How Small Businesses Analyze Behavior to Boost the Bottom Line

Over the past couple decades, ecommerce companies like Amazon have had so much success thanks to one distinct advantage over traditional brick-and-mortar stores (other than low prices)—the ability to analyze customer behavior using big data.

Big data in this context are the shopping patterns of buyers—such as what’s hot in search right now or what items are typically bought together.

While small businesses have long been able to understand basic trends (“We’re out of this item, so it must be selling well—we need more”), in the beginning they couldn’t compete with the online retail giants that can measure how long people dwelled on a certain page before moving on, or could see at which point in the online purchasing process the prospective buyer backed out.

The tides are beginning to turn, however: Though Amazon and other big box stores continue to dominate the retail world, small businesses can now use plenty of online analytics tools of their own to track their customers’ desires and actions, and see where their business is coming from, among other insights.

But the most exciting advances are coming from how small businesses can use in-store insights to boost their sales. Technology is rapidly improving in this space, and businesses will soon be able to build customer profiles, quickly find loyal customers with location-based technology, push context-specific advertising and deals, and much more.

Here are just some of the intriguing ways that small businesses can use behavior analytics, both online and offline, to improve their bottom line.

Google Analytics and Other Tools Help You Optimize Your Website

It’s 2017, so if you have a small business, you have a website to go along with it. And it’s in this space that most small businesses are able to utilize big data—by tracking the behaviors and trends of their online customers.

When it comes to analyzing your website’s performance, Google Analytics is perhaps the best-known and most popular platform. That’s probably because it works well and is free (and what’s better than free tools?).

You can certainly use it in conjunction with other tools to see a bigger picture of how customers are interacting with your site.

Bret Bonnet, co-owner/founder of Quality Logo Products in Chicago, tells Fundera that he uses Google Analytics and Inspectlet, a website heatmap and form analytics tool, to boost conversion rates.

“We’ve done a test in the past where we showed two different designs of the same page to a select online panel and asked them to complete specific tasks. During this test, we were able to monitor the heatmaps and actual recordings of user sessions to see where people were clicking and how they were interacting with our website,” Bonnet says. “We quickly learned where to place the most valuable information on the page and how to optimize our site flow to maximize usability.

“We’ve also run tests to see which call-to-action buttons work the best to create conversions and boost sales,” he adds. “We tested four text variations and three color variations on the button. What we found was that the most successful button was blue in color and had the CTA of ‘Start Your Order.’ It resulted in a 3% conversion rate, which we found to be extremely reasonable.” 

That’s the great thing about a website as opposed to a storefront: You can change your layout, signage, color scheme, and more with just a few clicks, and then measure whether that’s having an effect on your sales.

Move Away From Gut Feelings, and Identify Real Trends

As a small business owner, you probably feel you know your clientele like the back of your hand. But what if your observations and gut reactions are missing the larger trends that you could be capitalizing on?

Barbara Criswell of Aquarius Books, a new age book and gift shop in Kansas City, used to think that her customers were mostly returning regulars.

In reality, as the Womply blog details:

The best indicator of a potential customer was disposable income. She learned this by looking at the impact of new and repeat customers on her store’s revenue in Womply Customer Pulse.

“I didn’t realize how much of our business was coming from first-time customers,” she says. “That’s a significant and valuable piece of information. It totally changed how I viewed the people coming into the store ….

“I saw that some of the zip codes near our store were experiencing increased spending because the area is gentrifying, and new money is coming in,” she says. “I targeted some of my promotional mailings to people in those zip codes, and we saw increased sales.”

That’s a complete reversal of how Criswell saw her business, and how she went about marketing and advertising. As a result, according to Womply, Aquarius Books is coming off 17% growth over the previous year.

See How People Are Interacting With Your Physical Space

Here’s where it gets interesting: Businesses everywhere are beginning to marry ecommerce with brick-and-mortar, and one of the ways that’s happening is by tracking the behavior of people who enter physical spaces like storefronts.

Since Bain & Company predicts that 75% of retail sales will still take place in physical stores by 2025, emerging location technologies that can show business owners how customers (and their phones) move through their stores can serve a similar function to online tools like Google Analytics.

Jibestream, a platform that helps businesses and organizations put maps of their spaces in apps, is a prime example of a tool that companies can use to help bridge the gap between the digital world and the real world.

“Our platform is typically used in large venues, but those large venues could have a subset of small businesses, for example a mall,” says Chris Wiegand, CEO of Jibestream. “The mall may set up the infrastructure for this to be in place, to provide the opportunity to small businesses, tenants of the mall, to participate and create better experiences for their shoppers.”

Jibestream can offer businesses a variety of possible deployments. One concept is simply about analytics and seeing how to best optimize the space.

“If we think specifically about retail, it would be about the analytics: The path that a shopper would take throughout a venue, how long they dwell in a certain area, and just their general user behaviors and patterns,” says Wiegand. “Although it’s anonymized, you still gain a lot of insight into how people are spending time in a space. We don’t know who they are, but we can start to aggregate those trends and often make physical changes to stores and venues based on those analytics, moving product around, or moving signage.”

Identify and Engage Loyal Customers

Wiegand says that another possibility is using the platform to create a better, more personalized experience for the shopper directly.

“We’re able to provide the ability to deliver location-based messages based on real-time information,” he says. “It could be parking availability, or about a sale, or about something you [previously] selected in the preferred store or an item, and maybe you’re walking past it so they want to intrigue you to come and see that. Shoppers can opt in or out of that functionality.”  

If customers do start opting in to these various programs on their phone, businesses can offer increased value to them when they do enter the store.

“Operationally there are many different benefits. It could be you’re notified as an employee that a high-profile or loyal customer has walked in the door and they’re seeking assistance with a product, so being able to easily navigate to that person and know their first name if they’ve opted into that sort of program,” Wiegand says.

And if the employee knows what the customer has bought in the past, or what items are frequently bought with what they’re looking to purchase? Even better.

There are myriad possibilities for this kind of technology. IBM has developed “Presence Zones” that transform raw location data into contextually defined areas that can be useful for businesses. For more targeted interactions like the ones Wiegand describes, some companies use proximity-sensing Bluetooth location systems to connect with people who have downloaded the store’s app. Businesses can also send advertisements and promotions directly to a visiting customer’s phone.

The trick will be not to bombard people with information to the point that they’re turned off. Businesses will have to learn to balance their desire to interact with customers meaningfully with allowing them the freedom from pressure that window shopping traditionally encourages.

Improve Operational Efficiencies

Big data isn’t only about catering to customers. Businesses can also use data about their assets to increase operational efficiency.

“We have a big value proposition for asset tracking, which might be for a retail business, but also for tracking goods within a warehouse,” says Wiegand of Jibestream. “Our mapping platform is used in these industrial use cases, tracking products within a warehouse or forklifts: ‘Show me all the forklifts that have a battery life of less than half, and what’s the most efficient way to go and service them.’ We’re part of an ecosystem to bring a whole solution—there could be other data pieces that come into this.”

To do this, manufacturing or warehousing companies need to invest in making their assets “smart,” which means connecting them to the Internet of Things and then analyzing the resulting data. This will give businesses real-time visibility into the life and behavior of their machines, replacing, again, things like “gut instincts” and other guesswork.

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Collecting and analyzing big data isn’t just for big companies anymore. From online platforms to in-store tools, small and mid-range businesses are increasingly able to invest and utilize the kind of tools that helped transform the e-commerce and brick-and-mortar giants of the last few years.

As the costs of investing in these types of hardware and software come down and the tools become more accessible, expect analyzing behavior—of customers, employees, and machines—to become a common practice among all kinds of businesses, of all sizes.  

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from Fundera Ledger https://www.fundera.com/blog/small-businesses-analyze-behavior