Let's get one thing straight at the start. Being in the data business, which is absolutely essential for every business today, has nothing to do with hiring data scientists and/or spending even more time and money on technology than you already are. There's nothing wrong with investing in your future, and new technologies will be an important part of that commitment, but you don't have to spend a fortune today to start down the right path toward a data-centric tomorrow. Because the thoughtfulness of your approach matters more than your actual assets. What I've discovered is that success is much more about determination--the desire to make a difference for the better for your business-- than about dollars.

You can also forget about A.I. and machine learning for the moment, as if anyone even knows what those terms mean these days. And please don't start sweating about SQL queries, GOOGLE analytics or any of the other buzzwords and jargon that you hear floating around. The most important thing to know is what's really important for your business to succeed and no one knows that better than you. Tracking and capturing the right information in a timely fashion and then communicating that info effectively throughout your whole organization is crucial. Silos, secrecy, and a reluctance to share are remnants of a long-gone era when only those "in the know" were supposed to know what was going on. Today, the more people who know, the merrier and the more likely you'll have a responsive and responsible business. Remember that sharing data is ultimately like exchanging ideas or lighting the next candle from your own. Sharing doesn't diminish the power and value of the original; it simply increases the illumination for all. 

Some of the best tracking systems I've seen for identifying systemic production and service problems, as opposed to one-off mistakes, are nothing more than collection buckets where repeated instances of specific and persistent customer complaints are sorted and aggregated. A framing store in my neighborhood keeps track of returned frames (sorted by the cause for the return) in simple folders and when a folder has half a dozen return tickets for the same concern, they know they have a problem that needs looking into and not just some random mistakes. This simple system lets problems be identified, quantified, prioritized and then addressed in an organized and timely fashion. Not a keyboard or a computer anywhere in sight. These programs are more about attention and time than about elaborate solutions or costly computer-generated algorithms and outcomes.

So, sit back and take a deep breath because, for the moment, all we're talking about is how you can do a better job of keeping score. And you can do that in a million different ways - expensive and fancy or quick, cheap, and easy. Most entrepreneurs prefer the latter. Especially because, in a time of constant change, deep and highly specific tech investments (especially those with a limited ability to flex) can be a real albatross and an impediment to your agility and ability to meet the uncertain challenges certain to be coming down the road. McDonald's, on the other hand, clearly decided to go big and just spent $300 million to buy Dynamic Yield, an Israeli data tech startup, to help manage and make sense out of all of its customer data.  

For now, it's mainly about paying careful attention to and then attending to the things that matter most to your business and to your customers. And that starts with the old cliché: "what gets measured is what gets done." When I talk about "being in the data business," all I really mean is that you've got to develop systems that allow your team to define the metrics that are critical to determining whether and how well you're satisfying your customers' needs and desires. Growing sales and happy customers cure a world of potential problems and even serious shortcomings. But the measurements need to be practical and realistic and not feel-good factoids that don't lead to improvements.

To get started, you need to focus on the three main parts of the process: data collection; data measurement and the integration of the data results back into the business. Frankly, if you don't turn the data into facts and effectively share and communicate those facts to your team (at every level), the entire value and utility of the information you've gathered and analyzed will be lost.

Data Collection

The easiest and probably most accurate method of collecting customer data is direct from the customer. In some contexts (focus groups, political polls and opinion surveys) consumers who self-report may alter, enhance, mischaracterize or otherwise simply lie about their personal choices, attributes, demographics, etc. But in the world of e-commerce, where getting the correct selections is critical (and where "fit" is the most important factor), questionnaires, profiles, and other collection methods result in reasonably accurate baseline descriptions of the customer's needs. Newer methods, including a variety of gamified choice tools, are faster and easier and, as a result, generate far greater volumes of data and choices. No one has been smarter about gamification than Stitch Fix whose Tinder-like game feature called Style Shuffle is used by the vast majority of its 3 million customers to rate clothing choices every day. It has generated more than 1 billion customer ratings in just over a year.

The second level of aggregating customer data is from third party sources who are paid to append additional demographics, web activity and sometimes even purchase histories to existing in-house customer files.

And the final primary source of data input comes from tracking and capturing all of the customers' online activity and other interactions with the company. Note that customer feedback (and satisfaction metrics) are not ordinarily regarded as an initial data source since these inputs are primarily gathered after initial customer activities and transactions occur and so they are accumulated more in the measurement phase.   

Data Measurement

As consumers in general and customers in particular continually get smarter and better informed, they will demand more and more information about your products and services:  what do they do, what ingredients do they contain (hopefully not corn syrup if you're a beer merchant), and whether there are known side effects. They'll demand to know where they're made and how they're manufactured. Too many businesses today don't know the answers to many of these questions and concerns and they aren't prepared to respond to their customers' inquiries. FAQ pages on websites don't get the job done and they're just as useless as the indecipherable and illegible labels stuck on product packaging.

Step one in the measurement process is to know everything possible about your own products and operations and to have that data readily available and accessible. If you're selling clothes, you need to know every detail and dimension; if you're offering consumables, every chemical and component ingredient is now part of the equation; and if you're doing your manufacturing elsewhere, all those elements of the production and supply chain are now on the table as well.

Step two is to build multiple channels and simple ways to elicit and encourage constant feedback from your customers - happy and unhappy - from Day One and to develop two-way and interactive communications with them so that they know that they are being heard. Help them be part of the process of making your business better and more responsive to their needs. Just to be clear - again from a technology standpoint - the more this part of the chain of connection and engagement is automated, the less successful and valuable it will be to you.

Step three is to use the feedback to augment and empower your team to more effectively interact with and serve your customers. Every business ultimately is a people business and customer care cannot be turned into a mechanical process or a tool without losing the human connection and engagement elements that bring your business together and bind your customers to you. Only in intelligent one-on-one conversations (which can then certainly be documented and aggregated for other purposes) can you learn the true concerns, behavior drivers, decision points and other emotional parts of the purchasing process directly from your buyers.      

Data Integration

Once the particular insights and ongoing guidance drawn from the collected and evaluated data are turned into actionable information, the real payoff comes from incorporating them into the day-to-day operations and especially into the company's efforts to project and anticipate the future requirements of its customers. There are basically four different areas where immediate actions can return rapid results:

(a) decreasing friction in the purchase process and speeding up customer transactions, which will drive higher "take" rates and increases in average transaction revenues;

(b) offering the "best" of your customers bundles, discounts, particularized incentives and other extras, which delivers a more personalized and customized experience, and enhances engagement;

(c) stepped-up operational efficiencies in terms of inventory management, anticipatory restocking and repurchasing, and especially in terms of better targeting and fine-tuning the specific offers and products suggested to the individual customer; and

(d) using all of the data to share customer preferences, choices and directions both internally for in-house product design and development and externally with brand partners in order to more closely align their own production and offerings with the needs and desires of your customers.     

The ultimate goal will always be to most effectively use the information to enhance your employees' ongoing engagement with your customers, deepen your company's connection to those customers, improve the consistency of customer retention and grow your share of their spend while, at the same time, adding actual value for the customer in terms of speed, convenience, access and better decision making.

It's not an easy task, and it's an unending one if you're really committed, but, in the final analysis, it's all about visibility and vision - if you can't "see" your business, it won't be your business much longer.

 

Published on: Apr 2, 2019
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.