Aligning your business with your data team

It’s important for everyone at a company to have the data they need to make decisions. However, if they just work with their data team to retrieve specific metrics, they are missing out. Data teams can provide a lot more insights at a faster rate, but you will need to know how to work with them to make sure that everyone is set up for success. 

Data teams can be thought of as experts at finding answers in data, but it’s important to understand how they do that. In order to get the most value out of your collaboration, you need to help them understand the questions that matter to you and your team and why those questions need to be answered. There are a lot of assumptions that get built into any analysis, so the more the data team knows about what you are looking for, the more knowledge they may find as they explore data to produce their analysis. Here are four tips to make more productive requests from members of your data team: 

Approach data with an open mind

It’s important to treat the data request process as an open-ended investigation, not a way to find data that proves a point. A lot of unexpected insights can be found along the way. Make your goal to ask questions and let your data team search for the answers. This approach will allow you to get the best insights, the type of unknowns that could change your decision for the better. If you put limitations on what you’re asking the data, you’ll end up putting limitations on the insights you can get out of your inquiry. 

To really dig into this, think about how questions are answered scientifically. Scientists treat any bias as an opportunity for the insight to be compromised. For example, let’s say you are looking to improve customer satisfaction with your product. Requesting a list of customers with the highest and lowest NPS scores will give you a list of people who are happiest or most frustrated, but it is not going to let you know how to improve customer satisfaction. This request puts too much attention on the outliers in your customer base rather than identifying the key pain points. That’s part of the picture, but not all of it. If you’re trying to create a program that targets your goal, let your data team know the goal, give them a few optional starting points, and see what they come back with. They might surprise you with some sophisticated analysis that provides more insight and helps you launch a fantastic program. 

Start with a conversation, not a checklist

The single biggest mistake a line-of-business professional can make when requesting data is to present a data expert with a list of KPIs and tell the data team to just fill in the blanks. This approach misses so much of the value a data team can provide. Modern data teams have technology and abilities that allow them to go much further than just calculating numbers. They can guide analytical exploration through flexible, powerful tools to make sure you’re getting the most valuable insights out of your data.

Instead of a list of metrics, think about starting your data request as a meeting. You can provide the business context needed and a list of questions that you want answered. You can even present some initial hypotheses about what those numbers may look like and why they might move in one direction or another. This is a great way to kick off the conversation with your data counterpart. From there, you can benefit from their experience with data to start generating new and more informed questions from their initial inquiries. The data team’s job is to get you information that helps you be more informed, so give them as much context as possible and let them work as a problem solver to find data-driven recommendations.

Data should recommend actions, not just build KPIs reports

A lot of standard business KPIs measure the results of company efforts: revenue, lead conversion, user count, NPS, etc. These are important statistics to measure, but the people tracking them should be very clear that these numbers track how the company is moving, not why it is moving that way. To make these data points actionable, you need to take analysis further. Knowing that your NPS is going up or down is useless if it doesn’t inform a customer team about the next step to take. 

A good data team will map important KPIs to other data and find connections. They’ll comb through information to find the levers that are impacting those important KPIs the most, then make recommendations about how to achieve your goals. When you get a list of levers, make sure to understand the assumptions behind the recommendations and then take the right actions. You can always go back to those KPI reports to test if the levers are having the intended effect.

Data requests are iterative, give the data person feedback

Communication about data should not end when the data has been delivered to you. It’s important to dig into the analysis and see what you can learn. Instead of reporting that data or taking action on it right away, you should check with your dashboard creator to make sure that he or she can verify that you’re reading all of the data properly and that the next steps are clear. There are a lot of ways to misinterpret data, a good way to prevent mistakes is to continue communicating.

Even if you’ve gotten the right takeaways from the data, it’s still good to consult with your dashboard creator and go over your interpretation of the information so they know how you read data. You may need a follow-up meeting to restart with the overall question you want to answer, then see what additional data needs to be collected or what modifications are needed to make the report or dashboard work best for your intended use-case.

Author: Christine Quan

Source: Sisense

Dashboarding: advice for useful design and application

Since 1770 when Britain’s James Hargreaves patented his spinning jenny that allowed a single spinster to run eight spindles and produce eight times as much raw thread and yarn as before – cutting both time to market and labor expense involved with producing textiles in Blackburn, Lancashire – doing more with less has been the driving force behind growing a business.

This productivity remains an elemental economic force – with a decisive effect on profit.

In our modern economy, software applications measure linear-feet equivalents of today’s “thread and yarn.” Such raw, furnished data, unlike cotton or wool fibers, begs translation, comparison, and analysis. Consequently, every team lead needs an agent by which to see, interpret and act on that data.

The Dashboard – 3 Types for Business

And that’s what dashboards – imperative to business intelligence software – do. Of course, dicing and splicing that data constitutes a need for tailored dashboards, of which three types are recognized:

• Strategic – aggregates critical, overarching metrics, presenting a 10,000-foot view of a business.
• Analytic – gathers and compares particular metrics across time and many variables, drilling down to actionable data per team.
• Operational – monitors data in real time, alerting a team to any issues that need to be addressed.

Regardless of a dashboard’s purpose, it should reflect a company’s particular needs and culture, displaying Key Performance Indicators (KPIs) based on a firm’s high-level (and/or low-level) objectives. These KPIs will stand as quantifiable measurements of each goal; metrics, by any other definition.

That’s important, because according to Sruthi Varanasi of ReportGarden, “A metric is a quantifiable measure that is used to track and assess the status of a specific business process.”

Metrics – Lifeblood for a business; Heart of a Dashboard

Suffice to say, metrics are the truest barometer of how your online business is doing.

Consider this: A 15 percent increase in conversions is just that, a successful trend. Subsequently, metrics serve as buoys that can keep your business sailing in deep water or warn you when shoals are near. A 21 percent dip in visibility over a month is just that, a falling trend, indicating you might need to revisit strategy and adjust – on the fly.

It stands to reason, then, that constructing a clean, uncluttered, incisive dashboard that represents key business intelligence metrics is equal parts science and art.

You want a dashboard whose widgets illustrate – at a glance – essential data from which sound business decisions can be made – whether those decisions concern the content of a webpage or the features of an actual product.

Dashboard enABLEd! How to Determine Which Metrics to Track

So, how do you decide which specific metrics should populate that dashboard from which you will extract actionable data? How do you identify those KPIs for each business goal? Following these four steps will enABLE you (apology for the acronym within the acronym) to populate your dashboard with meaningful data:

1. Apply S.M.A.R.T. methodology.
2. Bring the selection to the team.
3. Limit KPI assignment to three primary, overriding goals.
4. Eliminate the urge to add more metrics to the dashboard.

1. Apply S.M.A.R.T. to each KPI

For a basic example, if an overriding goal is to increase monthly recurring revenue (MRR), the questions to ask – and answer (more than yes/no) – to assess the validity of a KPI begin with:

• Is a metric Specific to a goal? What needs to be accomplished and why?
  We want to increase MRR to increase margins and subsidize a new product launch next year.
• Is it Measurable? What kind of historical change has been evident? How will we know the goal was reached?
  According to historical analytics, we can feel confident that an MRR increase of between 3 – 5 % would be achievable.
• Is it Attainable? Are the resources readily available to achieve success? Is the goal reasonable? Is it likely to bring success?
  We can ramp up social media promotion, launch a campaign, or otherwise put effort behind ramping up sales to drive revenue.
• Is it Relevant? How meaningful and worthwhile is the goal? In the current situation can we commit to its achievement?
  Our competition has lost revenue, so more of the market is available to us. The more revenue generated, the more reward for us.
• Is it Timely? Is the goal ahead of the curve, or behind? What’s the deadline for achieving it? What’s the overall timeline set for adopting the goal?
  After strategic planning, we can achieve a substantive bump in MRR over the subsequent quarter.

So, your team devises this KPI: Increase MRR by 3% during Q2. What metric goes on the Dashboard? A monthly monitor of incoming revenue.

2. Bring KPI selection process to the team

Gain consensus on those metrics paramount to the team’s and the company’s success. Asking for a collective viewpoint not only helps distill the essence of paramount KPIs but also builds morale. Each team member gets some skin in the game.

3. Limit KPI assignation to no more than three primary goals

Segment’s Analytics Academy declares the purpose behind each solitary metric populating your dashboard should focus attention on a specific business process (goal!) that needs to be optimized. Using the sample KPI above, it could be one of three under an overarching goal to drive an increase of MRR.

4. Eliminate unnecessary metrics

The rule of thumb is to have no more than seven metrics displayed on any single dashboard because, after all, it functions as a quick-glance representation of a goal’s status. Thus, its design should advance easy comprehension, simple updating, and clean navigation without secondary data distractions.

Your team should make hard decisions on which metrics to include. Consider: secondary data get in the way, conflating interpretation, overwhelming the reviewer. Fewer metrics are better metrics.

Each time you visit the dashboard, you should remember that KPIs keep your business strategy agile, fleet, responsive. Positive data dictates stability and steadiness. Negative data compels your team to adjust, adapt and provide alternatives.

An effective dashboard illustrates this crucial data and discloses a course of action to take.

Metrics on Dashboard: What Are My Choices?

Once you’ve followed the ABLE steps to determine your KPIs, you’re ready to populate your dashboard. At this point, you may ask, “What are metrics that achieve near-universal adoption by businesses?”

That depends on the purpose behind your team, the audience (your team? An executive?) that will be reviewing the dashboard, the “actionability” of the selected KPIs, and the type of visuals preferred.

Metrics for a marketing team might include tracking web traffic sources, incremental sales, social sentiment, conversion rate, and SEO keyword ranking. A sales team might want to monitor sales growth, product performance, average purchase value, and average profit margin.

A financial team can follow working capital, debt-to-equity ratio, and current ratio. An e-commerce team might monitor customer lifetime value (CLV), customer retention rate, customer churn analysis, and monthly recurring revenue.

Other salient KPIs can address net profit, revenue growth rate, project schedule variance (PSV), and average revenue per customer. Because your KPI choices are ultimately subjective, the A.B.L.E. methodology can help your team judiciously arrive at which data would be most constructive to track and display.

Vital Metrics on (Dash)Board: The Skinny

As long as any KPI on your dashboard is based in company goals, is relevant to the team behind achieving that goal, is attainable, measurable and remains timely, the dashboard itself should render keen data from which you can take incisive action to engineer successes — as well as avert disasters.

Taking the time to apply the SMART methodology, bring in the team, limit primary goals and amount of KPIs assigned to each, and eliminate the urge to overpopulate a dashboard with secondary data, will help you select the most meaningful metrics for your business onto your dashboard.

Perform these steps. Pick your metrics. Build your dashboard. Mine your data.

Grow your business.

Author: Keith Craig

Source: Sisense

Gaining real value for you company with data analytics

Experienced business managers know that reliable data is a requirement for success. Accessing complete and accurate data can help your team determine if your business is achieving its key performance indicators (KPIs).

Data analysis is one of the most valuable practices for measuring business performance in today's competitive market. If you’re unable to gain a clear understanding of your business through data analysis, chances are you’re working within an outdated and limited data analysis reporting system.

Regardless of your sector, having access to timely, quality data means the difference between generating static reports and generating true business intelligence (BI) that conveys critical information about your business.

If you’re looking to get more out of your data and ensure your team is making decisions based on comprehensive reports that tell the whole story, consider taking your reporting and analysis in a new direction by implementing the following practices:

Maintain a single source of truth

When it comes to data analysis and producing accurate reports, accessing consolidated data is one of the biggest pain points facing businesses today. The next time you touch base with your finance and IT team, ask them how many data sources that have to manually add together to generate reports. Chances are that’s a job within itself.

This silo-based data system may have worked well when your business was starting out; however, as a business expands and its needs become more complex, outdated solutions could easily stand in the way of profit.

For many teams, it’s often only a matter of time before there are multiple versions of one spreadsheet being passed around among colleagues, compromising data integrity. A single, modern platform can ensure your data is processed in a seamless, efficient environment that keeps everyone on the same page.

Aim for real-time data 

Staying competitive means understanding your business and the needs of your customers in real-time. When it’s time to run reports, where do they, and the team, have to go to access all of that data? Is your finance team searching for data, and making corrections along the way, instead of meeting deadlines and producing up-to-date, dynamic reports?

Fast access to data means having the ability to collect and analyze critical data on demand. Enterprise Resource Planning systems are an excellent way to store data and plenty of businesses may already have a  reporting system in place that “just works".

Of course, the job gets done, but consider that keeping your data in ERPs may also be preventing access to the full power of data analytics. This is the difference between actionable data that your team can analyze and use to generate business intelligence and static data that doesn’t reflect your business's current state.

KPIs vs. metrics

When it comes to KPIs vs. metrics, it's important to know what you’re measuring and what you’re missing. Every industry has specific metrics that business managers must pay close attention to in order to understand whether their business is succeeding. Different reports detail P&L, customer information and sales. A single spreadsheet can contain valuable information about a business.

However, some business managers may not realize that they are missing the opportunity to perform deeper data analysis beyond preparing financial statements simply because they lack the most modern tools that can show them how their whole business is performing.

Once you have a more accurate picture of your business, you and your team may decide it’s time to reset your KPIs. New intelligence could mean new goals.

Redefine collaboration

Over the past year, countless businesses have had to switch gears, moving into a full telework environment. Automation can help your business overcome the limits of this environment where resources may also be stretched thin.

Most managers would agree: Scrambling to find missing data at 5 p.m. is not putting your team’s collective experience and skills to good use. Instead, hand that work over to a platform so your team can focus on collaboration and find new synergies between departments. Revisit workflow with your team to gain a better understanding of where the barriers lie.

Aim for a truly inclusive workflow that encourages all team members to contribute rather than solely relying on a few people who seem to hold the secrets to generating reports only the finance team can fully understand and utilize.

By capitalizing on the subject matter expertise of your individual team members across your organization, business managers can use data to gain a clear picture of not only your P&L through financial statements but also your company’s potential for growth.

Source: Phocas Software

How tracking the right KPIs and using the right triage strategy lead to success

Let’s start with a hard truth: If you try to do everything, you won’t excel at anything. In a growing business, there’s no shortage of things that need attention, but you can’t do everything at once. Instead, you have to decide where to focus your resources to get the greatest impact. In a word, you must become a master of triage.

Triage means making the tough calls. It means cutting program budgets to free up resources to run down existing leads. It means postponing the development of new features to shore up core functionality — or it could mean running the risk of alienating your existing customer base so you can develop a potentially industry-shaking new feature. In triage, there are going to be losers. But there will also be winners, and that is how companies survive, thrive, and grow.

To start, decide on your triage philosophy. Are you playing offense or defense?

Measuring competitive confidence: what to ask?

Running a competitive confidence survey will soon be a matter of course for competitive enablement programs.

Measuring sales confidence levels in your compete program and against your competitors will give you the kind of measurable insights you need to lift the entire program.

But in order to get to a place where competitive confidence becomes your most important KPI, you’ll need to thoughtfully craft a competitive confidence survey. And that starts with asking the right questions.

Here are three categories of questions you should include in your competitive confidence survey, and some sample questions to get you going.

Category 1: Assess Sales Confidence within your competitive landscape

Ever-changing and evermore competitive, your sales reps are often the front line for identifying when a new competitor enters into the fray.

The questions in this category are designed to understand general levels of confidence against any and all competitors.

Questions to ask

• How often do you come up against a new competitor in deals?
• How often do you come up against any competitor in a deal?
• Generally, how confident are you in de-positioning competitors?

Category 2: Sales confidence against your top competitor(s)

While some companies can safely say they have dozens of tier-one competitor, the questions in this category are meant to hone in on your top or two.

One of the most important ways a competitive confidence survey boosts your compete program is by helping you prioritize your time and effort.

If sales confidence against your top competitor is high, that might be your cue to move on to different competitors.

Questions to ask

• In deals, how often do you come up against [top competitor]?
• How confident are you in de-positioning [top competitor]?
• Beyond [top competitor] who do you think is the most important to focus on?

Category 3: Sales confidence in your competitive enablement program

How confident in your competitive content are the teams you’re enabling? It’s probably the most crucial question competitive enablement experts need to be asking themselves.

If the results are lower than expected, don’t take it personally. Instead, use the results as a way to help understand what content is most useful in deals and where to prioritize your efforts.

Questions to ask

• How would you rate our team’s competitive content from 0-5?
• How often do you rely on competitive content in competitive deals?
• What is the type of competitive content you most reference?

Putting the results into action from your competitive confidence survey questions

These three categories of questions in your competitive confidence survey each has a different purpose. And each purpose relates to different actions you can take from the results.

Finding out that your sales team lacks confidence against competitors in general could signal a need for more training. Just like a team lacking confidence against your top competitors might suggest a need for better positioning and messaging from your product marketing team.

And of course, if your sales teams lacks confidence in the competitive content you’re providing, you should take in that feedback and get into action.

That way, by the next time you run the survey, you’ll be able to see the progress you made and show off your competitive enablement team’s value across the entire org.

Author: Ben Ronald

Source: Klue

Rediscovering the skill of asking questions

Asking the right questions of your data and knowing what you are looking to find is a critical component for gaining insights from your data that drive specific actions. Data is not black and white; there is so much you can do with it. Accordingly, two people with the same data can come up with very different insights. This is because so much depends on the specific problem to be solved and the approach you take to solve it.

Perhaps, counter-intuitively, this process starts with questions, not answers. We don’t actually learn anything unless we truly question it. Most schools use a paradigm where they teach kids to answer questions asked by their teachers, but they don’t teach them how to question. The outcome of this is it forces kids to learn only facts.

There are two things that are wrong with that approach. First, we live in a world today where facts and other information are in abundance and are immediately accessible. We no longer have to find the nearest encyclopedia to look something up. We have this at our fingertips. In fact, we have much more information available at our fingertips, from many more sources, and some of those sources are either missing critical context or are not accurate. If we do not have the skills to question the information, we end up believing the information and insights are true when they are not.

This is exactly what we are seeing play out in the world today with massive amounts of misinformation being treated as a truth. Many people are not questioning it. Second, the world is continuing to evolve and change at a rapid rate. The half-life of facts and information is shorter than it’s ever been. We don’t really know what information we need in the future. A better skill to teach kids is the ability to find their own insights when they need them, by asking the right questions. This is not just a problem related to teaching kids. As we grow up and join the workforce, it sometimes is even harder to teach and apply questioning, as there are many cultural reasons why this is perceived as a negative.

What then are some key things we can do to help people ask the right questions when they are looking to gain insights from data?

Start With the Problem – Not the Data

Most people work with data backwards. They begin with the data they have available, then leverage a set of tools and analytic techniques, and come out with some insights. The problem with this is they end up using very simple, closed and leading questions, which then leads to uninteresting insights. When you build a house, you don’t start building before you think about the requirements for the house, and then build a blueprint. Starting with the data, without doing much preliminary questioning and thinking, will give you the same results as building a house without any requirements. This is one reason why people who are good at questioning use systems thinking. The starting point has to be the full problem from a systems perspective – not the tools or what transformations to apply to the data.

Identify the Right Key Performance Indicators (KPIs) Ahead of Time

Ideally, organizations have already established a measurement framework with the proper objectives and KPIs before they even look at the data. If they haven't, they won't be able to ask the right questions, as they will be too focused on metrics, which may be irrelevant or not important to the situation or the organization.

Question Not Just the Data, But Also the Assumptions

Proper questioning to achieve the best insights requires the ability to not just question the data, but also the assumptions and other information (i.e., context) related to it. Data can provide us different insights when we have different assumptions. Asking open-ended questions is a great way to make hidden assumptions visible. This is akin to how kids are asked to write out their work when solving math problems, as it provides an opportunity to understand the thought process and see where there may be assumptions that will impact the insights.

Use a Questioning Framework

There are multiple questioning frameworks available on the internet that help with asking the right questions. One in particular is introduced by Max Shron in his book “Thinking With Data.” Start by asking questions related to the context, such as what is the problem or situation, who are the stakeholders, are there any related projects or dependencies. Then ask questions related to the need, such as what will this give us that we did not have before, and why is this important to the organization. Then ask questions related to the vision, such as what will the results look like and how is the logic related to the insight. Finally, ask questions related to the outcome, such as what does success look like, who will use these insights, and what will they do with them.

Although there are certainly plenty of wrong answers, there are not nearly as many wrong questions. Be inquisitive, approach problems with a 360-view in mind, continually ask why, what, who and how – simply producing something by rote or formulaic command won’t get you to the insight you need. Embrace the art of questioning.

Author: Kevin Hanegan 

Source: Qlik

The Power of Descriptive Analytics: How Your Business Can Thrive in a Data-Driven World

Organizations are recognizing that data can be a powerful business asset, and are investing in data analytics to provide this valuable tool. According to research, more than 95% of all organizations today incorporate data initiatives into their business strategies. However, most businesses falter when it comes to effective and efficient uses of data. Descriptive analytics, the most common type of data analytics, is used by savvy businesses to help figure out the “what” at the core of their data.

Three objectives to guide your business' KPI's

Many data analytics vendors give users the ability to measure everything but offer little guidance. This can be overwhelming for new users. It is very important to determine the metrics that really matter to your business. To get you started, your business should establish critical metrics, and then teach you how to quickly identify areas of concern to meet the unique needs of your business. 

We have learned three objectives that serve as guideposts to help you decide what to measure. These guideposts are also a rubric to make sure that each functional area of the business is aligned toward overall success. In other words, every area of the business, like sales, inventory management, operations, and finance, is measuring core Key Performance Indicators (KPIs) that contribute to the overall success of the business. 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 having market analysts monitor 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, adapting to your environment. 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.

When measuring the right KPI's, 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.

Source: Phocas Software

Vijf manieren waarop business intelligence verandert in 2021

1. Dagelijkse KPI-inzichten, op elk device

2. Snackable data

3. Één scherm, één inzicht

4. Focus op datacommunicatie

5. Afname van dashboard-gebruik

What to track when running a subscription-based business model

The subscription-based business model is no longer the preserve of magazines and home security systems. Today, we’re seeing it employed in a variety of other markets, including everything from software to education to physical products.

In order for these operations to be profitable and sustainable, however, they require constant optimization. If you get the right data in hand, it becomes a lot easier to know which direction to take.

Five KPIs and metrics worth tracking

The subscription business model isn’t new, but today it’s become workable and even as valuable today for new lines of business as it was decades ago. Subscription sales yield an array of potential benefits, including predictable revenue, higher customer lifetime value, easier opportunities for up- and cross-selling, and greater customer loyalty.

In non-traditional industries, like men’s grooming, it has a way of differentiating a business from the pack.

Another benefit of running a subscription business is that the owner gets access to mounds of useful data. And if you employ the data strategically, you can learn a lot about who your customers are and what they might want.

In order to gain such insights, though, you have to home in on the appropriate key performance indicators (KPIs) and metrics. Here are a few that we recommend you try to keep tabs on:

1. Customer Acquisition Cost

A successful business has to know exactly how much it costs to acquire each customer. Once you have that information, you can run projection models that will help you predict fairly accurately how many new customers you will be able to onboard over a given period of time.

For example, if you know it costs you $17 to acquire a new client, and you have a budget of $75,000 for the next 90 days, you can calculate that you should be able to bring in somewhere around 4,400 new customers.

Second, customer acquisition cost helps you zero in on profitability and figure out how much you will have to charge in order to reach various desired profit levels.

2. Growth vs. Churn Rate

Churn, also known as attrition, is a critical concern. This is the rate at which you lose customers each month. (If you have 1,000 total members and you lose 150 each month, your churn rate is 15%).

Conversely, your growth rate is the number of new members you typically land each month. In order to expand your customer base, you obviously need the growth rate to be higher than your churn rate.

3. Impact of Dues Increases on Renewal

According to one study, dues increases of less than 20% do not typically result in a substantial drop in overall renewal rates. Anything above 20% does tend to damage retention rates, however.

Frequency and timing also matter. 'The more often you raise dues, the less the amount should be', Membership Works advises.

'If you wait too long and have to go with a high percentage, you risk member anger. Smaller increases on a more regular basis can train your members to expect that increases will happen.'

In terms of data, you should be tracking the impact your dues increases have on the renewal rate. In other words, what percentage of your member base renews when you raise your prices versus what percentage cancels or lapses.

4. Lifetime Value

Lifetime value (LTV) is worthwhile to know in every business model, but that’s especially the case with subscription-based companies. This number can be hard to pin down, but it’s worth a serious attempt to obtain. It helps determine what your sustainable customer acquisition cost will be, and when it makes sense to invest more in this area.

5. Member Engagement

No concrete metric tracks member engagement across the board, but you’d do well to look for key performance indicators in your data. If you run a membership website, you might study the number of times a member logs on per week.

If you sell a solid consumer item, a useful metric would be the frequency with which a customer reorders that product. In essence, you’re looking for signs that people are interacting with you on an ongoing basis.

Leveraging insights for growth

We live in a digital world where data and data collection are ubiquitous. Companies have millions of data points available to them at their fingertips. But how many of these firms are actually making serious use of the loads of information they possess?

It’s one thing to have a lot of raw information and various isolated insights. It would be something else entirely to be able to leverage those insights in a way that optimizes, expands, and improves your ongoing operations.

So as you gather data and analyze certain metrics and KPIs, make sure you have a plan in place to make great use of those numbers… or develop one as soon as possible based on what your metrics are hinting to you. You’re either going to sink or swim with this; there isn’t much in-between.

Author: Larry Alton

Source: SmartDataCollective