‘Key Performance Indicators’ or KPIs as we say, are very important to the enterprise and nearly every company is talking about them, these days. But, there are still a lot of businesses that don’t know how to define the right KPIs to get a good picture of success.
To really understand where you are succeeding and where you are falling short, you have to measure the right things. For example, if your goal is to increase sales in the Minneapolis store by 5% in the year 2015, you couldn’t determine success by establishing a KPI to measure the number of shopping bags you have on hand in the store. Do we care about the number of sales people on staff at a certain time of day, and whether that affects our sales? Do we want to look at the store hours for a particular day of the week to determine whether extended hours in a certain season or on a certain day may result in more sales? Should we look at the impact of sales rep training on closed sales?
In like manner, if you want to establish metrics to evaluate the effectiveness of your internet marketing program you’ll probably have to look at your program from various perspectives. That is true of nearly every initiative in your company and that is where many businesses go awry. They assume that they can establish one metric for each goal when, in fact your business is more complex than that and your goals usually have more than one factor or aspect that will determine success.
Let’s consider the KPIs for an internet marketing program. We can’t just say that we want to increase sales. We have to decide how we will determine success. Will we include site visits, visits per page, the click to conversion ratio, the number of email and newsletter ‘unsubscribe’ requests, the click through rates for visitors coming to the website from a social media site, etc. These factors might tell us which internet marketing techniques are driving traffic to our site, but do they tell us whether this traffic is coming from our target audience, or what percentage of the traffic from each source is actually resulting in a purchase? Do they measure the time of day, the day of the week, or the season in which these sales conversions are most likely?
Of course, every business, industry, location and team is different and you have to look carefully at your own business to determine what is relevant. The most important thing to ask yourself when you establish KPIs is, ‘how does this measurement correlate to our success?’ If I measure this particular thing, does the resulting number or data point give me any insight into how well we are doing, how much money we are making, and whether this task, activity or goal is actually having an effect on the overall performance of the business?
There is one final point to consider when establishing Key Performance Indicators (KPIs) and an integrated business intelligence approach to decision-making. Enterprise culture and communication is important. There are industry standard, and business function-specific business intelligence tools with KPI modules, but these solutions still have to be tailored to the individual organization, and to their targets, and the minimums and maximums to be defined and then gradually moved to the teams for adoption. In order to get a true picture of KPIs and business intelligence, the enterprise must integrate data from disparate data sources and systems and that takes careful planning and implementation.
Throughout this process, the business must be committed to building a performance driven culture, and to streamlining and improving communication, and, in all likelihood, the process of getting to the desired state will be an iterative process. It may seem like the enterprise is taking the long way around. But, the business team must focus on building for the long-term, and to achieving solid results and a culture that supports clear, concise, objective decision-making and full commitment to business success at every level.
If a business is committed to performance-driven management, it must link its goals to its processes and create key performance indicators that objectively measure performance and keep the company on track. Whether your goal is to create a successful eCommerce site, increase customer satisfaction by 15% or reduce expenses, you must have a good understanding of what you mean by the word ‘success’.
Successful sales force management is dependent on up-to-date, accurate information. With appropriate, easy access to business intelligence, a Sales Director and Sales Managers can monitor goals and objectives. But, that’s not all a business intelligence tool can do for a sales team. In today’s competitive market, marketing, advertising and sales teams cannot afford to wait to be outstripped by the competition. They must begin to court and engage a customer before the customer has the need for an item. By building brand awareness and improving product and service visibility, the sales team can work seamlessly throughout the marketing and sales team channel to educate, and enlighten prospects and then carry them through the process to close the deal. To do that, the sales staff must have a comprehensive understanding of buying behaviors, current issues with existing products, pricing points and the impact of changing prices, products or distribution channels. With access to data integrated from CRM, ERP, warehousing, supply chain management, and other functions and data sources, a sales manager and sales team can create personalized business intelligence dashboards to guide them through the process and to help them analyze and understand trends and patterns before the competition strikes.
The enterprise must monitor sales results at the international, national, regional, local, team and individual sales professional. As a sales manager, you should be able to manage incentives and set targets with complete confidence, and provide accurate sales forecasts and predictions to ensure that the enterprise consistently meets its goals and can depend on the predicted revenue and profits for investment, new product development, market expansion and resource acquisition.
Business Intelligence for the sales function must include Key Performance Indicators (KPI) to help the team manage each role and be accountable for objectives and goals. If a sales region fails to meet the established plan, the business can quickly ascertain the root cause of the issue, whether it is product dissatisfaction, poor sales performance, or any one of a number of other sources.
Since the demand generated by the sales force management directly affects the production cycle and plan, the sales team must monitor sales targets and objectives with product capacity and production to ensure that they can satisfy the customer without shortfalls or back orders. If some customers are behind on product payments, a business must be able to identify the source of the issue and address that issue before it results in decreased revenue and results.
The ten benefits listed below comprise a set of ‘must haves’ for every sales team considering a business intelligence solution:
- Set targets and allocate resources based on authentic data, rather than speculation
- Establish, monitor and adapt accurate forecasts and budgets based on up-to-date, verified data and objective KPIs
- Analyze current data, and possible cross-sell and up-sell revenue paths and the estimated lifetime value of a customer
- Analyze the elements of sales efforts (prospecting, up-selling, discounts, channel partners, sales collaterals, presentations) and adapt processes that do not provide a competitive edge and strong customer relationships and client loyalty
- Measure the factors affecting sales effectiveness to improve sales productivity and correct strategies that do not work
- Achieve a consistent view of sales force performance, with a clear picture of unexpected variations in sales and immediate corrective action and strategic adjustment based on trends and patterns
- Understand product profitability and customer behavior, by spotlighting customers and products with the highest contribution to the bottom line
- Revise expense and resource allocation using the net value of each customer segment or product group
- Identify the most effective sales tactics and mechanisms, and the best resources and tools, to meet organizational sales objectives
- Establish a personalized, automated alert system to identify and monitor upcoming opportunities and threats
When the enterprise provides a single source, integrated view of enterprise data from numerous sources and enables every user to build views, dashboards and KPIs, every member of the sales team is engaged in the pursuit of strategic, operational and tactical goals. In this way, the enterprise can acquire new clients, retain existing clients, and sell new products and services without a misstep.
Dashboards. Infographics. Vizzes. Everyone is talking about the cool buzzwords in Business Intelligence. But, with statistics like “70-80% of business intelligence projects fail” (Gartner analyst Patrick Meehan) floating around, folks are tripping over jargon and falling on their faces. Even in a perfect world where requirements are clear, business questions are documented, and key metrics are defined, communicating effectively with data visualization is still just plain hard. Here are five tips to keep you on track and to help make your vizzes both cool AND effective.
1. Choose the Right Visualization
Talk with whoever will consume the report (have a conversation, in real life if possible – I know it’s scary, but you can do it). Make sure the visualization you choose caters to their specific needs. Do they just need that one number so they can copy and paste it into an email every Friday? Great. Then just report the number. Don’t hide that number behind colors, bars, lines, or added drama. Do they need historical context to explain that number? Fantastic. Then add a line chart with that metric over time. Do they need to compare that number to a benchmark? Wonderful. Then build a Gantt chart with the number and the benchmark. In data visualization, less is more.
2. Be Deliberate
Fancy Business Intelligence software and even good ol’ Excel love to add gridlines, borders, shading, legends, and labels to every piece of every visualization. Resist the urge! Fight back! Embrace minimalism and let your data be the center of attention instead. Use descriptive labels and legends to help communicate your message rather than clutter it. Remember, white space is your friend.
3. Color Matters
Green means go. Red means stop. Deep saturated red means you cut yourself shaving. Whether we like it or not, color carries inherent meaning. Use color to call attention to some of your data or to emphasize a point. But, be deliberate! And consistent. Does blue mean profit in one chart and loss in another? Perhaps a bad idea. Remember, colors are fun, pretty, and cool. But. if they don’t add meaning to your visualization, consider simplifying and going with a classy shade of grey.
4. Cool Or Confused? Intercepts and Axes.
Nobody loves a hacked off axis more than news networks and politicians. The drama! The intrigue! Does it inspire shock and awe? Yes. Is it misleading? Very. Avoid confusion and err toward accuracy by setting your axis intercept to 0.
Another example of “cool” that quickly turns into “confusing” is the dual axis chart. Consider how your audience will interpret your visualization. Did orange outperform blue? Are those metrics even comparable? When in doubt, break those bars and lines into separate graphs. And if you insist on keeping them in one graph, for goodness sake, clearly label those lines and axes.
5. Oh Those Pie Charts… And Maps…
Pie charts are incredibly fun to create and terribly difficult to interpret. Slices often look similar in size when they are quite different. And too many slices can set your end user up for a Where’s Waldo? game to find the right slice. Be kind to your end user. Recommend a better visualization.
Maps, like pie charts, are a ton of fun to create. The colors! I can even see the ocean! However, think twice before you slap that data on a map. Is this really a geospatial analysis? If you want to identify the state bringing in the highest profit, looking through a bunch of numbers on top of a map is just another Where’s Waldo? game. Once again, be kind to your end user. Choose a better visualization.
Now Ignore Everything I Just Said. Sort of.
Rules are made to be broken, but it’s important to learn and understand the rules before you break them. Famous painters like Pablo Picasso and Matisse studied and experimented with principals like color theory and perspective before breaking those rules with their more modern paintings. So, once you have a handle on some data visualization basics, don’t be afraid to experiment, push back on the hundredth pie chart request, and have some fun. Happy Vizzing.
Note: this page contains paid content.
Please, subscribe to get an access.
The rise of third party or external data has given data scientists and organizations additional… Continue
The increased availability of computer resources and the prevalence of high-quality training data combined with… Continue
As businesses have modernized data processes to prioritize self-service and agility, the need for more… Continue
Ernst & Young is a global leader in assurance, tax, transaction, and advisory services, and the… Continue