Data is the new gold.
Most of us with a LinkedIn account see articles about “data” and its relevance in today’s digital world. When you speak to leaders of SMBs about data, they sometimes question the association between having customer data and being profitable. The disconnect isn’t solely about having data but developing event-driven workflow capabilities that lead customers to take action. Action can mean lots of things – sometimes, it’s just about getting customers to your new website, sending them a survey request about their recent visit, or getting them to signup for your business’s marketing campaigns.
The example I like to use is the neighborhood coffee shop vs. the Starbucks next door. The neighborhood coffee shop has culture, intimacy, and a unique connection to the community. Starbucks has achieved economies of scale, sophisticated technology & marketing capabilities. So how can the local coffee shop not only survive but thrive? It may be challenging, but it comes down to execution and an obsession with the customer experience.
Yet, such a small number of SMBs are collecting critical customer data. Starbucks collects customer data in so many different ways, from when you enter your email address for wifi access, creating a Starbucks account, or using the Starbucks mobile app for orders. Data collection yields a significant competitive advantage. With robust data, they’re able to understand and predict customer buying patterns.
In today’s new world SMBs are stretched thin and have bills to pay. My philosophy is around incremental improvement by using experiments and observation. One of my core beliefs is that you must know who your customer is by using primary identifiers such as their phone number or email address.
To start your business doesn’t require a fancy Point of Sale system. One idea is setting up a tablet with a simple Google Form that stores records in Google Sheets. You can entice your customer to provide their information by offering a discount during their next visit. With tools such as – Constant Contact, MailChimp, ActiveCampaign, and HubSpot, your business can set up easy, simple marketing automation.
After you’ve been able to observe and discuss with your staff, ask yourself a few questions –
- Did this step adversely affect the checkout process?
- Did your customers reclaim the discount during their next visit?
- Did your business see an increase in sales?
As I’ve mentioned in previous blogs, change management in business operations needs to be structured. Think about the above as a prototype. It only gets the business so far, but it helps you learn about bottlenecks and business needs. Once your staff thinks about how the workflow should look in an ideal world, you can use tools such as LucidCharts and Microsoft Visio to build out process flow diagrams (ATM example). The process flow diagram acts as a reference point for the staff.
The next iteration is implementing the Point of Sale system and CRM that stores customer interactions. At large grocery chains and pharmacies such as CVS and Rite Aid (CVS ExtraCare and Rite Aid Wellness), the cashier gives you an option to enter your phone number into the payment terminal to unlock discounts. They do an excellent job with their respective loyalty program for several reasons –
- Customer loyalty program – offer a discount according to customer purchasing volume.
- Weekly promotions – member-only discounts promoted using email marketing.
- Experience surveys – ensure quality control by sending surveys about the visit to understand how they can better serve the customer.
Consumer sale promotions have a positive impact on sales; numerous academic studies prove this. Primary benefits:
- Increase foot traffic – Customers are incentivized to enter the brick and mortar location. After all, it is a “numbers game.”
- Increase revenue – inventory will move off of shelves.
- Increase the probability of a sale due to the psychological effect of the discounts. We all want products when they are less than usual.
- Reduce the risk of out-of-date or expired products remaining on the shelf.
If you genuinely want your business to flourish, it’s not enough to merely have a customer loyalty program or sale promotions. Customers have a desire to feel special. According to Salesforce’s State of the connected customer (a survey of over 7,000 consumers and business buyers).
65% of customers suggested that receiving personalized offers and exclusive discounts have a major/moderate influence on their loyalty.
75% of business buyers expect companies to anticipate their needs and make relevant suggestions
Furthermore, 77% of shoppers say discounts can influence where they shop, almost half (48%) admit a discount has sped up a purchasing decision.
Back to an earlier statement, “Data is the new gold.” None of this is possible without relational data. Customer Relationship Management (CRM) systems like Apptivo CRM, HubSpot, Salesforce, and Zoho CRM have the flexibility and computing power to handle an infinite number of customer records such as contact information and purchasing history. Anyone familiar with big data understands solutions like Microsoft Excel and Google Sheets aren’t designed to be a database. That’s precisely why dumping critical customer information into a workbook isn’t sustainable.
By this point, you might be wondering how we can capture this information? The Point of Sale system can streamline customer/client information collection. The CRM systems and POS systems recommended in this blog have native integration and 3rd party connectors, which translates to plug and play. As your staff learns more about operations, you can learn about additional business needs.
- Lightspeed POS: Editor’s recommendation, offers robust integration capabilities, various retail/restaurant use cases, and hardware offering.
- Vend POS: They offer a range of hardware to fit your budget. They also offer an inventory management suite if your business doesn’t have an ERP system.
- Heartland POS: Heartland offers a range of solutions. The hardware and software are fully integrated and designed to meet a range of retail/restaurant use cases and different hardware to meet them.
Once your POS system is operational, your business will have capabilities to:
- Measure sales using data analytics
- Measure Retail shrinkage
- Identify consumer buying patterns (i.e., 4 pm was the busiest period while 10 am was the least active)
- Produce metrics such as required time for checkout
Once your CRM system integrates with the POS system, your business will have a robust relational database that will uncover insights that weren’t possible before. Staff will be able to forecast sales for better inventory management and a/b testing for marketing so you can understand effective marketing campaigns vs. ineffective ones. Most importantly, your business will realize new revenue streams by increasing opportunities to sell to customers. Over time, as consumer data collection matures, your business will have the ability to share customized marketing with customers.
CRM and POS systems might be an investment, but it comes down to the question – Do you want your business to be in business for the next five years or the next ten years? The Starbucks next door can source raw goods for MUCH less because of the purchasing leverage procuring in bulk. They have a nationally recognized brand and sophisticated marketing. If your business doesn’t adopt the tools to compete and make purchasing more comfortable for the customer, your business will close down eventually. Invest for tomorrow, the return might not be immediate, but it will pay for itself with the right execution.
93% of shoppers prefer small and local retailers. Make the decision easier for them. All of the POS systems mentioned make mobile ordering convenient. COVID19 has accelerated digital trends that existed before and are not going away. Mobile ordering allows your business to compete with Starbucks because you empower your consumer to order at their convenience.
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