McKinsey & Company and the New York Times have declared this the era of big data, but don’t think Big Data is only for Big Companies.
Here are four questions even small to mid-size companies can get answers to:
1. How well do you know your customers?
You may think your customers are local, but there are a couple of quick tests you can use to determine where your customers actually come from. If you do not have a point of sale mechanism to collect this data, you can do your own test by asking customers to share their home zip code when they shop. When our local hospital did a zip code test and had a GIS map run on the results they were surprised to find that they had a number of people who came from the northern counties in the state, bypassing a more conveniently located hospital in Wausau and a large medical center in Madison. This opened up opportunities to take a closer look at their specialties and their marketing strategy.
2. How well do you know your competitors?
Most Business Owners have a good idea of who they are losing sales to. What they may not know is why. It is easy to make an assumption that you are losing on price, but solid competitor research can determine if that is true. It can also identify the niche areas where you can focus and protect your pricing. Recently a local retailer saw a large sporting goods chain enter their market. Not only was this competitor able to offer many of the same products at a cheaper price, they would be able to sustain that price for a longer period of time. A competitor analysis was able to show where the big players saw their largest margin items, and what products and services they were ignoring to pursue these higher margin items. Combined with customer research, this competitor research revealed a niche area that the small retailer could enter and charge a premium.
3. How well do you know your trade area?
A good trade area analysis is specific to a company, its industry, and its geographic area. Companies thrive by being able to respond to local market conditions, particularly if they are at odds with the national picture. After the start of the Great Recession the restaurant business in general took a big hit. In Madison local restaurateurs were able to take advantage of Wisconsin’s status as an agricultural state and the presence of a strong local culinary school at Madison Area Technical College to become early entrants in the local food movement. Today Madison has a thriving Restaurant Sector which is gaining national attention.
4. What has changed for small business?
Business research used to come in two flavors, market research which was mainly for consumer companies and consisted of local surveys and focus groups, and business analytics which was a game for large companies which collected massive amounts of internal data and used expensive software and analysts to quantify. Medium sized B2B companies could also subscribe to Hoover’s databases and industry analysis from a source such as IBIS or First Research, for a costly annual fee.
Pricing for these tools have come down considerably in the last five years, and additional pricing options are available such as per report pricing or daily subscriptions. Beth Plutchak Consulting has access to a host of research tools, as well as the trained staff to use these tools and provide the analytics.
Small businesses need an edge to protect their margins and protect their pricing. Don’t think that the era of Big Data is only for Big Companies.