In a business environment that's changing rapidly and profoundly due to the digital revolution, the age-old marketing adage that 80 percent of business comes from 20 percent of customers is perhaps one of the few remaining truisms that still rings true.
Intelligent profiles formed by automatic customer classification and segmentation help companies identify their best customers. These profiles also help provide the kind of personalized experience that keeps customers happy and loyal and in that regard, data science is the cornerstone of digital revolution.
Borrowing from the industrial revolution, data has been called the new oil, and for good reason. Increasing and focused use of data is one of the fastest ways to grow a company, resulting in not only higher revenue but also lower operating costs.
With that in mind, consider that small businesses fail at a higher rate than large businesses. While we accept this, it also flies in the face of logic: after all, small businesses are run by owners who can achieve entrepreneurial returns rather than managerial bonuses, so incentive is high.
Conventional wisdom—and there's an oxymoron if there ever were one—also has it that small businesses have closer relationships with customers: think Ace Hardware franchisees vs. Home Depot. Lacking layers of overhead and embedded management, small businesses should be more nimble.
Yet, they fail.
Why? Some avoid or even reject new technologies and other emerging innovations as long as possible, trying to conserve cash and wait for "more proof" change will pay off, as though more proof of the positive effects of the digital revolution were needed. Additionally, many small businesses spend little time or money on innovation because they're pouring everything into defending and extending their historical business approach.
For example, look at the boom in digital marketing, the logical means of capturing new clients in the current digital environment. Dozens of research studies show that digital is the only growing ad market, while print is fast dying. Moreover, digital marketing is one of the few places where ads can be purchased for as little as $100. Digital ads are targeted at users based upon their searches and pages viewed, thus delivered directly to likely buyers. And digital ads consistently demonstrate the highest rate of return.
Bafflingly, many small businesses continue to put most of their money into local newspapers and direct mail circulars, which are the least targeted of all advertising, and increasingly the least read. While print ad spending has declined over 80% over the past few years to 1950 levels, smarter businesses have abandoned that medium.
A second major trend is the move to mobile apps: app use is growing while mobile website usage has stalled. In spite of those realities, many small business leaders complain they are unsure of app value and keep spending money on historical artifacts rather than investing in higher-return innovation opportunities.
The trend to digital marketing – including the explosive growth in mobile app use – is proven. And due to low up-front costs, as well as low variable costs, both trends are a wonderful opportunity for small businesses ready to adopt, adapt and grow. Unfortunately, the vast majority remain wedded to outdated marketing and customer relationship processes.
With the digital revolution in full swing and with consumers fully engaged in it, now is one of the best times for small competitors to be disruptive. They can seize new innovations faster and deploy them more rapidly than their larger competitors can.
Marketing is only one example of how the digital revolution is changing things for all of us. And change doesn't come easily (nor should it ever come lightly) for any of us. But it's happening and we need to acknowledge that fact. Let's see what we can come up with to make thing a little easier all around.