In today’s data-driven world, understanding and engaging with customers on a deeply personal level is no longer just an advantage – it’s a necessity. The capacity to personalise engagement with customers is already a strength for small and medium-sized enterprises (SMEs), but business growth is often limited due to the time SMEs have to spend on building these customer relationships. Large enterprises have more money, technology, resources and customers to gather data from. But that doesn’t necessarily mean these larger enterprises are doing a better job with customer engagement. And with consumers becoming increasingly more data savvy, customer expectations are higher than they ever have been – 73 per cent of customers now expect businesses to anticipate their distinct needs and desires. When businesses fail to meet these expectations, customers feel disconnected, leading to increased churn.
The need for SMEs to implement effective data strategies is clear, with 92 per cent of companies now using artificial intelligence (AI) to help them deliver tailored experiences for their customers. But there is a critical question to be answered for SMEs when it comes to data and AI: How can they compete with larger enterprises that have more resources and data to leverage, whilst still maintaining that personal touch customers expect? The answer lies in granular data. Yes, we want to use data to drive sales for SMEs but more than that, we want to enhance the quality of relationships they have with each customer, too. Relationships are what set SMEs apart and should, therefore, remain their priority, especially when integrating granular data and AI strategies.
What is granular data and why does it matter?
Granular data generally refers to a deeper level of detail in data, which enables far greater insight into customer behaviour. It goes beyond the basic data capture points like age, gender, location and product purchases, and dives deeper into customer specifics, like personal preferences, pricing points, campaign design, values and how those preferences change depending on time of day, weather, environment and so on. This type of granularity offers businesses a more detailed view on customer behaviour for precise decision-making.
Do customers want to give SMEs their granular data?
When talking about data, it’s important to understand first that businesses don’t own a customer’s data. Under Australian privacy laws and the General Data Protection Regulation (GDPR) in Europe, which is generally regarded as the most influential privacy regulation globally, customers are the ones who own their data and, therefore, have the right to tell a business what they can do with it, including demanding that it be deleted. This means businesses today need to have a strong emphasis not just on consent but also on the value they provide to each customer in return for using their data. Some SMEs might shy away from collecting data that may appear too invasive, but they have an opportunity to do things differently than larger enterprises, which typically bury data capture consents in long-winded disclaimers. If SMEs are upfront about their desire to truly understand their customers, for the purpose of personalised service, then the customer relationship regarding data has the potential to shift positively. This is because:
- 66 per cent of consumers say they are willing to share personal data if it enhances their customer experience
- 60 per cent of consumers report they are more likely to become repeat buyers after a personalised purchasing experience.
With data consent, transparency and consistency of use, SMEs have the opportunity to build and maintain trust with their customers, leading to greater customer satisfaction and ROI.
Building relationships with granular data
The key to SMEs leveraging granular data starts first with the guiding principle that it has to be about more than just driving sales. SMEs need to focus their data strategies on understanding who each customer is, what they want, what they value and how they prefer to be engaged. Understanding what motivates a customer is the key to long-term engagement, which is why SMEs have to go deeper into the granularity of data. Not every customer wants to receive generic email messages or a discount code. It’s not that simple anymore. Humans are complex and the demand for understanding each customer is only going to become more crucial. The good news is that SMEs are perfectly positioned to excel at personalisation, providing they adopt data strategies that are different from larger enterprises’ approaches.
Why should SMEs approach data differently?
It doesn’t make sense for SMEs to try to replicate what works for large businesses when it comes to data and AI. This is because a lot of data-based technologies are built for enterprise use and often come with an enterprise price tag. Or, if they are affordable, they simply won’t deliver the same kinds of results because of one key problem: SMEs can’t capture the volume of data that larger businesses can. SME data capture is typically siloed because it doesn’t extend beyond their own customer transactions. This means that any AI deployed by an SME isn’t going to be as effective as it could be, because AI is only as good as the data capture. If your data capture is narrow or disjointed, then so, too, are your insights – a problem many businesses in Australia share:
- 80 per cent of Australian SMEs face challenges when using AI due to an inability to capture and analyse consumer data effectively
- Australian businesses struggle with digital transformation due to fragmented data, which prevents businesses from extracting meaningful insights.
Unlocking the full potential of data and AI for SMEs hinges on strategic ecosystem collaboration. This approach not only differentiates them from larger enterprises but also enhances customer relationships and ROI in a way that makes sense for the SME business model.
Granular data strategies for SMEs: a collaborative approach
SMEs have the ability to create and leverage rich consumer data assets through the power of collaboration with other SMEs. Whether it’s based on geographical proximity, industry, ethos or all of the above, creating ‘cluster’ ecosystems where groups of SMEs can combine data on customer preferences, habits and interactions across all of their businesses – and thus across different contexts, interactions, environments, products and services – can provide a far more complete picture of each individual customer within that ecosystem. This can empower the entire SME group to engage more effectively and deliver greater personalisation and benefits to each customer.
The key is in using a single platform designed to integrate and anonymise data from multiple SMEs. This allows businesses not only to share data and insights, but also to pool resources and costs securely and ethically. This approach gives SMEs access to information they’ve never had before to transform their understanding of customers, and gives them the ability to, for example, leverage that new understanding to run joint, targeted promotions to shared consumer segments, delivering even greater value to those customers, too.
The power of collaboration in a data-driven world
For SMEs, joining forces with other businesses to create a collaborative ecosystem is the key to not only surviving, but thriving in an ever-growing data-driven world. Pooling resources and insights empowers SMEs to overcome limitations of siloed data, prohibitive technology costs and strengthen the relationship with their customers, creating a community of trust, engagement and long-term sustainable growth.
This article first appeared in issue 46 of the Inside Small Business quarterly magazine
