How to get your KPIs on track with data analytics
Many data analytics vendors give users the ability to measure everything but offer little guidance. Too much choice can be overwhelming for new users. Instead, we recommend determining the metrics that matter to your business and to get you started; Phocas helps you establish KPIs in the data analytics solution.We have three pillars that serve as guideposts to help you decide what to measure. So every area of your business from sales, inventory management to finance is measuring core KPIs that contribute to the overall success of the business.
These guideposts are also a rubric to make sure that each functional area of the business is aligned toward overall success.The three key objectives are improved customer experience, optimizing growth, and increasing profitability. Excelling in these three areas will drive your business goals.Each of these objectives drives and supports the others and creates a framework for success.
1. Improve customer experience
When considering how to improve customer experience, it may be helpful to begin asking the following questions. What is the experience of your customer base? How would you measure that experience ? Do you know what factors might be impacting your customers’ experience? Do you know how to measure those factors?
Customer experience is critical to increasing your market share. However, this is difficult to do if your customers are leaving because they are dissatisfied. So, how can we make sure our customers have a great experience and want to keep us as their supplier? First, customers want their orders on time. It might be they need their order delivered to a job site so they can complete their work.
In this case, a key metric is “delivery in full, on time” (DIFOT). A gauge on your dashboard can quickly show you what percentage of your orders are delivered in full and on time. In just a few clicks you can go from a high-level summary to a detailed analysis of your data to see DIFOT rates by warehouse, category of products, individual products, and more to pinpoint the problem. Is it a shipping problem from a particular warehouse? Is there a problem with a product category? Do I have enough product in stock? This is a key element to a positive customer experience. To be sure you always have the right product in stock, create a KPI to measure “stock outs” or priority items out of stock.
2. Support company growth
When considering ways to support the growth of your company, begin with the following questions: What are your top growth opportunities for new customers or new products? Are you aware of your biggest opportunities? Where might you have some risks? Can you quickly list these risks and opportunities? Growth is the key to business success. If you’re not increasing your share of the market, or at least keeping up with your competitors, then eventually you’re going to be out scaled. Maybe you have enough market share for the immediate future, but if you’re not striving to grow, then you are likely to be overtaken by your competition.
It is important for sales managers to be alerted to “customers in decline.” By monitoring customers whose sales have been declining for the last few months, your sales team will be able to quickly intervene before the sale is lost. Begin with the customers with the highest sales values to prevent the greatest losses. Another important alert is new customers and the product categories and individual products they are purchasing. The purchasing manager should pay attention to the sales trends for new products to ensure there is always enough stock on hand.
3. Enhance profitability
What can you do today to move the needle on your profitability? This is a core objective for every business. In the beginning, a small company must focus its efforts on gaining volume. However, once a company has matured, it is in a position to make small, subtle changes that will have a tremendous impact on profit.
Improving profitability usually involves making small changes in highly repeated business processes. For instance, strategic price increases can improve your profit margin without risking sales volume. Improving delivery processes can reduce the cost of each truck leaving the warehouse. Minimizing deadstock frees up cash that can be used on other profitable investments. To monitor profitability, your sales manager can create a KPI to monitor margin trends, deadstock, and low turns.
With Phocas, your sales team will know which customers are at risk. Your accounting team will know to keep an eye on those customers’ accounts receivables. Your warehouse will know how they’re performing against on-time delivery targets. In this way, each area of your company can work to meet the same three objectives to drive your success. Upon implementation of Phocas, you’ll get complete training on the basics of how to slice and dice your data, as well as how to use custom mode to develop your own reporting metrics. Because Phocas is so easy to use, your team will quickly become more discerning about what they need to measure.
Are your KPIs on track? To find out more and watch this webinar.
Craig is an expert in data analytics helping customers determine specific data requirements so they can enhance performance, productivity and confidence.
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