Using customer data to increase sales isn’t new, especially for large corporations. So until recently, it wasn’t something you’d expect your average small business to attempt.

But with the spread of affordable technology and the internet’s increased role in day-to-day business operations, collecting and using data is easier than ever.

Still unsure? Don’t worry. In this article we’ll help you understand how customer data increases sales, specifically:

  • The kind of data that’s considered “customer data”
  • How you can collect it
  • What benefits you can expect from using it
  • Specific examples of ways to use customer data to grow revenue

Let’s get started.

What is Customer Data?

Customer data is an umbrella term that refers to any kind of data related to how your customers engage with your business. It can also extend to data that your business can use to inform the type of products or services you offer, how you market your business, and even the ways that you train your sales reps to speak with customers. Since customer data covers so much ground, let’s look at some specific types of data that are considered “customer data.”

Purchase History
This includes everything from the category of products, or even specific products that a customer purchases. It can also include the amount of money that a customer spends with you on average, called the average transaction size or average transaction value. This data helps you understand which of your customers generate the most sales for your business.

Shopping Habits
This data is similar to purchase history, but instead of covering what your customers purchase, it focuses on how they typically shop with you. For example, it might be useful to know the days of the week when your most valuable customers typically shop at your store or visit your coffee shop. Similarly, if you know that many customers like to call your store ahead of time to check on inventory or new products, you can institute the appropriate operational processes.

Communication Preferences
Particularly as it relates to your overall marketing strategy, having intel on your customers’ preferred communication preferences can go a long way toward interacting with your customers appropriately. For example, maybe you find that your customers prefer to learn about new products via email updates versus social media posts, so you begin to emphasize email. Maybe you have a subset of VIP customers that you communicate with via a group text or instant message thread.

Demographic Information
Depending on the type of business that you run it could be important to understand the demographics of your customers. This can include everything from their age to their marital status to whether or not they have children. With this kind of data, you can further personalize your communications and marketing messages to ensure they resonate with your customers. You can also use this data to inform the sales messages that your reps use, how you handle customer service inquiries, and even how you greet shoppers that enter your store.

How Can You Start Collecting Customer Data?

Now that you understand the type of data that a business can use to increase sales, the next part of the equation is determining the best way to collect customer data. Fortunately, there are a number of different tools at your disposal.

Your Point of Sale (POS) System
The best and easiest way to collect customer data is with your point of sale system. Today’s POS systems are a sophisticated combination of hardware and software that can act as a “mission control” for small businesses in the retail and food-service industries.

POS systems have tools for managing inventory, running transactions, customer relationship management (CRM), executing basic marketing functions, tracking employee hours and performance, as well as analytics and reports to help you understand it all.

Each of these individual tools is important in their own right, but it’s the analytics that are the real difference-maker. Analytics make it simple and straightforward to understand your customer data (and overall business performance) at both a macro and micro level.

Imagine having the answer to important business questions available to you in just a few clicks:

  • Top selling products and product categories
  • How many customers were added to your customer database on a given day
  • A customer’s purchase history displayed in seconds
  • Your busiest hours of the day and days of the week

No other small business tool is going to help you collect and unlock the power of your customer data via actionable insights like a POS system, particularly its analytics tools.

Email Surveys
Surveys are a great way to gather data that’s otherwise hard to come by. For example, a POS system helps you collect and view analytics on standardized data like sales by hour, or top-selling products. A survey, on the other hand, lets you ask open-ended questions and collect qualitative feedback that can give you a deeper look into your customers’ motivations.

A survey is a great tool for collecting information like:

  • Feedback on a customer’s last visit to your business
  • To solicit interest in a special event series you’re considering hosting
  • Suggestions for aspects of your store or business that you can improve

With this information, you can make changes to your business processes to enhance the customer experience and drive more value from your shoppers.

Suggestion Box
It might seem a little bit old fashioned, but don’t neglect the power of a traditional suggestion box. This tool gives your customers an anonymous way to suggest ways you can improve or even let you know that they had a great time visiting your business.

The key here is to make it easy for shoppers to suggest ideas to you, and to give them a way to do it semi-anonymously. Not everyone is comfortable giving direct feedback so this is a way to ensure there’s a way to get honest feedback from everyone.

In-Person Conversations
One of the best ways to get authentic feedback is from the day-to-day conversations that you and your team have with shoppers. If you’re curious about your customers’ opinions on a particular topic, sometimes it’s easiest to just ask them directly.

Most POS systems that include CRM software tools allow you to take notes about a customer. This allows you to associate information gleaned from a conversation with a specific shopper. With these data-driven insights, you can improve the customer relationship and customer satisfaction.

The Benefits of Using Customer Data

Now that we’ve defined customer data and shared some ways that you can collect it, let’s look at some of the benefits you can expect from using customer data.

Increased Loyalty
One of the best ways you can use customer data is to shape and design a compelling customer experience. That sounds like a flashy buzzword, but the end goal is very straightforward: you want to turn your store into a place that people love to visit and shop in. That’s very hard to do if you don’t understand who your customers are and what they look for in a business. But if you can engineer this kind of experience, then you could be looking at lifelong customers.

More Repeat Shoppers and Greater Lifetime Value
These two benefits go hand-in-hand with increased loyalty. Loyal customers are inherently going to purchase from you multiple times. As a result, their value to you is greater than someone who only buys from you once or twice. It’s a well-known truism in business that it’s far more economical to keep an existing customer than it is to acquire a new one. In this way, encouraging repeat business via a compelling customer experience and highly targeted marketing is one of the most effective ways you can use customer data to increase sales.

Better Marketing Return on Investment (ROI)
ROI is one of the main metrics used to quantify whether specific marketing campaigns or marketing tactics are working effectively. It’s a measure of how much value (sales) are derived from your marketing investment. If you spend $1,000 on Facebook ads and can attribute $5,000 in sales to those ads, then you have a $4,000 return on your $1,000 investment.

There are no guarantees in marketing, but there are things that smart marketers can do to give your campaigns the best shot of delivering the return you want. Ensuring that your marketing is highly targeted and highly relevant to the recipient. Data about customer preferences, motivations, even personal tidbits like birthdays are useful tools for improving the relevancy of your marketing. In doing, so you give your marketing strategy the best possible opportunity to drive the sales volume you desire.

By now it should be clear that leveraging customer data to grow your sales is well within your reach. It isn’t just for big businesses anymore. With the right tools, like a modern POS system, and a clear strategy, you’re well on your way to unlocking your business’ true growth potential.

Ryan Gilmore is a writer at ShopKeep.

Ryan Gilmore

As Inbound Content Marketing Manager at ShopKeep, a leading iPad Point of Sale System, Ryan Gilmore uses his extensive experience in small business technology to create educational content that helps merchants run and grow their businesses more effectively.