Many businesses will host planning sessions that serve to inform the business strategy for the coming year. One of the main components of strategy planning is historical data, which gives key decision makers a comprehensive snapshot of the business’ performance to ensure they make informed decisions about their strategy, and set goals that are realistic.
Before getting into the strategic discussion, you will need to have a clear understanding of your business performance in the past year. This is where Business Intelligence comes in. Use your BI solution to analyse the following key areas to help you get a clear view of your business performance in the previous years, and in turn identify key areas of focus for growth.
1. Operational performance
One of the first things that come to mind when evaluating business performance is revenue or profit. Determine your business’ operational performance by measuring your total sales (in both volume and dollars), total revenue and total profit for the year. Then determine how much these numbers have grown from the previous year. You might also want to look at metrics like lost customer to new customer ratio, customer lifetime value, and average lines per invoice, and compare the current financial year to previous financial years. BI tools are typically equipped with sophisticated analytics functionalities to help you work out these numbers.
But in truth, these numbers only make up one piece of the puzzle. To get a true picture of your business performance, you will need other information such as competitor performance and market conditions.
2. Market conditions
Internal data can only do so much; you need information on external factors to help you understand your business’ performance. It is crucial that you determine the size of your market share. Measure the growth in market share from the previous year to see how much your business has grown over the past 12 months.
In your analysis of market conditions, you will also need to bear in mind your competitors. Measure the changes in your major competitors’ market shares over the past year, and see if you can identify any potential or emerging competition (from new entries or substitutes). With this information, you’ll be able to shape your strategy to address your competition better.
3. Employee productivity
Another key contributor of your business performance is employee productivity. Determine the productivity of your key employees by measuring their contribution towards revenue and profit. The same way you periodically measure salespeople on the number of sales and revenue they generate, measure customer service employees on their contribution to revenue from retained clients.
Aside from this, it will also be useful to measure overall employee satisfaction with the company. Identify all the factors that contribute to their productivity: company culture, management style, organisational policies, compensation, opportunities to grow, etc; and determine how your company fares in keeping your employees satisfied on each of these factors. Through this you will be able to identify opportunities to increase employee productivity, which will help you formulate this year’s strategy.
4. Customer satisfaction
Employee satisfaction is key for a business' success, but customer satisfaction is critical. Your customer’s satisfaction with your product / service or company is another strong indicator of your business performance. Conduct regular customer satisfaction surveys as part of your customer relationship management program, and determine of customer satisfaction changes over time.
Also ensure you track and monitor key metrics like your DIFOT, identify lost sales, and create mutually beneficial discounts or rebates. This way your customers will feel valued and looked after, which will naturally increase their satisfaction with your business.
Good BI software is typically equipped with CRM and sales opportunity management capabilities, as well as solutions for finance and operations, to give you the operational, market, employee productivity and customer satisfaction data you need. Most BI solutions are built to support the analysis of unstructured data drawn from other sources, so that you can integrate data from different sources to generate one view of the truth. With this, you get an accurate understanding of your company’s performance, which will help you build a well-informed business strategy.
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