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At Womply, we curate transaction data for millions of merchants, and as we analyze this data, we’re constantly surprised by how often conventional wisdom is wrong. Following are a few examples of what we’ve found:
In each of these cases, the data completely contradicted our initial assumptions. If this is true at a macro level, it’s certainly true for individual businesses, as well. Sadly, most merchants are flying blind when it comes to making data-driven decisions about running their businesses.
For small businesses, being right about assumptions isn’t just an episode of Freakonomics. On the contrary, making good decisions can mean the difference between staying open or shutting down.
Last fall, we surveyed 2,300 small business owners throughout the United States and found that one in five would close down within 30 days if sales stopped. Being wrong can have devastating consequences when you walk a razor’s edge with cash flow. So, how can merchants be right more often? The resounding answer is by using data.
Merchant level salespeople (MLSs) can help their merchant clients use data to get more visibility and make better decisions. The insights merchants need are often found within their own payment transactions.
Large companies have been harnessing payment and business performance data for years. In fact, according to Reuters, “business intelligence” is ramping into a $30 billion industry as big enterprises use analytics to better understand what drives revenue and value. Small businesses have been left behind, but for those that process card payments, transaction data is a window into business and market performance. If merchants can get access to all of their transaction data, they can see which days of the week really are their best, what their sales seasonality looks like over the course of the year, whether or not it makes sense to stay open on Sundays, and much more.
Structuring transaction data into a useful format is another challenge. Business owners who are handy with spreadsheets may be able to do it themselves, but the rest can take advantage of software built specifically for this purpose. Enterprise-level business intelligence tools like Domo or Tableau are expensive and complicated, but there’s a growing menu of options tailored specifically for small businesses.
For decades, large companies wandered in the dark much like small ones do today. They struggled to gain visibility into their business performance, their customers’ spending tendencies, and which levers they could pull to improve performance. Today, business intelligence and analytics systems are table stakes for big companies, and small businesses are racing to catch up. In fact, according to Techaisle, 94 percent of small businesses are now using software-as-a-service to run their businesses, up from just 27 percent in 2011.
Soon, business intelligence and analytics software systems will be as commonplace at small businesses as they are in big ones. For MLSs, this means it’s critical to get ahead of the trend now and use data and software solutions in every consultation. The early adopters will get it. The rest will remember you when they get on board.
Data and software are abstract concepts for most merchants, so it’s best to use relatable analogies when adding them to your merchant consultations.
The best comparison for business intelligence is your car’s dashboard. We take it for granted nowadays, but the dashboard was a novel concept a few decades ago and led to a ton of guesswork for motorists. Just as your dashboard tells you how the vehicle is performing, analytics do the same for a business. At a glance, the dashboard delivers a metric ton of information: speed, fuel usage, mileage, engine temperature, RPMs, and even direction in some cases. Similarly, an analytics platform can quickly put revenue, customer loyalty, competitor benchmarking and market trends into context.
One of the reasons Square has become so popular with merchants is the integration of POS, processing and analytics. With very little friction, merchants can take payments and use that transaction data to better understand their businesses and customers. All MLSs need to update their consultative strategy to match.
We’re still on the cusp of the small business analytics movement, but the mainstreaming will be swift and sudden. MLSs who work it into their consultations now will reap the rewards and set their clients up for unprecedented success.
Barry Davis is vice president of business development at Womply, http://womply.com, the top software partner to the payments industry and the top provider of front-office software to small businesses. For more tips or resources, reach out to the Womply team at firstname.lastname@example.org.