Over half of Britain’s SMEs admit they do not ‘completely’ understand the habits and preferences of their customers, while 42% of SME decision makers say their business tends to go by ‘feel’ to understand their customers, as opposed to using data and analytics.
Customer relationships are crucial to the growth and success of the nation’s businesses, but a new study reveals that over half of Britain’s SMEs do not “completely” understand the habits and preferences of their customers, with only 45% saying their business understands its customers “very well”. An online YouGov survey, commissioned by First Data Merchant Solutions, questioned over 1000 SME owners and decision makers, finding that over two fifths of SMEs (42%) go by “feel”, rather than using data and analytics to pinpoint the preferences, requirements and dislikes of their shoppers.
Just 23% of respondents said their business understands its customers’ needs very well by using data and analytics to assess their interactions with customers, with almost one fifth of those questioned (18%) saying that they “do their best but find it difficult to keep track”.
Despite the struggles to understand their customers, SMEs fully recognise the importance of customer service with most respondents rating ‘poor customer service’ as a reason that a customer might walk out of a store (69%).
In a parallel online survey of just over 2000 consumers, 73% agreed that poor customer service would be likely to make them walk out of a shop without making a purchase. 52% say that a long queue for the till may mean no sale, while over a third (36%) said they would be likely leave the store if it did not accept their chosen payment method. For 66%, being targeted with offers and services that aren’t relevant to them is an off-putting factor, though only 33% of SME decision makers identified this “unwanted cross-sell” as a likely issue.
When SME decision makers were asked what factors they feel would significantly improve their business’ customer relationships, 23% said ‘spending more time gathering detailed customer feedback on our products or services’. 16% said finding a way to capture more data around customer habits.
36% replied that they are “too busy with the day-to-day running of the business” to implement new or improved measures to enhance customer relationships.
Raj Sond, General Manager at First Data Merchant Solutions, comments, “These statistics are a real eye-opener for any business not currently embracing platforms that can collect, manage and analyse the masses of data and knowledge that passes through their business daily. The discrepancy in what consumers particularly dislike in a shopping experience, and what SMEs think their customers dislike, is apparent. If business decision makers are not on the same level of understanding as their customers, this can be detrimental further down the line.”
“With stiff competition from larger retailers and online giants, small business owners must learn from these insights and find ways to really look under the bonnet of their business. If they want to survive in this competitive landscape, SME owners need to implement systems that can harness this knowledge and be used to create unique customer experiences and safeguard the relationships with their shoppers”.
 Based on 53% of SME decision makers who said that their business understands the habits and preferences of its customers “fairly well” (50%), “not very well” (3%) or “not at all well” (0.28%).