What’s the Value of Your Customer and POS Data?
Your customer and POS data are possibly two of the most valuable things your business owns. Customer acquisition is expensive, but once acquired, can lead to a lifetime of sales. The hard part of data acquisition is that it takes time and constant perseverance. You have to be diligently collecting data at the time of every transaction. Each sale and customer interaction is another chance to gain another contact.
I spoke with Tim Krone, owner of Pedal Bicycles in Kalamazoo MI, and an NBDA board member who includes email collection rates in his compensation/commission plan, with an 80% collection rate required to qualify. In my experience, that is an excellent number for you to set your goal. Asked for confidently, assuring that the information will not be shared is crucial to develop the trust needed to get a high collection rate.
A possible issue many may be experiencing with the customer collected data is inadvertently sharing it. Vendors we share data with, and other apps used in your businesses can be collecting information. You may be unwittingly sharing information that will be used to market directly to YOUR hard-earned and winning customers. Brandee Lepak, NBDA president and owner of five Global Bikes stores in the Phoenix metro, places a high value on her customer list and social media follows, in regards to how many customers can be reached at a moment’s notice. Collecting that information since opening Global Bikes in 2001 through thousands of hard-won interactions and that information has tremendous value. When sharing any of this information, you must be aware of the cost in terms of potentially using it as a leverage point in negotiations and protecting the customers’ privacy. The data shared with others may not come with the same assurances of confidentiality you gave to your customer. Consumer data is an enormous industry and potentially one of the most significant modern gold mines, and it should be viewed as such in your store. When you have collected a customer’s data, it is money in the bank. When you have that data, you can create a customer for life vs. a one and done transaction.
The bottom line is that whenever you are sharing any customer data with a vendor, app, or elsewhere, it is best not to be naive. Be confident you understand fully where the information is going, and how it is to be used. When you register a customer for the warranty on a new bike you are selling, for example, is the data being used for strictly warranty information, or is it now free for the vendor to use to market to the customer directly? You may or may not be OK with that, but you should at least understand the implications. Remember that you have acquired that customer, and sharing the data may have literal value to you, or it may go against the fact that you assured the customer you don’t sell or share their data.
The other value your customer’s list has is added value if/when you were to sell your store. Is there an actual dollar figure you can apply to it? Maybe, but the real value is in creating an instant point of contact for the new owner to past customers. If this prior customer contact cannot be initiated, they are only buying hope that the sales continue as they have in the past. Financial institutions use the phrase “past performance is not a guarantee of future results.” Still, a new buyer, armed with a means to connect instantly with all those previous customers, has a real chance at continued success.
In addition to your customer data, your POS data needs to be appropriately minded. It is essential to make sure that you treat each sale, inventory item, and work order with solemn respect. When you sell an item that may not have an accurate category attached, you have lost the ability to track those sales and check your inventory with accuracy quickly. And speaking of categories, do you have enough of them so you can drill down to particular areas of your list to distinguish the profitable areas of your business, and likewise identify the underperformers? I like to think of this as having good data hygiene. Without that clean data, it isn’t easy to make the right decisions.
Customer and inventory data, if not a priority for you right now, needs to be. As we barrel headlong into an increasingly data-driven world, you will be running at a significant disadvantage if you perform poorly in these areas, to your competitors who collect and accurately keep clean, actionable data, and utilize it in very focused ways.
Finally, it may be worth retailers beginning to discuss the value of the data being shared with vendors and other applications, who may be deriving benefits from the sharing. Is there reciprocal information you feel would be worth negotiating for, or perhaps even a financial component to the data shared? These are questions sure to be at least explored at this point.
Words by David DeKeyser
David DeKeyser and his wife Rebecca Cleveland owned and operated The Bike Hub in De Pere, Wisconsin, for nearly 18 years. In 2018, they sold the business and real estate to another retailer based in a nearby community. David now writes the Positive Spin series on Bicycle Retailer and Industry News and he writes articles for the NBDA’s blog, Outspokin’. David also provides business consulting through the NBDA’s P2 Consult Program.
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