Monthly Archives: March 2012

Technology offers many tools to business owners. Some of the newer ones that are emerging involve business intelligence and can provide a competitive advantage at a very low cost.  These tools are emerging within a context of rapid technological changes. Here are a few:

Sources of data are easier to find and easier to use. There’s a whole new technology out there allowing users to put together their own dashboards, set parameters on the kinds and amounts of business intelligence they want to receive, and so on.  On the up side, the cost of business analytics is coming down rapidly and in many cases is free (the analytic tools on Facebook is an example). And data tools can be implemented on a very targeted and narrow focus . On the down side, receiving way too much data without any context in which to interpret it and issues with ascertaining the validity of the data, and the ever-present need to keep up computer skills and hardware.

Greater access to business intelligence tools improves user productivity. Users can discover business opportunities and get to the bottom of problems more quickly. What used to involve paper sources can now be accomplished in minutes, thus freeing up time for more productive activities. Also, since information is increasingly stored in digital form. And all of this happens in real time.

Social media is driving innovation in customer analytics. With the rise of Facebook and Twitter and myriad others, a phenomenon has emerged of customers influencing the preferences of friends and expressing their own. There is great pressure to design tools to mine this information, analyze it and sell it to business owners.

Going beyond numerical analysis of customer behavior, there are now new tools allowing for text analysis. Akin to data mining, text mining techniques and tools allow for a sophisticated analysis of sentiment, relationship extraction, predictive analysis and more.  It is a complementary tool to the more objective data analysis.

Don’t have enough customers so it’s time to lower prices, right? Well, maybe. You may be tempted to do this in your business, especially if a competitor has lowered prices. But you run the risk of lowering yourself right out of business.

Carefully consider other options; perhaps there are better ways to remain competitive. And if you need to lower prices, do so with a clear idea of where that might take your business.

-Review each step of your supply chain, from your vendors on through to your customers. Why are there not enough customers? Are you losing current customers because they’re dissatisfied? Chances are there’s more to it than your prices. Find the areas of weakness and shore them up.

-Find ways to cut costs where your competition can’t. This increases your margins and consequently your cash. If you need to cut prices as a last resort, you’ll be sitting in a better position. You may think you’ve cut costs to the bone, but take another look.

-Examine your business model. Are there strategic changes you can make instead of tinkering with pricing? Are your current offerings what the market really wants? You may have a problem with what you’re selling instead of how much you’re charging for it.

-See if you can raise prices in a complementary service or good if you need to lower them on a core good or service. A coffee shop might leave the coffee pricing alone, but slightly increase prices for pastries. This results in the same revenue per customer. On the surface it appears as if you are competitively priced, but you’re not paying the penalty for those low prices.

-Selectively lower prices for only some of your customer base, or for only a limited time as an incentive. Make sure that what you gain (in customer loyalty, in increased purchases of ancillary goods) makes up for the loss from the price reductions. Be strategic about this.

-Have a clear idea of just how low you can go, if you choose to engage in a price war. Know your limits. Remember that smaller businesses will lose this arms race much faster than larger and better capitalized businesses.

If your business (bricks and mortar, or virtual) is going to be successful during the long run, you must focus on serving your customers’ needs and desires. The essence of marketing rests on your clear understanding of your customer and delivering a unique product, service, and benefits that he or she cannot get anywhere else.