Not Tracking Your Data is Eating Your Profits

Every transaction, every customer click, and every hour your employees work creates a digital footprint. If you aren't looking at those footprints, you are likely losing actual cash every single day. Here is how it is costing you when you don’t use your data; and how you can start plugging those leaks today.

The Inventory Trap: Overstocking vs. Stockouts

If you have ever walked through your backroom and seen products gathering dust, you are looking at frozen capital. Conversely, if a customer asks for an item and you are sold out, that is a lost sale you cannot get back.

Many businesses order based on what we usually need rather than actual velocity. Excess inventory ties up cash flow that could be used for marketing or hiring. Stockouts drive your customers straight to your competitors. You’ll need to use the features in your Point of Sale (POS) system, seeking out data to identify products with high margin and high turnover, and those with low turnover.

Marketing into the Void

Are you spending $500 a month on Facebook ads because everyone does, or because you know for a fact they bring in $2,000 in sales? Small businesses often track spending but fail to track attribution.

The fact is, you might be overspending on a platform that only brings in likes while ignoring a simple email newsletter that actually drives revenue. To remedy this, you should use basic tracking links or unique discount codes for different platforms. If you cannot prove a channel is making you money, stop feeding it.

Ignoring the Churn

It is significantly cheaper to keep an existing customer than to find a new one. Yet, most small businesses do not know their customer churn rate, which is the percentage of customers who stop buying from them over a certain period. If you are not tracking when a regular customer stops showing up, you cannot intervene.

High customer acquisition costs devour your margins. Losing a repeat customer is like losing a recurring paycheck. Use your data. Identify customers who have not purchased in 60-to-90 days and send a “We Miss You” offer. Data shows that even a 5 percent increase in customer retention can increase profits significantly.

Pricing by Guesswork

Many small businesses set prices based on what the guy down the street is charging. You have to know his costs are not your costs. You might be working harder than ever only to find that your most popular service is actually losing you money after labor and supplies are factored in.

Build a simple spreadsheet. Track the time, materials, and overhead for every product or service. You might find it is time to raise prices or cut a low-margin offering entirely.

How to Start Without a Data Scientist

You do not need a six-figure budget to stop the bleeding. Start with these three no-cost moves:

• Audit your POS - Most modern tools like Square, Shopify, or QuickBooks have reports tabs you have probably never clicked. Spend one hour this Friday looking at your Top Selling Items versus your Most Profitable Items.
• Set up Google Analytics - If you have a website, this is free. It will tell you exactly where your visitors come from and where they leave.
• Ask one question - Start collecting one piece of data you do not have. For example, ask “How did you hear about us?” at the register and record it in a simple notebook or spreadsheet.

Data is not just numbers; it is the voice of your business telling you what is working and what is broken. When you stop guessing and start measuring, you stop leaving money on the table and start putting it in the bank.

If you would like to use your data in ways that are sure to create better situations for your business, give the experts at C3-Solutions a call today at (240) 226-7055.