By James King, below, Chief Product Officer, Feefo
Confidence among small British business owners has fallen to its lowest level since the pandemic. At the same time, this Christmas shoppers are likely to spend £4.4bn less on non-essential items. So, with SMEs facing an uncertain future, how can they best prepare?
In tough times, it’s tempting for SMEs to focus on cost-reductions strategies but it’s vital to spend time investing in the right places. Moving into 2023, SMEs must prioritise their customer experience (CX) and all strategies must have customers at their heart. In fact, a report from McKinsey found that on average, brands that continuously improve their CX, increase revenue 10-15% and lower their costs by 15-20%. At the same time, 73% of people point to customer experience as an important factor in their purchasing decisions.
Having the right tools in place to understand your customers is key. AI for example, is a powerful tool that SMEs should look to for support. For many businesses, AI technology can help them gain valuable insights about their customers, without the armies of data analysts and scientists that big enterprises have.
Big data pools are drowning SMEs
For many businesses, data is king and collecting the right data on your customers can be a golden opportunity. However, mountains of data can be counterproductive for SMEs who don’t have the resource to process them effectively.
This is where businesses can lean on innovate tools such as AI. AI-driven smart tools have the potential to collect, analyse and interpret huge volumes of data at incredible speed and scale, which gives businesses a granular understanding of the complete customer journey, including pain points, purchase triggers, and other customer behaviours. At the same time, AI also has the power to streamline different customer data sets into one place, preventing SMEs from being overwhelmed.
Avoiding data for data’s sake
But there is no point of data for data’s sake. The right tools provide you with the insights you need from data to improve your products or services and personalise relationships with customers.
Machine learning can help take data further and really pinpoint how your customers feel about specific aspects of your business. For example, it can flag if reviews repeatedly mention certain words like ‘packaging’ and ‘plastic’ in a negative context. This allows you to identify where there’s an issue and take action, to improve your packaging and therefore reduce return rates. Similarly, AI will also identify what people leave positive feedback about, so you can focus on promoting those parts of your service more widely and personalise communications with customers who have valued a particular service.
We know from working with TheVeganKind, one of the UK’s leading subscription boxes that they’ve used AI insights to improve their sustainability strategies. For example, reviews data revealed that customers wanted to know more about the company’s sustainable practices. Acting on this insight, TheVeganKind went through their entire inventory to compile a complete list of their products’ environmental credentials.
Customers don’t just want efficient websites and checkout; they want to connect with a brand and offer their loyalty in exchange for their feedback being taken on board. By taking the time to listen to customers and inform your product or strategies, SMEs will reap the benefits.
Customer loyalty is a lifeline for SMEs
“The customer is always right” is a long-accepted business philosophy. However, today it’s not about being right – customer’s want to be heard and your business must listen. Embracing customer feedback will demonstrate to new customers that your business is real and trustworthy, which helps give them the confidence to buy from you, especially when money is tight. It will also ensure existing customers return again and again.
Loyal customers will be the cornerstone of businesses’ survival as costs rise and customer spending tightens throughout the cost-of-living crisis. Whilst boosting productivity and cutting cost will be top of mind for many business owners, embracing a customer first culture will leave your business standing on top.