Updated: Nov 11, 2020
The ability to interrogate and harness the insights from your company data are vital. It is one of the building blocks to sustainable growth.
"Learn from the past, but don't live there. Build on what you know so that you don't repeat mistakes." Harvey Mackay
Are you getting the most out of your data?
During the COVID Pandemic, data proved to be the basis of every decision made. Whether it be when to go into lock-down, when to open new hospitals, or when to start lifting the bans.
In business, the same fundamental need exists. The ability to harness data can provide structure to mid to long term planning. It can define triggers to ensure you deploy your resources in an efficient way. And enables you to have the agility to face unforeseen challenges.
Business Intelligence is more than just reading the daily sales report. It provides invaluable commercial, meaningful insight to support your strategic planning process.
Standard financial reporting is integral to monitoring company performance at an aggregated level. Yet, if used in silo, it can often masque some of the underlying issues. Interrogating your data on a granular level leads to the discovery of new opportunities or potential risks.
Imagine having an expensive, powerful car that you clean and polish with pride every week. Yet you never pop the hood to check the oil and water, until one day it breaks down and you have a hefty bill.
A company runs in a similar way. We must pop the hood under the P&L reports to check what our data is telling us. Targeting key areas such as Products, Margins and Customer behaviour provide valuable clues.
On the flip side, with so much data at our disposal it is too easy to get lost in the finite details. By losing sight of the bigger picture, you waste valuable time and resource reporting for reporting’s sake.
So how do we strike a balance?
Business Intelligence must be dynamic, relevant, and insightful. Clearly communicating salient points for consideration.
Before you begin your journey of discovery you must first establish the following:
Is your data clean and reliable?
What are you looking to achieve? and what questions do you need the answers to?
How often should you run this report to keep it relevant?
Let’s explore some ideas of where to start.
We have provided a shortlist of some of the most common and effective reports.
Regular review of product or service performance. Either at a Category or SKU level. This level of reporting identifies trends, seasonality, and profitability. It highlights gaps in your offering or potential risks such as redundant products. Constant review of these areas will enable you to adapt to evolving demands.
Use your data to assess Sales promotions and campaigns. Tracking what impact these have on sales YTD or YoY as well as on margins will improve your ROI. Mitigating the risk of re-running low impact activities in the future.
Aligning product performance to stock holding at a SKU level. This type of reporting results in better supply chain management. You will be able to focus sales efforts, and stock investment more effectively.
Do you construct your sales budget with estimated targets and arbitrary values?
Using this approach often leads to unachievable outcomes. Combining historic sales trajectories with actual selling prices, is a much more effective method.
Similar to budgets, applying insight from historic data is vital to relevance. Applying seasonality, Regional and Customer contribution is far more effective and realistic.
Tracking customer lifetime value is an invaluable indicator. It can provide insight into the average spend per customer (a useful gage for price positioning). Buying behaviours and changes over time will reflect customer retention rate. Also, the ratio of new customers to the business is a great indicator of sustainable growth.
Analysing historic data can be a good place to identify new leads. Highlighting lost business to re-visit and re-establish partnerships. Or identifying customers to nurture for future growth
Do you know who the most profitable salesperson in your organisation is?
Your historic data can provide clarity around selling behaviours. Tracking profitability by Salesperson over time reflects the effectiveness of commission plans. This allows you to fine tune these plans and drive higher margin contributions. It can also provide the basis for more targeted sales drivers such as league tables and bonuses.
Setting up reports that flag suspicious activities to mitigate against Grey Trading. This is a topic we cover in more detail in another blog (Click here to read more)
Using historic data is vital to project the likely impact of future decisions. For example, the effect of price changes, new sales channels or even changes in exchange rate.
Tracking the impact of Free of charge goods, returns and credits allows you to target broken processes. Overtime, if left ungoverned, these could lead to substantial margin erosion. Similarly tracking discounting and rebates is an effective way to govern pricing strategies.
Tracking the average order processing time. This metric can provide operational insight of bottlenecks and pain points.
This is just a small sample of the insight you could get out of your data.
Such dashboards provide an exceptionally powerful tool in your arsenal. With this insight at your fingertips you are better placed to make more informed decisions. And more importantly to track the results and fine tune further.