In my last post, I talked about how you can keep business data in some sort of decent order. That was talking primarily about customer and contact data, used largely for marketing purposes – mailshots, email newsletters and the like.
Of course, this information is only useful if you can establish which customers you need to notify about your latest offerings. There’s no point in wasting time and money sending details of products to people who have not the slightest interest. So today I’d like to look at some of the more ‘transactional’ data within your business, as this can not only help you with your marketing initiatives but can also reveal a lot about the effectiveness of your business processes, and more besides.
Garbage in, garbage out
I expect we’ve all heard this phrase, and it does remain a universal truth – put rubbish data into a computer system, and you will get very little meaningful intelligence out of it.
To an extent that’s pretty obvious – if all the numbers are wrong, then the results are going to be wrong. However, I think that there is a bit more to this than meets the eye. It’s a misused phrase, really – often people use it because they can’t get an answer from their system, not because dodgy data has got into it but because the wrong data has got into it.
How can you tell how long it takes you to make your product if the system doesn’t record that information? How do you know what issues your factory or warehouse face if nobody is recording them? One of the tasks I carry out most frequently when working on business intelligence projects is to work out what information the system needs in order to produce the required reporting. It’s amazing how often that information is simply not there.
This is nobody’s fault, really – it’s the nature of software systems that they are generic in order to appeal to the widest possible audience. Equally it’s the nature of businesses to be unique in their practices, to give them a competitive edge.
And people wonder why software systems can be a nightmare!
So, rule one – make sure you are collecting the information you need to measure performance and service levels and anything else you are interested in (and see the points made about that below as well). There’s no right and wrong – your business is pretty unique, remember!
Key Performance Indicators
So once you have decided what to measure, you need to do the measuring. It’s a favourite bit of jargon for people in operations – “What KPIs are you using here?” they will ask, knowing that half the time the answer will be “not a lot”!
Actually, that’s a little unfair (although not a lot!) because many business are taking measures of their performance, but frequently they are measures that don’t really tell you much. Order values, turnover, the number of visits made, or phone calls achieved. All of that is good stuff, of course, but it doesn’t cut to the chase. You need to tune yourself into a mindset that looks at cost and margin, effort and reward, cause and effect.
In the end, it’s all likely to be about customer service. Are you delivering the best product you can in the most effective manner possible, or adding the most value that you can through your services, and are your customers as happy as you could wish? Have you asked them?
If I had to impart a single nugget of advice to someone starting out looking at their business processes and systems, it would be “Look for the exceptions”. This is where you will find the truth about what’s happening. Don’t worry as much about the overall value of an order, as about whether it went out on time, whether it was complete, and whether it was a pain to process for whatever reason. Perhaps the customer requires special packaging, or some specific delivery arrangement.
Don’t worry as much about how many visits your salesmen have made, as about how big the orders are, and how effective that customer is to your business. With all due respect to salesmen, they will tend to gravitate to the nicest customers with the best coffee – it’s only human. If you find that £100 orders are being collected three times a month instead of a £300 order once a month, then it may be time for a conversation.
Do you know how much it costs you to send a salesman in to a customer? It’s not difficult to calculate – salary, car, expenses, average number of visits. Do the sums, and compare that cost against your average margin, and be prepared to weep at how many orders you might collect that make you no money!
Again, this could go on and on, even more so than it has already! The key message is to structure and collect the sort of data that is going to tell you something about your business. Don’t bother with total turnover and all that stuff – those figures are easy to get hold of and don’t really mean much outside the financial accounts. You’re interested in margin, cost and efficiency, so look for variances and exceptions – late orders, missing stock, service level issues – and you will begin to spot patterns.
Never forget that a slice of your cost base is probably tied up in waste and inefficiency. This is not a reflection on you, as your business changes constantly, and you can’t keep up with everything, but it’s more than likely to be true. Making sure that you are working with the right business data will help you to spot opportunities for improvement much faster, and that can only be a good thing!
For help with this kind of thing, or just to have a chat, please call me on 01438 832724, or email me here.