Running a successful small business for over a decade is difficult. In Australia, 60% of businesses will fail within their first three years of operation. One main reason small businesses close is lacking a comprehensive and flexible business strategy. 

Analytics are what ensure a business is on track to reach its goals and follow its overarching market strategy. Analytic insights are distilled from various types of data sources. They serve as input for precise business decisions and ensure business owners and managers are not precariously over-relying on intuition or assumption. 

In this way, analytical insights ensure small businesses are closely following their unique success strategies. This article will dive into practical ways small businesses can harness the power of analytics to improve their customer engagement, operational efficiency, and product development with the ultimate goal of boosting their longevity and profitability. 

Analytics for Customer Engagement

A major component of small business strategy is simply knowing your customer or target market. Owners and managers employ several types of business intelligence including emotional intelligence, linguistic intelligence, and interpersonal intelligence to develop a clear understanding of their target market. However, these types of intuition rarely paint a full picture of a customer demographic, which is why small business owners should rely heavily on logical-mathematical intelligence and use customer data and analysis to know and understand their customers. 

Luckily, when it comes to analysing customer data in order to better understand a target market, there is a plethora of customer data available to small business owners today. 

Small business owners can collect customer data through:

  • Surveys;
  • Questionnaires;
  • Focus groups;
  • Interviews;
  • Subscriptions;
  • Online tracking;
  • Social media;
  • Cart abandonment data;
  • Heat mapping;
  • Video surveillance.

Once collected, small business owners must then analyse this raw customer data to make informed conclusions from it. 

Due to the volume of customer data that can be collected, there are many analytics tools and software small business owners can utilise. Some top analytics software in 2024 includes UX Cam, Amplitude, Google Analytics, Mixpanel, and more. Each of these tools and services offers unique advantages and disadvantages, which should be weighed against the value of the conclusions you could learn about your target market. 

Analytics for Operational Efficiency

Another major component of a successful business strategy is operating efficiently. It’s the daily operations of a business such as ordering, stocking, shipping, selling, and fulfilling orders or contracts that will mean the difference between lasting for decades and closing. Analytic tools can help eliminate or reduce waste and unnecessary expenses in these operations by compiling operational data and helping decision-makers identify areas that need improvement. 

In order to use analytics to reduce inefficiencies, business owners must first collect operational data. Depending on the type of business and its products, whether it is virtual, physical, or a hybrid of the two, this data will look largely different from business to business. Generally, customer feedback is an ideal place to start as it can direct future data collection. Customer feedback — specifically negative feedback — will highlight areas that aren’t functioning well such as long wait times or confusing product layouts. With this information, small businesses can collect more in-depth data on a specific aspect of their daily operations. 

Once this data is collected, it must be analysed and organised for business owners to draw actionable conclusions. Data visualisation is a powerful analytical tool as it allows decision-makers to intake large amounts of operational data in a way that is easy to consume. When analysing operational data, making a flowchart can be particularly useful since flowcharts visually represent sequences and systems which makes it easier for business owners to identify problem areas in their systems. Once identified, these problems can be remedied thereby increasing business efficiency and overall longevity. 

Analytics for New Product Opportunities 

Finally, a successful small business strategy must include growing and adapting to meet new market needs. It’s not enough to run a successful business model for a season, longevity and profitability are forged through innovation. Harnessing analytics helps small business owners have confidence in improving their current product lines and creating new ones. 

Further analysis of small business customer data and feedback often reveals opportunities to improve products. A great example of this is when a business starts with one all-around good product like Coke’s original Coca-Cola drink, but through analysis and market feedback develops specialised versions of this product, such as Diet Coke, Coke Zero, and Cherry Coke, to cater to unique needs and interests. In this way, analysis of customer data serves as a blueprint for how businesses can improve or adapt their current products. 

Advanced data analysis also enables small businesses to create entirely new product lines. Small business owners are highly creative people so creating something new may not be the challenge, but knowing if something is a viable product that is worth the risk is where data analysis can help. Market analytics can reveal to small business owners where there are gaps in the market, how their brand compares to other businesses, and if there is a target market for their new products. Since this type of market research can require a lot of time and investment, outsourcing research and data analysis can be a great option for small business owners. Regardless of how data is collected and analysed, it fuels decision-makers with what they need to make innovative strategy moves.

Conclusion

To conclude, running a successful small business is not a simple task. Small business profitability and longevity reside in following a sound strategy. Data analysis is what gives small business owners and managers the advantage they need to make precise and accurate strategy decisions to improve their customer relations, daily operations, and product innovations.