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Small Businesses Need Technology to Really Know Their Customers Mythical small shop owners knows every customer. In reality, small businesses need the tools to analyze their sales data if they are to compete.

By Rudd Davis Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

With the growing interest in locally made and locally grown products, some say that small, local retailers have a unique advantage.

Nonetheless, big companies with big budgets still have considerable advantages. Large companies are spending hundreds of millions of dollars on marketing, social media and technology, both online and in-store. Mom-and-pop shops struggle to compete with the massive resources and scale of major retailers.

Related: Point-of-Sale System Basics for Retailers

It's ironic that the largest retailers somehow have the upper hand when it comes to understanding shoppers and making them feel special. This should be the domain of the small shop owner who knows many of her customers personally. Thankfully, there are new ways a smaller retailer can deliver that personal touch.

Stay local but act global. My parents, like many of their generation, weren't ready or able to retire but were ready for a new challenge when the country store came on the market in Underhill, Vermont, the small town where I grew up. We decided to buy it.

This store had operated essentially the same way for more than a hundred years, selling locally-produced goods to the small community. But, with buying habits changing, the last 20 years were more challenging. It was, at best, a break-even operation.

The most advanced technology in our store was an ancient point-of-sale system that was hard-pressed to handle a simple transaction, let alone provide any useful data. It was impossible to know where to focus our limited resources without any tools in place to tell us what was and wasn't working. In the first year of operation, we lost a substantial amount of money.

We needed to start with the basics: understanding how many people came in to the store, when and what they bought. At the time, there were few tools for small and medium-sized businesses to get that data.

Related: Which Point of Sale System Should I Use?

Fortunately, there are now a number of great companies providing powerful tools at affordable rates. Swarm, the comany I co-founded, provides a small battery-powered device that monitors foot traffic and visualizes the data in a beautiful app. Vend is a cloud-based point-of-sale system that replaces the antiquated POS with a sleek and full featured system that runs on a tablet, providing detailed metrics on purchases and inventory. FiveStars is a customer loyalty company that allows merchants to reward customers for loyalty and gives them insight into the behaviors of their best customers.

Increasingly, such apps and services work together for the benefit of the merchant. For less than $100 a month, a store can take control of their business by gaining access to the essential metrics for reducing costs and growing revenues.

Some small retailers won't care for the idea of "digitizing" their business. They want to shake hands with customers and talk about the local high school football team. That's great but they also need to measure a few essential metrics to adjust operations and offerings that achieve significant results. Small stores need technology to collect and analyze date on traffic patterns by hour, day and week, variations in conversion rates by hour and day of the week, which products are in high demand and why a product is selling well and why and detailed profiles of their average and premium customers.

Customers today still love the human, tactile experience of the physical store, especially when that store is in their community. Yet they expect more, given the convenience and personalization they get from shopping online. It's a smart move when local retailers can marry both worlds, delighting shoppers and reaping benefits to the bottom line.

Related: The Benefits of Cloud-Based Point-of-Sale Systems

Rudd Davis

Helping SMB retail run better, CEO and Co-founder of Swarm Mobile

Rudd Davis sold his first company, BNQT Media Group, to USA Today at age 24.  He later became president of USA Today's Travel Media Group.  In 2012, Rudd co-founded Swarm, a San Francisco-based company that helps SMB retailers build better businesses through powerfully simple technology.

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