Understanding your financial metrics at a granular level is important in that it allows for a true understanding of what is happening, and what is not. It enables you to drill down and appreciate, for example, similarities, differences, and outliers. Being informed at a granular level enables better decision-making when it comes to determining how to increase profits. How often does one need to look at these metrics and how does one evaluate and react to numbers?
The frequency with which to look metrics depends upon the area of business. For example, inventory flows and manufacturing output should be looked at on a daily basis. Your sales pipeline, on the other hand, should be looked at on a weekly basis, and your financials should be looked at monthly.
Once a schedule has been established, the question is what to do with the data – how should the data be evaluated and when is it time to act? The reality is that there is no hard and fast answer to this question. When to act is dependent upon the type of business, its typical cycle, and the company itself. It is therefore important to develop a database that captures your metrics. This database should be updated with the same frequency that the data is collected (see above for suggested frequency). A historical database will enable you to quickly identify a data point that is deviating, positive or negative, from the historical. When this happens, it is time to act.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
Analytics is good for business — as long as you can make sense of it.
Does your business suffer from a case of data overload? Or do you steer clear of new investments in supply chain analytics because you are afraid they could yield more data than your business can handle? You are in good company.
Several recent surveys indicate companies either are wary of advanced analytics tools or say they have failed to leverage the technology. The issue does not seem to be a lack of knowledge of its existence or potential impact — end users are generally well informed — but how to absorb the data effectively and apply it across the entire organization.
According to a Telematics Update, for example, vendors would be wise to spend less time on their sales pitch and more time presenting the data in a digestible format, ensuring compatibility with the end user’s legacy systems, and aligning the solution with the end-user’s key performance indicators.
The challenge is also captured in an Accenture survey in which only one in five companies said they are “very satisfied” with the returns they have received from analytics. And it’s not for lack of trying. Two-thirds of companies have appointed a chief data officer in the last 18 months to oversee data management and analytics, while 71 percent of those who have not created such a position plan to do so in the near future.
This passage from Accenture’s survey report hits the nail on the head:
Companies wanting to compete more aggressively with analytics will move rapidly to industrialize the discipline on an enterprise-wide scale, redesigning how fact-based insights get embedded into key processes, leading to smarter decisions and better business outcomes.
Most organizations measure too many things that don’t matter, and don’t put sufficient focus on those things that do, establishing a large set of metrics, but often lacking a causal mapping of the key drivers of their business.
As the survey suggests, the move away from an isolated approach to an integrated cross-functional model may be the key to squeezing the most out of supply chain analytics. According to Deloitte, the key to delivering strategic insights is creating a single authoritative data set from which all business units can draw information.
However, only 33% of the Accenture survey respondents said they are “aggressively using analytics across the entire enterprise.” Instead, highly customized data is often collected for units within the organization. A spending forecast by procurement may look nothing like its counterpart coming out of logistics. The inconsistency in reporting makes it hard to share the knowledge, and that takes us back to square one: lots of data and little useful information.
Jerry O’Dwyer, a principal with Deloitte Consulting, summed it up this way in a 2012 post:
If you are performing analytics in different areas of the supply chain — for example, spend analytics or demand planning — you may be missing opportunities that an expansive approach can yield. For companies of all kinds, in-depth supply chain analysis offers an opportunity to create increased value throughout their operations.
Let’s hear it: What do you think companies need to do to put analytics to effective use?
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
In what seemed like a curious social experiment, KLM Royal Dutch Airline harnessed the popularity of social media and launched their “Meet and Seat” program in 2012. The service gives passengers the option to link their social media profiles to their boarding information during the ticket purchase process. Once a traveler’s profile is linked, they gain access to other social profiles of travelers that have also opted in to the service. Underling the concept is the notion that travelers will choose seatmates based on the profiles of users with similar business or leisure interests. While KLM reports that over 50,000 flyers have utilized the service since its inception – enough for KLM to deem the program successful – what’s discernable from KLM’s efforts is that social media has become a major player in today’s business world.
With a reported 8 out of 10 businesses using social media in the communication between their brand and their audiences, companies are spending more marketing dollars on social efforts with increasing regularity. But with its fairly recent introduction to the business world, many companies are struggling to determine whether their efforts, and their investments, are paying off. Fortunately, by focusing on a few key metrics, your company can start to understand which of your social efforts are adding value and, just as important, which ones are not.
Here are the 4 social metrics that matter:
Source Reports
The most common remark about measurement you’ll hear social media marketing experts say is that social media efforts shouldn’t be solely measured in likes and follows. It’s hard to connect the number of likes and follows to financial business metrics, so thinking about the success of your channels in different terms gives a more insightful report about how your social channels are performing. HubSpot recommends tracking the network source of your web traffic, leads, and customers to determine how your social platforms are performing.
Track: # of visits, leads, and customers for each of your social channels
Engagement and Amplification
“No man is an island,” wrote John Donne in his poem. His summation about the nature of humans is quite evident in social media. Indeed, one of the greatest benefits of social media is that it is by its very nature, social. For companies, social media exponentially expands the reach of its content by playing on the communal nature of these networks. If a company has 2,000 followers on Twitter, and each of them shared that company’s content with 200 of their followers, the amplification of its content has expanded to 200,000 users. Your business can leverage these immense networks by maintaining consistency in the quality and value of your content as this strategy will naturally inspire followers to share and repost your content. Track the types of content that drives the most amplification and identify trends in popular publishing times, then refine your efforts based on your analysis. Remember, as a business using social media, your end goal is action, not eyes. In other words, what’s important to your efforts is engagement. Pay close attention to how your followers are interacting with your content.
Track: # of Facebook Post Shares, # of Retweets, # of Twitter Mentions
Lead Generation
Put simply, lead generation activity lets you know whether your social content is generating leads and creating opportunities for your business. At the end of the day, your social efforts don’t matter if they aren’t playing a part in driving new business. Of particular value to your business is your conversion rate. Knowing how often content consumption results in a new lead will help you to build a more successful overall content strategy. Is your new infographic converting visitors to leads at a higher rate than your verbose Facebook posts? That might be a sign that your audience responds better to image-heavy content.
Track: # of form submissions, # of email subscribers, conversion rate
Return on Investment
If one of your company’s objectives for its social media participation is to drive growth, your company’s ROI calculation is one of the most important measurements of your social efforts. This measurement determines what impact your social content is having on customer acquisition and sales. Just as you would for all other marketing efforts, you need to know whether or not the investment you’re making in social media is producing a positive return for your business. To find your investment, start by calculating the total of your investment, your overhead factor, and your miscellaneous costs. To calculate your return, you’ll need to know your leads per month, your lead conversion rate, your average lifetime customer value, and average profit margin. Let’s take a look at how those factor into your ROI calculation in the example below.
To Calculate Investment
Multiply the hours per month needed to create the content by the hourly rate of the employees used to create the content.
Multiply the result by the overhead factor, taking into account rent, insurance, utilities, etc. (typically 50%)
Add all other costs, such as design fees, hosting fees, subscriptions, software, etc. You may choose to allocate them to a specific piece of content or amortize them monthly and spread the costs evenly across each piece of content.
Calculation: At 40 hours/month at $40/hour to produce a corporate blog, multiplied by a 50% overhead factor. Add in $1k/month for design, $100/month for hosting, and $100/month for miscellaneous fees.
Total Investment in Monthly Blog = $3,600
To Calculate Return
Multiply your leads per month by your lead conversion rate, average lifetime customer value, and average profit margin.
Calculation: You collect 25 leads a month from your blog. At a 20% lead conversion rate, you’ll generate five new customers. Assume a $3,000 average lifetime customer value and a 30% average profit margin.
Total Monthly Blogging Return = $4,500
To Calculate Return on Investment
Subtract the investment from the return. Then, divide by the investment.
Calculation:
$4,500 – $3,600 = 900
900/3,600 = .25
ROI = 25%
Nearly 70% of communications professionals report dissatisfaction in how they’re measuring their social efforts. That’s understandable, social can be cumbersome to analyze. But looking at activity through the lens of your business objectives should really get to the heart of why your company participates in social media. In your work to distinguish your company from the thousands of others in the sea of social, seek to create rich and robust social experiences for your followers by connecting them with relevant and valuable content. Then measure that user activity and engagement to see how it is helping grow your business.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
In this age of radical transformation for supply chains, top companies are tying together prevailing concepts, like big data and the Internet of Things (IoT), with cloud-based computing. Supply chains are being reimagined as digital networks that track not only physical goods, but also people, data, and money. As such, global technology giants continue to invest heavily in cloud computing.
The Chinese e-commerce company Alibaba Group Holding, Ltd. recently announced that it is launching its first international venture – a cloud computing hub in Silicon Valley, proving the fierce competition for market share is stiffening both globally and on the home turf. Notably, all five top-ranked companies listed by the 2013 Strategy & Global Information, Communications and Technology 50 study bet their future on cloud technologies. The companies (IBM, Microsoft, SAP, Oracle, and Cisco Systems) could not, until recently, be perceived as direct competitors, and now they all wield cloud-based portfolios as their competitive weapon of choice.
The industry leaders are seeking dominant positions, wanting to become the kings of the cloud. As a group, they are putting distance between themselves and the second tier of followers.
For further proof data analytics is driving competition for cloud customers, we can look to a new report by Market & Research that shows data analytics and cloud computing are expected to record a combined growth of 26% annually over the next five years. The implication is that demand is hardly going to lessen as an increasing number of organizations need cloud solutions to manage and store the huge amounts of data that they use to transform manufacturing processes, fine-tune supply chains, forecast customer behavior, and optimize inventories – to name a fraction of potential applications.
And cloud-based computing is even moving the needle of interest in industries that seem inherently averse to making data and information more easily accessible. For example, concerns about data encryption, auditing controls, and transparency have stymied the adoption of cloud-based computing in the financial industry. According to a report by the Cloud Security Alliance, only 28% of American financial institutions have a cloud-based strategy in place, but as a sponsor of the report, Dr. Chenxi Wang, vice president of Cloud Security and Strategy at CipherCloud points out:
Cloud has made solid inroads in this industry with many firms looking to harnessing the power of cloud. There’s plenty of room for growth, particularly for providers who can fill the void for the auditing and data protection controls that are at the top of respondents’ cloud wish list.
Meanwhile, the public cloud services market alone could grow into a $100 billion industry by 2017, according to researcher IDC. Is your business prepared to leverage cloud computing for its supply chain activities? It’s coming, ready or not.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
From coffee makers to urban design, the Internet of Things (IoT) is affecting change in virtually all aspects of daily life. And even though the IoT is still at the early-adopter stage, in just five years 50 billion devices are projected to be connected to the Internet, generating an estimated $2 trillion to $14 trillion in value. Expectations are running high, so high, in fact, that Gartnerranked IoT at the topof its 2014 Hype Cycle for Emerging Technologies.
Companies are naturally eager to get a piece of the action with as many as three out of four exploring how IoT technologies could fit into their business operations. Too many times, however, companies end up with mountains of data and no actionable information. Entry into the IoT should come with warnings: analyze the data or prepare to be disappointed. Or, data without analytics is nothing but noise.
But unless businessesturn the focus awayfrom pure data collection to data analysis, investments in IoT technologies are doomed to produce disappointing results. To be truly useful, the data should do more than “look pretty on a dashboard,” as Steven Sarracino, founder of Activant Capital Group, LLC, in Greenwich, Conn.,pointed out.
Vendors of sensor technologies would simultaneously be wise to take their services beyond singing the virtues of amassing data to showing their clients how to make sensor-driven decisions. In fact, the need formore guidancewas underscored in a fleet report by Tracking Automotive Technology: TU Automotive (previously Telematics Update). Vendors should, according to the report, present the data in a digestible format to assist overwhelmed end-users. While purely monitoring the performance of a forklift, for example, provides value, it is not until the data is analyzed and acted upon that maximum ROI is achieved. In the case of a forklift fleet, it might entail optimizing routes in the warehouse or performing preventive maintenance. As another example, the retail sector can apply analytics to data collected by security cameras and Wi-Fi beacons tohelp retailers understandwhat types of displays catch customers’ attention.
The adoption of IoT technologies will likelycome easier to industriessuch as manufacturing and supply chain which already connect machinery and fleets with Internet-enabled sensors or devices. Smart grid technologies also hold a lot of promise for public utilities based on current industry trends, connecting countless data points for continuous monitoring and proactive management of the power supply. However, until companies are able to adequately apply analytics to squeeze value out of their investments, it may be a while before IoT technologies reach critical mass.
It’s impossible not to recognize that the business world is changing. Whether it’s the fall of the travel agent as people migrate towards online booking, or the irrelevance of the compact disc as Spotify and iTunes changed the music industry, or how advertising is done. Outbound marketing, such as print ads, TV ads, banner ads, trade shows, telemarketing, and direct mail are no longer what consumers are requiring. According to Forbes, many brands are moving their advertising budgets from television to online videos. The Content Marketing Institute reports that 8 out of 10 people identify themselves as blog readers, and 23% of all time spent online is spent on social media sites. With the rise of the blog, companies have gotten smart about how to reach their current and potential consumers.
In the B2B world things are changing, too, with many executives wanting to gain information through other mediums. The Content Marketing Institute also reports that a majority (80%) of business decision-makers prefer to get information from articles rather than through advertisements.
We know that inbound marketing is effective in garnering consumers’ attention. It’s aligned with a generation of people who want to be educated about the products they’re buying and who are willing to search for those products online. Even with all of this known, it’s important to ask: what is the ROI when it comes to content marketing?
According to Search Engine Journal, inbound leads cost 60% less than outbound leads. In the Harvard Business Review article, How to Profit from “Lean Advertising”, the shoe company DC Shoes is profiled as a model for inbound marketing. In an industry where star athletes are profiled in big-production advertisements via TV commercials, billboards, and magazine ads, the skateboard shoe company decided to take a different route. According to the 2013 HBS article, “Over the past four years they have gotten more than 180 million views—and in 2011 alone, sales jumped 15%. One was YouTube’s most-shared video of 2011; another garnered a million views in its first 24 hours. Paying online media for this type of exposure would cost upward of $5 million.”
Like any new tack in business decisions, relying on case studies from other businesses is helpful, but cost needs to be considered. In order to calculate ROI the cost of content marketing needs to be assessed:
salaries (if going in-house)
marketing agency or contractor services
additional overhead
distribution costs
design and publication software
After those costs have been calculated, the next step is to subtract that number from the revenue generated. The Guardian has put forth its simple content marketing ROI calculator:
(Revenue Generated – Cost of Content Marketing) / Cost of Content Marketing = ROI
According to the newspaper, “A simple calculation could say that you drove 1000 visits through a piece of content, and Google Ads would have cost £1 per click, e.g. £1000 to equal the same. If the content only cost £500, you have a saving!”
But with most seemingly simple things, there’s complexity underneath. Dig deeper and ask more questions. Is the money you’re spending on inbound marketing deterring other, less obvious, costs? Would it have cost you more through outbound marketing methods to achieve that same level of visibility than through inbound marketing solutions? Is inbound marketing bringing in customers or closing a deal more quickly than alternative methods (time is money, after all)? Is inbound marketing cutting down the need for staffing in other areas, such as support staff to manage inquiries or support calls?
Some incalculable values from inbound marketing, like consumer preferences, content intelligence, customer relationship strategies, and branding can be hard to tie to a number, but over time you will see that your ROI will become more clear to you as you generate leads, turn leads into customers, and see the result in the form of money gained (American dollars or British pounds!).
