As businesses gradually begin to reopen, the new climate of renewed hope is tempered by a hearty dose of cautiousness. On the hopeful side, The National Federation of Independent Business’ Small Business Optimism Index climbed to 98.2 in March—the first time since November 2020 that it reached its historical average. Yet at the same time, the “uncertainty index” also increased, indicating businesses are unsure if now is the right time to expand their business.1
While forecasters continue to make upward revisions to their expected 2021 economic performance, businesses still question how to respond in uncertain times. Jena Cherry, Senior Sales Director at LexisNexis® Risk Solutions, recently shared that a LexisNexis® Risk Solutions retail card customer referred to 2021 as the “year of account management.” Focusing on existing customers with the key strategic goals of controlling risk and expanding wallet share offers a smart way to move forward without incurring undue financial jeopardy.
Spring Clean Customer Data for Improved Visibility Into Risk and Opportunity
A commitment to nurturing your existing customer base begins with managing data properly and understanding its intrinsic value. Assuring that data is continually updated makes it possible to truly understand and know your customer and make smart decisions. Doing so equates to good “account management.”
Refreshing firmographic, payment and alternative data on your existing customers on a regular basis—whether it is for risk control or deepening the customer relationship—is an important step you can take to elevate your stewardship of your small business accounts.
Equally important is evaluating small business credit risk with confidence. By doing so, you can extend more offers, optimize performance, and increase profitability while mitigating risk factors. That is not always an easy thing to accomplish because often credit reports on businesses are hit or miss; less than 50% of small businesses even have a credit profile and half of those are thin files.2 Searches also come up short if you are unable to connect the dots, between, say a business with multiple locations.
Since so many businesses fall under the category of sole proprietors, it is very important to properly access and link information on both the business and the business owner. Ask yourself: does my resource leverage thousands of proprietary and public data sources to link people and business entities? Is financial and trade payment history included? Does it alert me to “red flags” that warrant future inquiry? Ultimately, how is the information obtained and linked together?
Consider, too: just as home security technology alerts us to someone approaching our doorsteps, business alerts are vital for monitoring our customer base for positive and negative events. It is another building block in secure account management. Receiving an event alert quickly—for example, the filing of a lien or judgement or an account opening by a business with another lender—can be a signal to take action. That action can vary from simply contacting the customer, offering a higher line of credit or additional product, or taking care to limit future exposure.
“Hunkering Down” Is Not an Option. Arming Yourself With Data Insight Is!
As a result of the pandemic, small businesses have been forced to transform overnight to a new digital customer engagement model with limited in-person customer contact. These new customer attraction and process improvement strategies from 2020 will not simply disappear. In fact, small businesses, who have grown increasingly comfortable with fintech and online banking, are more poised than ever to accept change. Accenture reports 42% of small business owners believe alternative providers offer better service than traditional banks.3 And that presents a huge opportunity for you to ensure your best customers remain your best customers.
We are all eager to return to normal even if the definition of “normal” looks different from what we have experienced in the past. The Small- to Mid-Sized Business segment is too important and strategic to under-cultivate, particularly since 99% of the US business population is comprised of micro, small and privately held businesses.4 And the best place to start is increasing your attentiveness to your existing customers. With robust data, proven decisioning intelligence and credit risk insights, you will be in a prime position to identify new opportunities and minimize risk to optimize portfolio performance.
Learn more about our Business Risk Management solutions.
1. Small Business Economics Trends | NFIB
2. LexisNexis Risk Solutions Internal Infohub Data
3. Bank of the Profitable SME Base | Accenture