accurately anticipate how these distinct “value populations” are likely to behave in the future—and what they are likely to buy as a result.
Intense global competition for customers is driving a new focus on customer retention, repeat orders, and cross-selling. Although all businesses need customers, some are better than others. Some customers are just more profitable than others. These are the customers you should be giving the most attention to with special savings and service offers.
Small business owners who know how to acquire, manage, and utilize customer information are in a unique position to dominate their market. That is why knowledge about customer needs, wants, behavior, and values is absolutely critical.
A common mistake of business owners is to make assumptions about their customers. And, when they are wrong, which they often are, it costs them dearly. Hence, the proliferation of customer surveys. New technology makes it possible to collect customer data from a number of sources today. However, if a company doesn’t have a way to manage and utilize this information, the data has limited value.
Until recently small businesses have not had the ability to integrate the intelligence from their website, call centers, etc. Enter Predictive Analytics which relies on statistical analysis and math to study customer data in order to make better business decisions. Analytics is the closest thing to a crystal ball that small businesses can get.
One major obstacle successful small business owners have in leveraging predictive analytics is a learned trust in their own experience and judgment. This tendency is a mistake because predictive analytics have been shown to be 40-60% more accurate than judgment alone. As technology, customer behavior, and values shift, it is imperative that business owners have access to relevant, current, and most importantly, accurate customer data. Neural networks can help business owners to “learn and objectively adapt” based on actual customer behaviors.
One of the chief benefits of predictive analytics is how it can help a company match the right customer for the right offer using the right medium. This approach helps a company enhance its relationships with customers. When a company is “tuned in” to a customer’s needs and wants, the customer feels the company cares about them; which builds trust. And, in today’s uncertain world, trust builds brand and customer loyalty.
According to Dave Schrader of Teradata, companies can access all kinds of information relative to customer wants and needs from sources including purchases, web browsing, call center utilization, responses to marketing initiatives, responses to surveys, emails, and various wireless communications. Predictive analytics allows a company to collect, analyze, and then implement the information to predict customer behavior so they can make the right product/service offers to the right customers at the right time at the right price.
Event-based marketing is yet another effective predictive analytic strategy. For example, if a department store notices that a particular customer made a large purchase from the bridal department they can extend other product offers related to weddings.
Schrader makes the point that analytics benefits customers as well as companies. The average person in the USA receives 34 pounds of junk mail and 2600+ emails per year. Most of this mail does not meet the customer’s wants, needs or time frame. Mass email messaging is no more effective. It irritates potential customers and clogs their mailboxes.
According to Randy Erdahl, President of Clario Analytics, predictive analytics is not just for big companies. Your small business can leverage predictive analytics to dramatically improve customer loyalty while increasing revenue per customer. These outcomes can net significant savings in marketing dollars and give them a remarkable return on investments they make in analytics consulting and software.
Using proprietary analytic tools (designed and priced for small biz), Erdahl’s team applies a state-of-the-art approach to customer data that solves challenging marketing contact optimization problems, such as what is the best contact strategy for each customer.
If you would like to contact me, you can do so by emailing me at mike.clough@bestbizpractices.org or visiting my LinkedIn page.
Posted by: Mike Clough
