Boost value by asking some simple questions
DATA analytics is often painted as a purely high-tech area, with PhD graduates devising complex algorithms. According to Peter Simons, technical specialist at the Chartered Institute of Management Accountants, this perception is wrong. He recently authored a report on Big Data for Chartered Global Management Accountants and he tells City A.M. how basic commercial curiosity can improve performance in SMEs.
SMEs have been slow to adopt big data. Is this a missed opportunity?
Businesses need to be asking questions about what works and what doesn’t – which customer segments are doing well? Which products are the most lucrative? In any business, there are assumptions about what’s valuable and what is not. And SMEs need to make sure they’re constantly testing these assumptions against the data, and focusing on the right areas.
How can SMEs practically go about doing this?
In a lot of cases, the data are already there inside the business. Years ago, many pubs thought they were making money through the people who were coming in and drinking. But they quickly realised that others were making more profit through food sales. A few years later, they realised someone down the street had been making money throughout the day by selling coffee. People can get stuck in a frame of mind – “I’m running a pub” – and fail to realise that there’s people either side of them making more money. Some companies simply don’t test their assumptions against the data they’ve amassed, and that complacency goes for many more businesses than just the pubs.
Should SMEs be looking at data sources outside of their own books?
Your working assumption must be: “there’s something in-house that we can use as a measure”, otherwise you’re incurring costs without knowing whether there’s a benefit. But there are plenty of data sources available to smaller companies if needed, including Dun & Bradstreet, and Mosaic.
How much of a challenge will this be in terms of the skills required?
The idea that it’s all about complex number crunching is wrong. SMEs and entrepreneurs tend not to use their finance people in the way that larger businesses do, and they could be missing a trick here. All you need for commercial curiosity is someone who’s willing to ask the simple questions – is this spending justified? A look at the data by a management accountant can often help.
Enterprise Nation founder Emma Jones on how to build a niche business with analytics
I CAN often be found advising small business owners to start and grow a niche business; one that delivers a clear product or service to a well-identified customer group. Examples include providing payroll services for childcare professionals, a measurement app for surfers, or a HR solution to award-giving bodies. The benefit of a niche business is that you know the habits, characteristics and whereabouts of your ideal customer – and this keeps marketing costs low, and customer loyalty high.
Analytics plays a key role, as you can measure anything from the effectiveness of ads, who’s visiting your website, to the pages and items with which they most engage. And there are easily accessible tools to help you do this.
Google Analytics google.com/analytics – will reveal the origin of visitors to your site and their dwell time. The beauty of this is you can measure what marketing and promotion activity is most effective, as these will be the days when you see the greatest spikes in traffic and engagement.
GetClicky clicky.com – offers heatmaps to show the stickiest (most popular) areas of your website or blog. Armed with this knowledge, you can deliver more of what your customers (existing and potential) most like.
Zendesk zendesk.com – provides a support desk so customers can pose questions and have them answered in real time. This is a route to gathering data on what your customers want to know – and to spot any gaps in the market or service you’re delivering.
Eventbrite eventbrite.com – an effective tool for hosting and managing events for contacts and customers with in-built analytics, so you can see how people are finding your event page, the conversion of people moving from browsing to buying, and, when offered in conjunction with event codes, the greatest source of referrals and attendees.
These tools are either free to use or come with a small cost attached. But it’s a small price to pay for gathering valuable intelligence on your customers and prospects. The more you know about this group, the better they can be served. That will keep them coming back – and that’s good for business.