Stop Operating by Feel (part 3): How Should I Look at All of My Numbers
This is Part 3 in a series about numbers and how they relate to operating a product business. In Part 1, we talked about why knowing your numbers is so important. Part 2 explored what numbers you need to know. In this session, we're going to explore who, how, when and where you should present them.
The Numbers Jumble
Running a successful eCommerce business means numbers are everywhere and knowing how to extract, slice and dice a big bubbling cauldron of them is essential to being able to take appropriate action. There's no truer saying in business than, "You can't improve what you don't measure."
Making Sense of it All
There are limitless ways in which your numbers can and should be presented to the relevant people in your organization. I want to stress "relevant" because it's equally important who sees certain numbers as it is how they are presented. Numbers should be on a need-to-know basis. I'm not implying you overtly hide anything from anyone. I'm just suggesting that it's easy to overload someone with too many numbers to the point that analysis paralysis kicks in. I'm a big fan of keeping things as simple as they need to be.
Presentation Type and Frequency
We'll use Ruth from Part 2 as an example and walk through how we can help her set up an effective presentation and review of some of her operations numbers. She has a young and thriving business selling women's denim but doesn't know what numbers to review and how frequently she should review them.
Before we send a single number to anyone, let's discuss the options and frequency in which we can present them. We’ll break this down into three categories:
Review Frequency — Immediate / Daily or Weekly / Monthly or Quarterly
Display Format — Single Number / Graph / Table / Dashboard
Delivery Method — Push / Pull
Turning Numbers into Actions
For the sake of brevity and clarity, we'll pick four number types relating to customer orders and run through which categories they should fall into and why. Our goal is to optimize into the Goldilocks Principle: just the right amount of numbers at just the right time.
1. Order Volume
Review Frequency: Weekly
Display Format: Monthly Bar Graph
Delivery Method: Pull
Arguably the most important number for any operator of a product business, so we’ll conduct a weekly review. And since the trend of our order volume is paramount, we want to see this as a monthly bar graph. I'd like this on a dashboard with other order related numbers so it's one thing to check and scan.
2. Backorders (with overnight shipping)
Review Frequency: Immediate
Display Format: Single Order or Table of Orders
Delivery Method: Push
In this case, Ruth needs to know immediately when an express order cannot be fulfilled, so we'll set up an email or text alert with the order number to the "problem solver" on her team. As her order volume grows, we may need to move this to a 2x per day emailed report if the single order texts become too frequent to manage individually.
3. Returns to Process
Review Frequency: Daily / Immediate
Display Format: Dial Graph
Delivery Method: Pull / Push combo
To ensure that returns are not piling up and customers receive their refunds in a timely manner, we'll set up a dial graph on her Operations Dashboard. It will show the number of returns waiting to be processed along with a warning limit that sends an alert to her warehouse supervisor when 40 or more returns are waiting. As an escalation path, Ruth will get an email at 50.
4. Return Rate
Review Frequency: Monthly
Display Format: Monthly Line Graph
Delivery Method: Pull
We want Ruth to understand if her return rate is increasing or decreasing, so we'll put together a line graph of the percent of items returned on a rolling monthly basis. To keep our main daily Ops Dashboard clean, let's put this on a secondary Operations Dashboard that is reviewed at our monthly ops performance meeting.
Conclusion
As you can see, there are quite a few variables to run through when determining when and how to extract and present numbers from the cauldron. And as Ruth's business and team grow, we need to re-evaluate our formats, frequency and audience to ensure that we're always giving them the numbers they need to be effective and efficient operators of the business.
At Bluprint, data analytics has become a much larger part of the value we provide to our partners that I ever thought it would. This is in part because, as an operator in some of my earlier startups, I lacked access to the numbers I needed to make optimal decisions for our organization. I know how important it is for even the smallest product startup to know their numbers, so we now include Data Analytics as part of our Operations Partner Program, in addition to offering it as a stand-alone product. We're only successful if our partner companies are, and knowing your numbers is certainly one of the keys to their success.