Small Business or Big Business: Straightforward Ways to Improve Profitability
By Timi Olubiyi, PhD
As businesses grow, the chase is usually for profit maximization, they introduce new products or services, create new marketing plans, invest in human capital and technology, all for expansion, better returns, and to gain a competitive edge.
However, with all these efforts to maximize profits, the mechanism to survey and gauge customer feedback is most times missing. This is where customer experience comes in and it falls within the non-financial business performance indicator.
Customer experience is so important and yet business operators rarely pay attention to it, this is why I am giving my opinion on it for awakening. To me, understanding customer experience is as important as major efforts businesses consider to maximize profits.
Firstly, what do we mean by a non-financial business performance indicator? These are measures that cannot be expressed in monetary units, which are related to product or service quality, customer relationships, operations, and so on.
A good example is customer experience which a large body of knowledge sees as a significant determinant of business profitability and income.
Fundamentally, customer experience involves every aspect of business offering or operations— from the quality of customer care to patronage pattern, satisfaction, advertisement, the shopping environment, sales, ease to use or get products or services, and so on.
That said, one of the most significant elements in helping a business get to know its customers and to have a fair idea of patronage and customer experience is data. Invariably customer data can easily be used to gain different insights and in particular help, businesses to align with customer goals.
As important as customer experience measure is businesses hardly gather and process its data to improve business performance. Without doubts, if data on customer experience is well utilized it can improve the different aspects of business operations from sales performance to customer growth and even profitability.
From context observation poor customer data management practices are not just a small business issue, it involves large firms as well in Nigeria and indeed Africa.
Businesses usually guess customers’ needs without asking and analyzing what their interests are, the crucial impact of customer data on businesses is rarely considered. The place of measuring customer experience with data is generally missing in the most developing business environment and huge challenges exist majorly in Africa.
In recent times we have seen businesses introduce new products and services, even have price changes without reaching out to customers to determine their preferences or what types of changes they would like to see, the level of product or service expectations, and if they would be willing to pay more for them.
In a market or environment where substitute demands are readily available, businesses must endeavour to do more and consider evaluating customer experience from time to time
In fact, studies have shown that there is a wide gap between the percentages of businesses that make use of customer experience data and those that do not.
Businesses incur billions of money each year on unnecessary costs and even make losses due to the inability to easily access the right information from customers to manage customer expectations, experiences which in turn can improve decision making, profitability, and performance.
Additional findings show that businesses rarely gather and evaluate customer data to improve business operations. This is where customer analytics comes into the picture, just like the financial metrics, customer experience can serve as a leading indicator to gauge business performance and data from it can provide valuable insights as to its business impact on stakeholders, customers, and society.
Customer experience begins the moment customers visit a business website or physical location, and ends when they choose to no longer use the services of the business. Meanwhile, it is important to stress that a good customer experience leads to repeat purchases, patronage, brand loyalty, and positive word of mouth.
As a reminder, in any form of business, the customer is king, consequently, data from customers can be used to get insights and understand the performance of businesses and also make future trend predictions.
Customer analytics, also called customer data analysis, is the process of collecting and analyzing customer data to gain insights into customer behaviour. This can serve as a key indicator for understanding customer preferences, patronage patterns, customer profiles and it can allow businesses to understand customers better and make smart and well-informed business decisions. Simply put is helps to learn customer engagements and shopping experience, therefore businesses should strive to embrace it.
Customer valuable shopping behaviour insights, such as buying pattern, demand pattern, shopping trend, spending pattern, request data, time of shopping, time gaps between visits, repurchase pattern, preferences, peak shopping hours, and so on can be analyzed.
For business operators, particularly young entrepreneurs and solopreneurs, it is not sufficient to post an update on social media or WhatsApp status about your services or products, data gathering and simple analysis of feedbacks can help grow the small business.
For large firms, it can help make key business decisions, increase customer retention, predict customer behaviours, understand choices of customers per time, their product choices, and loyal customer tracking.
In fact, smarter decisions can be made by any form of business either large or small by adopting a data-driven approach to operations and customer experience. So, it is important to have a system that gathers data on customers to improve business performance.
So, to succeed in an unpredictable environment like ours, businesses must seek opportunities to understand customer experiences and get feedback from time to time for a smooth competitive advantage. More so, businesses need to have a process to continually analyze trends concerning actions, reactions, and transactions in their businesses for ease of forecasting and predictions.
A few leading companies and as big as Google and Facebook Inc, are with billions of users, yet they adopt customer analytics for improved performance, so why will a business with a manageable size of customers not join the trend to keep customers and avoid them switching to competitors.
In conclusion, business software and customer data analysis tools with trend analysis are one major helpful way to analyze customer experience and behaviour over a defined period and can generate valuable insights. This can be gathered through multiple interaction channels such as website visits, social media engagements (comments, likes, and shares), visit patterns (buying, spending, and needs), and payment history.
A better customer analytic is good for businesses in both the short term and long term because it will improve customer experience and give valuable predictive insights, which can lead to more sales, more loyalty, and in the end a healthy and profitable business. Good luck!
How may you obtain advice or further information on the article?
Dr Timi Olubiyi is an Entrepreneurship & Business Management expert with a PhD in Business Administration from Babcock University Nigeria. He is a prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and Securities & Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: [email protected], for any questions, reactions, and comments