5 Things to Know About Data As You Grow Your Small Business
Paying attention to your customer data is key to keeping your small business growing.
Two consultants just unloaded their challenge:
How do we help our client who has over 100M companies represented in their corporate database?
Your first response is probably a smirk – “Well, that sounds wonderful! What’s the problem?”
The problem is that there are only approximately 45K publicly-traded corporations in the world. Even if you include all the private, government, education and not-for-profit organizations, you still don’t come near 100M. The consultants needed to zero in on what the company needed to know. – How many customers do we really have?From there, the consultants can expand their scope to consider how many of these companies are profitable, how many of them buy regularly, and the lifetime value of each.
Before any data are gathered, before any questions are asked, the consultants and countless other companies across the world must define “customer.”Over the years, this problem has presented itself to me in countless meetings, at conferences and in board rooms. And it represents something that most companies are not clear about from the day they open their doors:
Who is their customer?
Startups, as well as long standing companies, define each customer in a variety terms – CIOs, application developers, insurance agents, franchise owners, information security professionals, HR leads and departments. This wide definition works for the marketing folks, but not great for managing these customers for purposes of billing, support, resale, and a host of other operational issues.
Here are 5 things to know about customer data as you grow your company
1. Gain agreement on what a customer is to you and your Hispanic business. This sounds so simple but take the examples above and dissect a few:
- Chief Information Officers (CIOs) are individuals who head up information technology departments usually in larger corporations.They come in various shapes, sizes, sexes but they also exist in companies that vary as greatly as they do. Does your product benefit the individual or the enterprise?The answer to that question will determine whether your definition of customer is linked to the individual or the company.
- Insurance agents are numerous. Similar to the CIO, your definition should consider whether an agent as an individual or as a component of her firm? Do you want agents associated with certain lines of insurance or certain companies?
- HR leaders and their departments are usually multifaceted.
Consider whether the size of the company they support matters. Should a larger company be divided into smaller, manageable customers? Additionally, consider if your product supports the leaders and/or the departmental needs. It may be best to focus on which HR function your product supports – employee benefits, education and development, or recruiting..There are a multitude of considerations that should be carefully thought through before you get your first customer. Most importantly, all functions in your business need to agree to your definition of customer. For example, Sales should introduce the customer data the same way as Product Development. That’s the first alignment that needs to happen. Planning for how a customer is represented throughout your organization is key. But even then, you may find that your first customer is very unlike your 100th.
2. Revisit the definition of customer annually, at least.
As your business changes, your definition of your best customers will also change. Those changes may not be drastic, but keeping abreast of how customer data are represented in your systems becomes very important. With a fast moving and highly successful company, you may look up in a year’s time to discover that you have hundreds of customers, 50% of which have similar names. For example, you may have IBM, International Business Machines and I.B.M. Each is correct, but the addresses and the individuals associated with each might be different. Reevaluate your definition of customer so it best assists your employees as your company grows and changes.
3. Keep customers data up-to-date by using it.
Marketing departments are notorious for wanting to know as much as they can about the customer base, especially in a startup company or with a new product line. But collecting information such as an individual’s title, mobile phone and email address requires that you also keep that information up to date. Here’s a rule of thumb: never collect a piece of information that you DO NOT have a plan for how to keep current. That may require that you carefully evaluate your processes each time someone wants a new piece of information collected from the customer.
If your process does not include a way to keep data up-to-date as well as an estimate on how often the information will be used, then you might reconsider collecting that information at all.
.4. Measure your customers in a way meaningful to your business.
After you have determined what your business should be and how it will be successful in the market, your next step is to determine how your customers contribute to that success. Determine the metric – the dollars spent, , number of times they purchase, or a combination of the two. Ascertain which is more important – the total dollars from each customer or the amount of profit per transaction?
If you are a startup company, the answer may not be associated with dollars. You may simply want to measure the number of companies that use your product and what the individuals who purchase, use, or recommend it think about your company.
5. Value data as part of the assets of your company.
When one company acquires another, it assumes the assets of the purchased company – the intellectual property, the facilities, the employees. But one of the assets often overlooked in these transactions is the customer data. In order to maintain customer satisfaction and continued customer purchases, the acquiring company must know who the customers are. If you start your company thinking that the information on your customers has true value as an asset, then you will treat it differently, manage it more appropriately. Take care of it just as you do your office equipment or physical plants.
When building your business, thinking about what your customer base will look like when you sell it or pass it on to your children brings a world of clarity to the information you collect on each and every customer. Businesses do not exist without customers.
Customers are represented in your business by the data that they generate in their transactions with you. So, paying attention to your customer data is key to keeping your business growing.
Related content:
Critical Business Data- Measuring What You Manage
Data Analytics Driven Marketing for Small Business
Where Are You on the Data Analytics Maturity Model?
Finding the Right Data Resource: Asking the Important Questions
