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Using data to help understand and transform your business

When you understand what data means and begin to utilise it, you’ll be on the path to better understanding your customers and tapping into what makes your business stand out from the rest.

4 minute read

With innovative technology giving us the ability to measure, track, and analyse information on a whole new scale, the buzz around data is growing louder every day.

But for many small to medium-sized enterprise (SME) owners, the customer-centricity craze is raising more questions than it is answers. Where does data actually come from? How do you put it to work? And with so much information out there, where do you even start?

Tim Wixon, BNZ’s Head of Tech Industry, has spent years funding and working with tech companies, and has witnessed the benefits of utilising data in the industry first-hand. We sought out his insights on using data to help understand your customers, and ultimately help grow or transform your business.

When we say “data” what do we actually mean?

Tim describes data in the business context as information that can be used to observe something. “It’s all the information a company can use to understand their customer base, their industry, and everything else that impacts their business.”

This means data is incredibly broad, and comes in many different forms - including sales figures, foot traffic numbers, customer drop-off points in sales processes, engagement, customer demographics, and much more.

“Data has always been a necessary part of making well-informed business decisions, albeit more manual to collect and analyse,” says Tim. “It’s just that technological advances have given us this wide array of affordable data sources that, in the past, businesses simply didn’t have access to.”

Because of this, more and more businesses are using data to inform every decision (what to stock, who to sell to), and businesses which choose not to use data may be left behind.

How to collect data about your business

Where data collection once relied on people with clip-boards physically observing customers, innovative technology has made it easier to measure just about everything.

“There’s so much information out there that you can track,” says Tim. “The trick is to figure out what shifts the dial to achieve your goals and businesses goals. For example, you don’t want to invest time and money tracking 100 things, when only four are relevant lead performance indicators for your business.”

Data can come from a range of sources, including:

• sending your customers online surveys
• tracking how customers navigate your website – like which pages they spend the most time on, and at exactly which point drop-off occurs
• getting a third-party research or data collection agency on board
• using business software to track which of your products are best-sellers and how much of each item you need to stock
• tracking what your customers are saying about you on social media platforms
• searching publicly available data resources for wider business trends and information about your industry.

It’s important to go a step further than just collecting data. For it to really benefit your business, you need to analyse it too. “Say you’ve observed a whole bunch of behaviours,” says Tim. “How do you get the value from it? How do you use that to refine your customer value proposition, retain your existing customers, or attract new customers?”

The right data can bring significant business benefits with it

Relevant and well-analysed data can have a positive impact on almost every area of a business. The majority of these benefits fall under two main categories; efficiency and understanding.

 You could use data to increase your business’s efficiency by:

• tracking sales so you can automate product-ordering whenever stock gets low
• measuring the effect of weather, construction, or local events so you can predict busy periods and roster on the right number of staff
• using online accounting software to help you make well-informed business decisions without having to wait for a current picture of your finances.

You could use data to build a clearer understanding of your business by:

• using sales figures to show which of your products resonate with your audience best
• tracking the most profitable areas of your business, identifying where you need to invest the most time and energy
• identifying areas of your business that aren’t performing as well as they could be, and seeking out ways to improve
• tracking your business’ lead performance indicators for success, including to build a solid case for potential investors or banks when you’re looking to raise capital
• identifying which online advertising messages are resonating best with your audience.

Understanding your customers is the key to a successful business

The importance of customer-centricity can’t be underestimated. “Say you’re a company and I’m your potential customer. If you’ve understood my needs better than your competitors, then I’ll choose to buy from you,” says Tim. “In-depth understanding means you're likely to attract more customers, retain more customers, make more revenue, and your business will be worth more.”

The beauty of data is that if used properly, it can be an objective source of information to help inform your decision making – rather making decisions based on gut instinct, or tainted by potential biases from survey participants. “Traditionally you might’ve relied on talking to your customers and getting their feedback, which is still really important,” Tim explains. “But often what people think or say they do or will do is slightly different to what they actually do. So, to uncover real insights into actual behaviours, data has a crucial part to play.”

With data only becoming more accessible and affordable, the likelihood of innovative companies in your industry using it to understand and attract customers is high. As Tim suggests, so is the potential cost of not following suit. “If someone else is using data better than you are, they may attract your customers by understanding their wants and needs better,” he says. “And, therefore, your revenues.”

Data is for every business – not just the big players

You might think data is only useful for large companies with even larger budgets, or that it’s just for online businesses. But the right data has the potential to inform business decisions in businesses of any size, in any industry.

Tim has seen plenty of cases of smaller-scale businesses using data well. He gives the example of a food and beverage company which has been tracking everything right from the get-go. Inventory, sales figures, lead generation, packaging preferences, website traffic, conversion ratios, and more. “They’ve used all this information to really understand what their customers want and demand,” Tim says. “And they’ve been able to establish a successful premium brand within their market as a result.”

Tim recommends all businesses aim to set themselves up to track relevant data, particularly their lead indicators of performance, as early as they can – ideally from day one.

You own a SME business and you’re new to data, what should your first step be?

With hundreds (if not thousands) of possible elements to measure, diving into data for the first time can leave any business feeling out of their depth.

That’s why Tim’s advice is to begin with a narrow focus. “Start by working out what information is valuable, and what’s not,” he says. “Then only concentrate on collecting data and insights that are meaningful to your business.”

Tim explains that for most SME businesses, there are often only a handful of lead indicators that are critical to their success. He recommends working out what those key lead indicators are, and only tracking data that directly informs them. Dashboards can help visually.

As more and more businesses start tapping into data, those who do it well will likely rise to the top – scaling faster, serving customers better, and driving more success. Take a moment to consider how data could help you understand your audience, and whether customer-centricity could transform your business for the better.

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This material is for general information purposes only and does not constitute, and is not intended as, personalised financial advice or as a replacement for legal advice. BNZ strongly recommends you seek advice specific to your personal financial or legal situation from a qualified adviser.