Ever wonder why grocery stores push customers to use rewards cards? I became fascinated with this question recently when I received a booklet of coupons in the mail from my local grocery store. The coupons were tailored to my purchasing habits and even offered decent savings on items that I purchased only once or twice. Seemed pretty amazing to me, but I wondered how and why they did it.
After doing some research, I realized that rewards cards serve two purposes (1) to drive customer loyalty by offering discounts and (2) to build customer profiles for the store and region. It’s the second purpose that is the most intriguing. Essentially grocery stores use purchase information to understand the preferences of their customers; this helps them estimate demand and ensure key products are stocked at each store. In a way, they can use the data to custom tailor their services to unique demographic groups.
Grocery stores offer an exchange, in return for using your purchase information, they provide in-store discounts and personalized coupons. Overall, it seems like a pretty fair trade and an excellent way for businesses to understand their customers. While most grocery stores are part of national chains (which can afford large business intelligence departments), are there similar ways for small businesses (who often have constrained resources) to capture and analyze this information?
Here are four simple ways small businesses can use data to understand (and better serve) their customers.
- Leverage Web Analytics. Website traffic is a great way to understand where viewers come from, how they found the website, and what content they are viewing. This can help identify if there are key areas of interest (possibly a great article or blog post) and how to optimize content for your audience.
- Reach Out with Social Media. Pretty much everyone has a social media strategy, but how much analysis is actually going on. There are a number of platforms to look at trends, popular posts, “likes”, and “shares”. While these are simple measures, they allow businesses to see what content is most popular. Businesses can take this a step further with text and network mining to analyze the content, sentiment, influencers, and relationships between the viewers.
- Dig Deep into Current Clientele. Examining sales for current clients is the best way to understand demographic trends, product preference, and customer “loyalty.” For a small business like gothamCulture, this can be easy as looking at where clients come from, what market sector they are apart of, and what type of services they purchase. By identifying links and connections, businesses can target marketing and project trends.
- Understand the Competition. Understanding where the competition’s customers come from and how it uses social media can be a mirror to allow small businesses to differentiate their products and target new customer groups.
By leveraging current sales, potential sales (website traffic, social media, and the competition), and identifying trends and similarities between the two, small businesses can start piecing together profiles for different customer populations, the products and services they may be interested in, and anticipate future market trends.