Developing Your Corporate Dashboard of Key Performance Metrics
By Curt Barry
Introduction
Consider the hundreds of reports and millions of data elements that are generated in your business by merchandising, marketing, fulfillment and financial systems. From all that data, what are you using to run your catalog? What are the key performance metrics, indicators or dials that tell management about customer satisfaction, whether you’re on sales plan, how current your inventory is, what your cash flow needs will be, etc.?
Coming up with effective management reports has always been a challenge. This may sound like Catalog Management 101, but we are constantly surprised that this seemingly fundamental aspect of the business is being ignored by many catalogs. As companies grow and continue to add new channels and titles, benchmarking and weekly reporting are key to helping top management keep a finger on the pulse of the business without micro-managing.
One concept worth exploring is the “corporate dashboard” – a series of dials in the corporate cockpit-that reflects the key performance metrics from each department. How can your catalog benefit? By improving customer service, achieving sales and profitability. What are the essential elements to imple-menting this highly refined online reporting?
What is a Corporate Dashboard?
By dashboard we mean, key indicators of performance in customer service, sales tracking and profitability. When highly summarized, they give management an accurate and timely picture of the business. In order to do this, the information systems also need to provide detail answers (drill down) as to why the various indicators or dials are reporting what they’re reporting. Also, as you think through these dials you need to determine which need to be plans, projection and/or actual.
Here are some dials we see in catalog dashboards or weekly reporting:
- From a marketing perspective for the current active catalogs-the demand dollars to date, revenue dollars per catalog for house file and prospect lists separately and in total, average order in units and dollars, order forecast by week, etc.
- From Internet data, total sales generated, unique visitors, total new customers, shopping cart abandonment rate, inventory out of stock, sales per marketing effort (organic search, paid search, e-mail, shopping portals, banner ads, affiliate marketing, etc.).
- Merchandising dials may include category projections, top 20 and bottom 20 selling products, cancellation and return rates in total, high reasons for return products, etc.
- Inventory Control indicators might show initial customer order fill rates compared to item fill rates for the year, summaries of cost recovery and margin loss by liquidation media, summary of initial coverage of products/SKUs as new catalogs mail, etc.
- Customer Contact Center indicators may be limited to call and order activity by channel, call to order ratio, summary of inquiries/complaints and service indicators such as time to answer and call abandonment rate.
- In the Fulfillment Center in-bound receipts and receipts requiring buyer or vendor attention; aging of customer back orders; pick/pack error statistics, order and return turnaround times, packages shipped, etc.
- Finance may report sales actual to plan, summarized cash flow and days to refund/credit customers
We have created a corporate dashboard pictorially representing many of these dials (www.fcbco.com/dashboard.htm) THIS NEEDS TO BE DONE. One can obviously argue that a dashboard should include or exclude specific dials. There is no one way or standard to implement this as it will vary by management’s specific hot buttons, the importance of multi-channels and the ability to report in detail at all levels of management.
Additionally, weekly reporting will obviously differ from monthly reporting. On a monthly basis more formal analysis points are taken (e.g. profit & loss statement, inventory turnover calculated, etc.).
There is a wealth of information in our catalog businesses. What specific dials will give a complete picture of your business?
Three Examples
While many catalogs have not formalized their key performance metrics, leading catalog companies have moved beyond reporting to online management systems that integrate the results of information systems across the enterprise into highly refined dials, graphs and bar charts that are easy to read and interpret.
To better understand what other catalog leaders are doing with corporate performance reporting, here are three examples:
- Company A with sales over $1 billion annually-including retail stores, 10 specialty catalog titles and the Internet-has developed an online system that displays all the key business indicators daily. Some indicators are obviously kept as weekly, monthly, catalog-to-date and by season. Sales from the retail stores are downloaded automatically each hour. Every five (5) minutes, phone and Internet order management systems report the number of orders and dollars, average order of sales check by channel. The fulfillment system reports every five (5) minutes on in-bound receipt status and packages shipped. A 52-week history of initial customer order fill rates are reported vs. initial item fill rates as a measure of customer service.
- Company B has overlaid its fulfillment, marketing and financial reporting systems with a financial reporting package that uploads key metrics on a daily, weekly and monthly basis. Some of the data is displayed online as well as key metrics reporting.
- Company C has implemented departmental operational statistics reporting throughout the company. Marketing, merchandising, call center, fulfillment center and finance managers are responsible for maintaining departmental reports. Departments are also responsible for data integrity, timeliness and accuracy and then extracting and reporting the key daily, weekly and monthly metric. While Company A and B require a significant investment for purchasing a commercial system or developing in-house programming, Company C’s model is one that we recommend all catalogs implement.
Detailed Departmental Reporting Key
No matter what approach you take to develop your dials, detailed departmental reporting is essential both to providing key performance metrics at an executive level and being able to break down more detailed statistics when necessary. Let’s take for example metrics that are provided to the weekly management team reporting (above) by the director of a Customer Contact Center. The detailed Customer Contact Manager’s departmental reporting typically covers 25 to 35 measures of inbound orders, call and non-order activity; outbound contacts and correspondence; performance service levels and cost per contact, call and order. Data integrity, timeliness and accuracy, which are at the heart of this effective reporting, should remain the responsibility of the director of the Customer Call Center.
What are the Benefits?
There is an old industrial engineering principle that says, “What hasn’t been measured can’t be improved.” Establishing this principle will push each of the departments to improve their analysis and internal reporting of efficiency, cost and customer service. One of the most beneficial results that will come from this is “benchmarking internally against yourself” season to season and year to year. Through continual process improvement, your organization will improve internally.
Start Realistically
If you’re not reporting key performance benchmarks, start out on a small scale. Reduce it to the essentials and the build on it. Don’t get overwhelmed with how many things you could report. Be cognizant of data integrity, timeliness and consistency. If you don’t, the process will not be maintainable.
Set realistic benchmarks (internal and external) by exchanging benchmarks and best practices with other. External benchmarking plays an important role in the development of these concepts. While businesses vary dramatically, there are certain foundational benchmarks and best practices that are always important. These external benchmarks are obtained through exchanging ideas with other catalogs and trade organizations.
Conclusion
In this period of uncertainty, there is no better way to improve your catalog’s performance-customer service, achieving sales and profitability-than implementing a corporate dashboard of key performance metrics.
Curt Barry is president of F. Curtis Barry & Company, a fulfillment consulting firm for catalog, e-commerce, and retail businesses. We offer clients expertise in business process and order management systems, inventory management systems, warehouse management systems; warehousing and distribution; call center services; inventory management and forecasting solutions; and strategic, financial, and operational planning for all business channels.
He can be reached at 1897 Billingsgate Circle, Suite 102, Richmond, VA 23238, phone: 804-740-8743; email: cbarry@fcbco.com; website: http://www.fcbco.com.
