As a small business owner, staying on top of your industry and competition is essential for success. One great way to do this is to take advantage of payment analytics—data that can provide insights into the customer experience, help you identify patterns in customer preferences and behavior, and inform strategies for driving future growth.

By utilizing payment analytics resources such as transaction histories and budget monitoring tools, you can gain valuable data-driven insights into what’s working (or not) with your current operations, enabling you to stay ahead of your competitors while maximizing customer satisfaction. In this post, we’ll look at 8 ways payment analytics can help power up your small business.

The Critical Importance of Data

Data is critical to the success of any business, regardless of its size or industry. Data can inform decision-making, identify growth opportunities, and improve business performance. 

Payment Analytics Defined

Payment analytics involves collecting and analyzing payment-related data, including transaction volume, revenue, chargebacks, and customer behavior. Along with payment analytics, it’s important to familiarize yourself with the four main types of data analytics:

  1. Descriptive analytics help you tell the story of what happened. This is the building blocks of all other analytics. For example, using descriptive analytics, you could pinpoint which of your products are most popular or the season that sales are highest.
  2. Diagnostic analytics answer why something happened. They illuminate trends and uncover relationships between two seemingly different variables. Using diagnostic analytics, you might combine sales data with demographic data to discover who is buying your most popular product and why.
  3. Predictive analytics help you understand what might happen next. For example, predictive analytics might help you understand this year’s high sales of product X in relation to the past several years’ of sales, so you can anticipate future spikes in demand.
  4. Prescriptive analytics bring together all of the above so you can understand the best way to move forward. The idea behind prescriptive analytics is to highlight strategic opportunities for action. For example, you might anticipate a seasonal spike in sales for product X and try to maximize this with targeted marketing to would-be customers.

When you understand these four types of data analytics, you can move from asking yourself, “what just happened” to “what should I do next.” This is the critical leap from information to innovation.

Payment Analytics as a Competitive Advantage

Payment analytics represent a wildly untapped competitive advantage opportunity for small businesses to leverage. Here are some specific examples of how you can use payments analytics as a competitive advantage in your business:

Drive Business Growth

One way to use payment analytics to drive business growth is by identifying new opportunities for revenue generation. By analyzing transaction data, businesses can identify trends and patterns that suggest new products or services that their customers might be interested in.

Big companies like Walmart and Target are doing this all the time. There’s even an interesting anecdote about Target predicting a woman’s pregnancy before she told her parents, highlighting the power of payment analytics. In the past, only large businesses had the resources to access data like this, but now with tools like integrated payment, even small businesses can leverage payment analytics and data to grow their business. 

Improve Chargeback Rates

Another way to use payment analytics as a competitive advantage is to improve chargeback rates. For example, let’s say you are a business owner, but you’re struggling with high chargeback rates and declined transactions. By using payment analytics data, you have a good chance of identifying the root cause of the problem, which could be as simple as a lack of clear communication with customers about the payment process.

When you know what the problem is, you could then work to improve your payment communication strategy by providing clear payment instructions and offering customer support for any payment-related issues. Once the root problem is identified and addressed, you can reduce your chargeback rates and increase your transaction success rate.

In addition to more money in your business, this can help you increase your credit score, get more favorable loan terms, and overall help improve your bottom line.

Make Your Business Thrive

While these two stories highlight some of the ways payment analytics can be used to drive growth in a business, there are more. Here are some more examples of how you can use payment analytics to help your business thrive:

Improve your payment processes: Payment analytics can help businesses identify areas of their payment processes that may be causing friction for customers and leading to abandoned carts, such as slow processing times or confusing payment instructions. As a result, businesses can improve the customer experience and increase conversions by addressing these issues.

Implement fraud prevention measures: Payment analytics can be used to identify fraudulent transactions and take measures to prevent future fraud. For example, businesses can use data analytics to detect patterns of fraudulent behavior, such as repeated purchases from the same IP address or unusually large transactions. Preventing fraud can help prevent losses as well as upset customers. 

Monitor billing errors: Billing errors can be a significant source of customer dissatisfaction, so monitoring them closely is important. Payment analytics can identify patterns that suggest billing errors, such as customers being charged multiple times for the same product or service. Billing errors may also be causing delays in payment processing. By addressing these issues, businesses can streamline their payment processes and get paid faster.

Optimize your supply chain: Payment analytics can help businesses gain insights into their supply chain and identify areas of inefficiency or risk. For example, a company may notice that they are consistently paying vendors late, causing delays in the delivery of necessary materials, delaying their output, and ultimately decreasing the available inventory they have to sell. By addressing these issues, businesses can solidify their supply chain, reduce costs, and improve profits.

Improve your forecasting: Payment analytics can help businesses gain insights into revenue trends and patterns, which can be used to create more accurate revenue forecasts. For example, businesses can gain insights into cash flow trends and patterns, which can be used to create more accurate cash flow forecasts and reduce the risk of cash flow disruptions.

The Bottom Line

It’s clear that payment analytics and data are essential to business success. Payment analytics allow businesses to understand the payments of their customers, which can help inform decisions related to marketing, customer service, and more. Businesses who use this data will unlock opportunities to make improvements in cost management, improved customer loyalty, and grow their business overall. This data also allows businesses to get a clearer picture of cash flow so as to prioritize investments on what matters most: their customers!

Ultimately, it’s time for all businesses to take advantage of payment analytics in order to move forward quickly and ensure success even during difficult times. After all, there’s no better time than now to seize the opportunity and grow your business with the help of invaluable data from payment analytics!