Technology makes more tools available to startup businesses than ever before. One is a world of big data, giving leaders far more information in making decisions than previous generations had. Learning to analyze the 411 lets you harness its power to fuel your success.
Understanding how to use today’s tech tools to harvest and interpret information gives you a powerful edge over the competition. Here’s a crash course on how business startups can harness data analytics to grow profits and enrich everyone by improving their products and services.
How Startups Can Use Data Analytics to Achieve Market Success
Even the smallest businesses incur startup costs, including sole proprietorships that begin in garages. Those hoping to secure funding through loans or grants need a business plan, and writing one requires market research. Dedicating some initial capital to data collection and analytics fuels your success in the following ways.
1. Identifying Market Opportunities
What needs do potential customers have that current products and services don’t meet? Reviewing data from various surveys lets you identify areas of deficiency and step up to the plate to fulfill that demand.
This process doesn’t always require enormous innovation. It more often involves examining what’s happening and identifying small ways to improve. For example, many college students drop out, but few schools dig into the data to explore why. Colorado State University did, using big data to improve retention rates from 82% to 86%. Keeping current enrollees is less expensive than finding new ones.
Find your niche and use the data to hone your offerings further. What isn’t the competition providing customers that you can?
2. Enhanced Customer Experience
Technology has made people expect more. For example, they now take personalized offers for granted in everything from grocery coupons to social media advertising. Including a simple survey with each purchase lets you amass valuable data on what customers love and don’t so you can continue to improve.
Such interactions also build ongoing customer loyalty. People appreciate buying from brands that take their opinions seriously, and opening a dialogue by asking how you can do better inspires trust. Providing space for sharing feedback matters more than ever in a world where AI has replaced traditional customer service lines handled by humans.
3. Data-Driven Decision-Making
You might have a brilliant idea — but the world might not be ready for it. For example, many experts feel that the Edsel, one of the most famous business failures, would have succeeded had its release not corresponded with the Eisenhower recession, which began in 1958. The right data informs you if the cultural zeitgeist calls for luxury or frugality, flashy neon or calming pastels.
Challenges Startups Face in Using Data Analytics and How to Solve Them
Given the many ways data analytics can fuel your success, why don’t all small businesses harness this power? There are always barriers and tough decisions about what to do with limited resources, but the right strategies can help you get more out of the available information for less.
1. Data Collection and Storage
There’s a lot of information out there. Keeping it organized is crucial to having the data you need at your fingertips when you need it. Scores of CRM software programs exist that can do everything from keeping detailed profiles on customers to scheduling follow-up texts and emails, but those without the budget for such tools also have options.
For example, Google offers countless free tools to individuals and small-business owners. You can also find other free programs that let you do everything from creating surveys to project management. Utilizing them enables you to build familiarity with the platform, and you can upgrade as you grow and the need arises.
2. Data Integration and Analysis
Collaborating in partnerships can help. For example, you might join forces with a local school where students eagerly await the chance to cut their teeth on real-life business problems. What decisions would they make in your position? A class discussion could provide valuable insight.
3. Protecting Data Security and Privacy
Perhaps the biggest challenge startups face in harnessing big data is keeping their proprietary information safe in a world of cyberthieves. Breaches can shatter trust. Here’s one area where making a moderate initial investment pays off. Additionally, you should do the following to protect your data:
- Keep all computer systems updated
- Use the most up-to-date anti-malware software
- Require a VPN to access the company network
A Closer Look at a Data-Driven Success Story
What does it look like when a startup harnesses big data to drive success? Uber offers an example.
Uber used data analytics to identify popular pickup and drop-off locations, peak hours of demand, and user preferences to position drivers for maximum efficiency and reduce wait times. It also implemented dynamic pricing, which brings in additional revenue during peak hours.
Uber continues to learn from big data. Recently, it’s made headlines due to working conditions. In response, it used information to discover what drivers want and how various factors impact the service they render. The company exemplifies using data analytics before and after launch to continually improve and drive higher profit margins.
How Startups Can Harness Big Data and Achieve Success
Starting a business requires analyzing the market and designing products and services that satisfy customers’ unmet needs. This task relies on the right information.
Harnessing big data gives your startup an advantage over the competition. Use the tools at your disposal to strategize how to best grow in 2024.