Posted: 11:20 a.m. Monday, April 1, 2013
By Victor Ho
Forget punch cards. How smart businesses can connect with customers to create loyalty.
In start-up land, the hot buzzword is Big Data--those massive data sets that can't be handled with traditional database tools. The promise is that businesses can capture, curate, and synthesize big data to enable personalization in e-commerce, smarter business decisions, and greater efficiency.
In the world of local businesses, we're not talking about big data. Instead we're dealing with Small Data.
Make no mistake, small does not mean insignificant. Think of it this way: If we leveraged data in local the same way large e-commerce companies do, we could have a greater impact on commerce than Big Data, since more than 90 percent of retail transactions still occur offline in local businesses. But most of us don’t. The reality is that most local businesses haven’t figured out how to capture or use this data to grow profits. So how do we solve the "data divide" for local businesses?
If you are an e-commerce company, it’s a straightforward exercise to use Google Analytics to see how many customers are visiting your website daily, how many are repeat visitors, and how long they spend on your site. But if you're a local business with a physical store, it’s a lot harder. Large multi-store chains can hire people to count traffic by hand or leverage new technologies that use cameras or mobile phone signals to estimate traffic, but smaller local businesses have been left out--until recently.
Forget paper punch cards for repeat visitors. Today’s cards are digital and link to your customer database. Modern loyalty programs--enabled by technology called loyalty automation--do at least three things in the area of data: capture identity, connect identity to activity, and drive personalization. That’s exactly what big businesses have been doing for years. Here’s how it works.
One great example is The Real Deli, a small deli store in Dana Point, California, which leverages data and tools from its modern loyalty program to figure out who visits frequently and regularly opens their emails. They call these customers “super fans,” since they can be The Real Deli’s greatest word-of-mouth advocates. They give them special offers and VIP treatment and rely on them to spread the word about their business. This simple tactic of matching store visits with email activity--something e-commerce companies do on a regular basis--had previously been impossible for local businesses.
The Real Deli may have crossed the data divide. If other local businesses can join, the potential gains in personalization, sales, and efficiency with Small Data could be just as staggering as that of Big Data.