SMEs must use big data to improve festive season sales, says FNB Business head

© solarseven – 123RF.com

Yudhvir Seetharam, head of analytics of FNB Business, said there is no question about the effectiveness of big data when it comes to driving sales. SMEs are beginning to appreciate the value of big data, in busy periods like the festive season, as they make most of their profits for the year during this time. Therefore, small businesses are largely using big data for meeting customer demand and supply chain management.

"From a customer-demand perspective, businesses often plan ahead by indentifying the peak time for sales and the products that customers spend most of their money on," said Seetharam.

For example, business owners usually analyse historical data to figure out peak and off-peak times for sales, and use the information to determine trading hours for the festive season. That is why a lot of retailers open stores earlier and close a lot later.

"By knowing which products customers spend their money on, SMEs are able to enhance the effectiveness of their marketing efforts by promoting the right products to the right customers. This also helps with the design and branding of festive season promotions."

Establish the amount of stock

Small businesses are also using big data to establish the amount of stock needed for busy periods and how much it should be sold for. In essence, businesses have to strike the correct balance between volume and value.

During busy holiday periods customers often want value for money, in the form of discounts for certain products and services. However, while it may seem counter intuitive, small businesses often benefit during this time by taking a knock on value, by lowering prices, in order to sell more volume. This enables them to increase the overall revenue and profitability of their businesses.

"Carefully managing stock and cash flow becomes crucial at this time of the year, as SMEs will be selling more and paying suppliers in advance for two months' worth of stock," explained Seetharam.

He said that SMEs can learn a lot from big retailers who have leveraged big data to develop an art and science for packaging and displaying products on store shelves. That is why, for instance, frozen foods are strategically placed on one side of the store and certain brands on top shelves. Retailers have gone the extra mile to use big data to understand customer behaviour and preferences better.

Similarly, big data is also being successfully used in the online space where convenience is driving sales. Customers who are familiar with certain products and brands find it more convenient to order online than driving to busy malls and standing in long queues.

"As customers become more sophisticated, it is important for SMEs to start using platforms like big data to gain a competitive advantage. They will not only increase sales, but attract new customers and retain them," concluded Seetharam.