The Internet of Things (IoT) has a reputation for being something that only large companies can capitalize on. However, in reality, the growing realm of connected technology has the power to provide invaluable customer insights to even the smallest businesses.
Imagine for a moment that you own a local sporting goods store. Looking at your inventory data, you may know which products are (and aren’t) selling during which seasons, but you’re not gaining any insight into why these trends are occurring. You have no hard data regarding customer behavior and foot traffic, so when it comes to optimizing your store’s layout, you’re left playing a guessing game.
This is where IoT technology can help.
The Pre-IoT Approach
Before the genesis of connected technology, customer insights were mostly gained through a combination of anecdotal evidence, word of mouth, trial and error, and sales data. Then, with the advent of sites like Facebook, Twitter, and Yelp, businesses began tracking online reviews and monitoring social media activity to try to uncover why customers behave the way they do.
However, these methods leave much of the story untold.
Inventory and sales will show you what’s bringing in money, but they won’t explain why some items sell better than others (or why some aren’t selling at all). While surveys, reviews, and social media activity all provide businesses with a straight-from-the-source line of consumer feedback, these avenues only feature data that’s willfully provided by active customers. In other words, you’re only learning what people want you to know.
All told, none of these approaches address perhaps the most pivotal demographic to understand: almost-customers. As you know, not everyone who visits your store makes a purchase and posts an online review — and IoT technology can help you understand why these individuals walked through your aisles and browsed your goods without pulling the trigger.
Valid for Small Business
Many small businesses overlook the IoT because they believe it will require an entirely new (and expensive) infrastructure. While this was true of the first generation of IoT devices, new solutions like random phase multiple access (RPMA) create their own networks and are simple to implement.
Think of RPMA like your cellular network. Just as you don’t need any extra equipment to use your phone’s data, these newer IoT systems don’t require additional network management. As a result, it’s never been cheaper or easier for a small business to adopt connected technology and gain access to hidden, real-time consumer insights they’ve been missing out on.
Through an IoT-driven customer insight system, you could, for example, notice that a vast majority of customers take the same path through your store and certain sections that feature high-margin products are going unexplored. Or you could discover that customers are continuously stopping to look at a certain product but never actually purchase it. If that’s the case, you can conclude that the item’s price tag is likely deterring them.
Whatever the reasons for purchasing (or not purchasing), IoT technology leaves businesses better armed to identify shopping patterns and correct problems. There’s simply no better way to objectively understand what your customers like (and dislike) about conducting business with you.
Power New Insights With the IoT
Here are just a few of the rewards your small business could reap from IoT technology:
#1. Higher Conversion Rates
Similar to how e-commerce sites optimize their design to increase sales, IoT sensors provide data that allows brick-and-mortar establishments to influence customer flow and ensure items are placed strategically throughout the building. Engaging in this practice can boost your conversion rates through the roof.
Grocery stores have customer flow down to a science. With meat, produce, and dairy on the back walls, customers are forced to walk though multiple sections of the store in order to reach these necessities. Along the way, items they never thought about purchasing inevitably catch their eye and end up in their shopping carts. I think we can all say this happens to us nearly every time we visit our neighborhood grocer.
Now, thanks to the IoT, stores of all types can use foot traffic data to optimize their layout and sell more products the same way grocery stores have been for decades.
#2. Optimized Purchase Patterns
Like the weather, patterns can’t be predicted without data. IoT technology allows you to segment customers by time of day, day of the week, holiday, season, and other important events. With these insights, you can learn that Saturday morning is buy time, while Friday afternoon brings out the browsers. Further, you can identify which departments are most popular during which times of the day for both traffic and sales (which won’t always correlate).
Most small businesses know what the register count is at the end of the day, but with IoT technology, you can easily look back at your historical data to see how today’s sales match this day last week, last month, or last year. If data proves your sporting goods store tends to sell the most running shoes toward the end of the month, you can tweak your inventory to match predicted sales or run a campaign to boost those sales even higher.
#3. Well-Informed Marketing Efforts
Speaking of campaigns, IoT data can display which of your marketing initiatives are actually driving customers to convert. Even if you’re simultaneously running multiple ads across multiple mediums, connected technology allows you to decipher how much traffic each initiative is bringing in and how each individual customer is behaving. With this knowledge, you can create future promotions and campaigns with more direction and impact.
There are thousands of reasons people decide to browse and make a purchase somewhere. Keeping track of all this information manually is a herculean effort, but through IoT technology, you can constantly have this data at your fingertips in real time.
IoT isn’t just a buzzword for technology that only helps large corporations. Thanks to these low-cost sensors, any small business can gain insight and react faster than the competition. Optimizing inventory, branding efforts, and customer conversions are just a few of the many ways the IoT can help you.
Where do you see the IoT bringing the most value to your small business? Let us know in the comments.