6 Data Driven Ways to Uncover Revenue Growth Opportunities.

There’s a lot of hype in the world of Big Data Marketing solutions.  Many claim to be using Big Data, very few have been able to quantifiably tie revenue generating results to it. Don’t get me wrong, there is a business case and application for these tools in organizations that have LOTS of data points. Retail and Financial Services are very good examples. However, for most critical business decisions, throwing expensive Big Data solutions into the mix before understanding the strategic marketing or growth problem you are trying to solve is like swatting a fly with a sledgehammer.

Some typical growth problems I encounter in conversations with business leaders include:

1. How do we increase sales and margin next quarter / year?
2. How will demographic shifts and preferences impacting our future growth?
3. In what ways can we change our business model?
4. Which products should we introduce next year? Which products should we discontinue?
5. What features must we include in our new / existing products?

If you don’t understand the small data answers to these strategic questions, BIG DATA will not be of any help. In my experience, once you understand the small data, you are better informed to make decisions about your next steps in the strategic marketing process. Sometimes that may be exploring a Big Data solution, other times it may be to design a few marketing experiments to validate your hypothesis. Either way, you are in a better place.

It’s easy to jump to solutions, but it’s far more effective to understand your problem from all the angles.

The following 6 data driven techniques are a practical launching pad to build the products, services, and experiences that will fuel your business growth in any economic environment. I have been using these techniques on my strategic marketing, innovation and growth projects with great results since 2006. I’m certain they can help you too.

6 Small Data Techniques to Drive New Business Growth

1. Understand the Macro Trends In Your Industry

Are you in tune with the big global trends that are expected to impact your industry? Are you reading the views of thought leaders in the industry? If not, you better start. There is no shortage of information out there. You can check out sites like: Trendhunter, FastCompany, or Inc. to get started.

But, the small data angle here is to create a chart and document your findings. You can organize your observations around several themes. I like to use the PESTe model.

• Political: What are the governmental regulations and legislation currently being considered at home and abroad that could impact revenue growth?
• Economic: What impact will changes to inflation, interest rates, economic growth, unemployment rates, and the business cycle have on your company?
• Social: How might socio-economic trends, such as demographics, lifestyle attitudes, and education affect your sales, services, and customer experiences?
• Technological: What are the positive and negative consequences of technological advancements in your industry?
• Environmental: How are you managing your environmental footprint? Will new environmental innovations, regulations, and customer expectations impact future sales?

Remember to qualify these trends by indicating the expected impact (positive, neutral, negative) and time-frame for your industry / business. Next, print this chart and update it every 6-8 months. It’s a living document that will show you how fast things are changing. Here’s a couple sample charts you can use:

2. Collect and Mine Consumer Data Sources for Insights

How well do you understand the consumers in your market? Are you in tune with their emotional states? What were their spending habits on products in your category in the last 12 to 24 months? How do consumers plan to spend their money in the future? What are the main consumer segments in your market? What are their tastes? Is your business in the consumer’s consideration set? These are all important ‘small data’ points that provide valuable feedback into your market. They will also become the foundation of your marketing strategy before you get into the ‘how’ techniques used by digital, advertising, and communication channels.

Depending on your budget, researching consumer behaviour can be a complex and lengthy process. I’ve been involved in designing custom consumer research (qualitative & quantitative) with boutique research firms and purchasing consumer research from agencies. I’ve attended focus groups from behind one way glass, watched how consumers interacted with products on video recordings, and even spent countless days in the field speaking with consumers. All these techniques have their pros and cons. The key is to be clear on your goals and ensure that you are able to quantify the data you are capturing, regardless of how informal the technique may seem.

If you are on a tight budget, you can poll your social media followers, or use Google Consumer Surveys. Pricing is as low as 10 cents per completed survey to $2000+ for custom surveys. However, in my experience, always supplement your research by speaking directly with consumers. One of the best projects I was involved with required me to spend time at local leash-free dog parks speaking with dog parents and capturing their needs and pain points on video camera. We gained valuable insights that helped us design a product directly related to their most relevant needs. When we shared the prototype with them on a return visit, we received important feedback that further enhanced and validated the product idea.

 Here’s an example of how you can summarize your consumer research findings:

3. Know the Key Industry Metrics, Trends and Forecasts

Industry developments are more than just the latest and greatest product innovations on display at conferences. They are a focused look at the technical and competitive landscape. Industry data often reveals valuable information about an industry’s health. For example:

• What is the market’s dollar size? What is the historical trend? Where is it expected to go in the future?
• What is the market share of the competitors in the industry? How is that expected to change? Who is growing? Who is shrinking? Why?
• What are the main drivers of success in this industry?

Industry reports are a good source for consumer insights. They may reveal key purchase drivers or changing tastes and preferences for products and substitutions. You can buy these reports from a number of research agencies such as IBIS World, Euromonitor, or MarketResearch.

Within the industry analysis, be sure to take a close look at the competition. What are the best of the best doing differently? What does it take to be successful in the industry? Where have they invested and are now reaping the rewards? Where are they making their next investments?

In one retail marketing strategy project, I analysed the strengths and weaknesses of a competitor’s sales strategy. I looked at multiple years of flyers and promotions for the categories under review. Mapping out space and pricing data for over two years of promotional data revealed some interesting insights into the competition’s strategies. We could see what tactics were cancelled and which ones were repeated. We understood how they devoted valuable space to specific products and where they were trying to grow. We even understood the pricing strategies being used. Who would have guessed that applying an analytical process to something as simple as a promotional flyer could yield such rich competitive insights? Sometimes small data exists right under your nose!

There are many free and paid sources for industry information. You can check out industry associations, StatsCan or Census data, Hoovers, online, or get creative, like I did in the example above. I’ve found useful data through my local research library for free! It’s worth the trip.

Below is an example of a chart that can be created with industry competitor information:

4. Analyze, Prioritize and Segment Your Customer Insights

How do your customers like to make their purchases? What do they buy from you and why? How frequently do they buy? Are they loyal to your products only? What is your share of their wallet / total spend? What is the lifetime value of the different customers you serve? Which customer segment(s) would provide you with the largest return on your marketing dollars?

I could go on and on with questions…this area has been an interest of mine. I think it’s because this is where the rubber hits the road in the world of marketing execution, so to speak. Customer insights is where customers take their hard earned money out of their wallets to pay for your goods. They have clearly made a statement about what they value. Customers are not ‘telling’ you, they are ‘showing’ you what they value. What would that kind of data be worth to you?

Below is a sample customer loyalty segmentation chart that can help you with your marketing strategy:

I’m betting the answers to the above questions, and many more like them, would help you tremendously.  This data could help you understand your customer’s preferences, purchase patterns and frequencies, affinities for brands in a category, and so forth. You just need to organize the rich data that you are already collecting from your sales and customer relationship management or loyalty systems.

Alternatively, you can now directly poll your customers for their thoughts and ideas without long lag times. Check out Vision Critical’s platform to find out how engaged online communities of your very own customers can help you design your next marketing initiative or product offering. For more ideas on how to strategically use your data to grow sales and loyalty, check out my previous post: here.

Please note, that this is where many companies would jump to Big Data marketing solutions. I believe this is a mistake. First, I suggest you understand the small data and where the gaps may be as they relate to the questions you want answered. Then, determine how critical the answer would be and if Big Data solutions would be able to help you get there.

5. What Are Your Internal Capabilities and How Can They Help You?

Up to this point, the techniques we’ve been discussing have been focused on the external environment. Another great source of data is your company’s internal capabilities. What are the key measures of success at your firm, and how have these changed over time? For example, has your revenue growth been driven by increased volume of discounted items? Are you relying too heavily on a customer segment or product for financial results? What would happen if 10% of your customers buy from your competitors? How much time and effort does it take to make a decision? If you have internal capabilities that set you apart from your competitors, can they be used in new ways or verticals? If you have internal weaknesses that expose you to risks, can they be mitigated?

This is also known as value chain analysis and can be leveraged to profit from the insights you’ve uncovered in the above steps. They are important to your ability to execute the future growth you’re seeking.

6. Create Customer Stories to Envision Future Growth

Once your team have all this internal and external data, you can create customer stories. By this point, you have a tremendous amount of data to work with. You can make some very educated forecasts about where the opportunities and threats are to your industry. You also have a clearer picture of what it will take to win in the eyes of the consumer. Finally, you know the strengths and weaknesses at your firm.

Now is the time to visualize the future of your organization from the customer’s perspective. What would your customers say once your best insights have been implemented? What impact would you have in their life? That’s the power of creating customer stories. You can easily define what success looks like, based on what you have learned during the small data analysis.

I recommend that you organize a group session in an off-site location. First, break people into teams to create these stories or assign it as pre-work. Either way, sharing these perspectives in a group setting is a great way to inspire conversation, idea generation, and a glimpse into what the future could be like for your company.

Data Is All Around You!

So, there you have it. Six proven techniques that use small-data and strategic marketing tools to help you design your next product, service or customer experience. I have used these techniques in large corporations and small start-ups. They helped me to innovate new products, create marketing campaigns, develop retail concepts, identify profitable product promotions, and much more. In some cases, a Big Data solution could have been applied (e.g. predicting future sales of products) in a follow up phase. In most cases, however, for the key strategic problems facing businesses today, the small data is the best place to start.

What are your thoughts on these techniques? Are there other tools that have helped you? If so, please let me know by leaving some feedback below, or dropping me a line at [email protected]. If you liked this article, please give it a thumbs up and share it with your network on LinkedIn, Twitter, G+, Medium, Slideshare, or Facebook!