For many small businesses, third-party providers were a lifeline at the start of 2020. Different types of delivery platforms helped grocery and retail businesses pivot to meet customer demand for delivery, curbside, and online ordering practically overnight.
But there's a hidden downside to these seemingly miraculous apps—you don't own the data the apps collect. The volume that these apps collect and what they do with it has put customer data in the spotlight, leaving small businesses to evaluate their relationship with big data.
For some professional services and small businesses, losing that data might not be a big deal. But collecting data and not taking advantage of it can be just as bad as losing it. You might not have access to data if it's collected by a third party, but you do have first-party data—which you collect through your website, marketing efforts, and point-of-sale system.
Here are three game-changing benefits of owning and applying your customer data to maintain a strong customer base.
1. Drive more sales.
For many small businesses, collecting and using customer data isn't second nature. After all, you got into business to run a business. The data you collect from your point-of-sale platform and customer relationship management system might not have factored into your decisions until now. But the rise and risk of third-party apps highlight just how much information you can get when you own the customer relationship. It's revealed several interesting ways businesses can use data to drive sales, build relationships, and boost profits.
For example, some third-party apps use machine learning-based lifetime value models to build complex algorithms that suggest products to customers. These algorithms optimize for total lifetime value from customers, not one-time conversions. This could translate to increased basket size and sales, and return customers. When apps use data this way, it gives them an idea of who shops at your business. It also shows how the products and services they purchase could provide valuable information that you could be tracking to make marketing decisions on your own. You could send more frequent email newsletters to repeat customers or suggest services or products to customers based on what they've bought.
2. Save everyone time and money.
Customer data can also help you unearth opportunities to streamline the customer experience, which can save you and your customers time and money. And a better experience can drive more loyal customers, Trustpilot notes.
For example, many small plumbing businesses still approach onboarding, service, and offboarding manually. This introduces a lot of friction in the customer experience if a customer is waiting on the service professional to share paperwork, email with updates, call with appointment reminders, or process payments.
Small businesses that want to optimize their operations and the customer experience can use a technology platform to:
- Share information about the business through a professional website.
- Collect customer information in convenient digital forms.
- Empower customers to book appointments and reschedule online.
- Send automated appointment reminders.
- Send digital proposals and invoices.
- Save customer credit cards and process recurring payments.
All these interactions generate a lot of data. Even with a simple digital process put in place, customers and businesses can work together to quickly and easily build habits that lead to a lifetime of customer satisfaction.
3. Build better relationships.
Speaking of customer satisfaction, the ultimate purpose of collecting and using customer data is to build better relationships. The more you engage with customers and record information about those engagements, the more data you have to make strategic business decisions.
Here are a few ways that you can use data to build better customer relationships.
- Personalize email marketing. Data from customer interactions can help you develop personalized email campaigns based on common products or services. And you can automate those emails to be released throughout the year. You could offer special holiday coupons to your highest-volume shoppers, or you could set up alerts for when a customer spends more than a certain amount so you can thank them for their business.
- React to trends in spending and payments. As you collect more data, you might spot spending and payment trends. You might find that certain products and services are more popular during certain times of day, week, month, or year, or you might stumble on the average time it takes a customer to pay for your services. If you notice these trends, you can create reminders to help customers stock up on their favorite items or remit payments at the right time.
- Identify new opportunities to delight and impress. Trends in customer spending could also shine a light on opportunities to customize your products, services, and offers. If you found that a large percentage of customers at your auto shop always got their oil changed when they took their vehicles in for state inspection, you could create a promotion—a special coupon, perhaps—to make it more convenient to bundle those services.
Unlock a world of potential.
When you own your customers' data, you can mine it for important insights into their behavior. You can use those insights to drive sales, save time and money, and build stronger relationships. Professional services businesses might not face the same threat from third-party apps as restaurants and retailers, but they face the risk of not collecting and not acting on their first-party data—a missed opportunity that can have lasting consequences.