I’ve been reflecting recently on the wealth of information that businesses have at their disposal and the challenges this brings. I say challenges as sometimes it can feel like there’s so much information available that it can be difficult for SMEs to know how to make best use of it.
The reality is that information can be worth its weight in gold, but only if you have the right information and use it to support your strategic and operational decisions.
Information collection and analysis is something which big businesses do well, often having teams in place just focused on this, while many small businesses struggle with it, not looking beyond the top line information which they and their accountants need for financial reporting and ensuring the business is profitable.
Whilst understandable in a small business when the pressure is on to deliver, this can be dangerous. Not understanding how the top line is made up can lead to poor alignment between the limited resources businesses have available and the areas which are critical for the bottom line or have the most potential to grow. It’s essential to spend time digging into the information available to gain a clear understanding of your strengths, weaknesses, opportunities and threats.
We are not talking paralysis through analysis here. Getting the right information together and making it work for you can be the difference between success and failure, between doing ok and reaching the heights of your ambitions for your business.
The starting point is to identify what underpins your current and future profitability and to ensure you have the information you need to enable you to make good decisions for the future of your business – even if this means gathering even more information.
So, if you don’t already have this to hand, how do you go about identifying and pulling this information together?
Firstly, think about the way in which your business can be broken down: by products/service, by customer groupings, by channels to market and so on. Then think about whether these can be sub divided and/or combined in a way which provides a tighter focus.
Now consider what is important within the areas you’ve identified: Volume and/or value? The level of repeat business and/or new? Business which you didn’t secure or have lost? Costs and or profitability associated with an area? Customer satisfaction or level of complaints/returns? Are some products, customers or channels more important than others? Response to different promotional activity? The number of potential customers you can target?
Check: Do you have the information you need to measure what you’ve decided is important? If not, reassess how important this information is. If you definitely need it then take steps to gather it. This could be done by making changes to the data collected through your existing systems and procedures, by introducing new ones or through a piece of ad hoc research. If it’s just nice to know, then park it.
So as not to be overwhelmed, you need to decide on how often you should look at the information and it won’t be the same for every measure you’ve identified. Depending on your business, this could mean looking at some information every day. Almost every business should be viewing information on the most business-critical areas on a weekly basis, probably with a more detailed review each month or quarter. Once a year, most usefully linked to your financial year, you should build a picture from the bottom up so you have a detailed understanding of how your performance has been achieved.
To make the information meaningful, you need to have something to compare it to. This could be your own performance over the same period in previous years, it could be the average over a set period, it could be the targets you have set for your business, or it could be some industry data or benchmark you want to achieve.
To help you read the information, develop a regular report format which will quickly show you what’s happening. Doing this will minimise the time you need to spend on viewing the reports as they become familiar and you know what you’re looking for. Graphs and charts are great for this and are often a standard part of Customer Relationship Management (CRM) and sales/ production management packages. Alternatively, if you just have raw data, Excel is very flexible and offers great charting options.
Finally, you need to decide whether you want to add any narrative to the report. If you’re comfortable with reading charts and tables then you may not need it, but if not then getting someone who can add relevant commentary and highlight points of note will be helpful. Ideally this will be someone who is aware of any changes you have made within the business which could have an impact on the figures. This doesn’t need to be the same person as the one who compiles the information. It will depend on the skills of the people you have.
With your key information identified, measured and reported, you will have a good base on which to develop timely actions for the business.
One point I’d like you to remember when reviewing your key information. The temptation is to focus on where things are not performing as you’d hoped. That’s important, but you can learn as much from the things that are going well as those which aren’t. This is about both heading off challenges and identifying and grasping opportunities.
What’s this got to do with marketing?
It’s still often the case that when you say to people that you work in marketing they immediately assume that you’re involved in selling advertising, that it’s about promoting a company, a product or a service through media coverage and social media, that you produce flyers or brochures, run events and promotions. Whilst marketing involves all these things, they are simply delivery mechanisms.
Your marketing should be helping to define what you offer, who you offer it to, what you say, how and where you say it. To be effective and impactful your marketing must be built on a broad base of knowledge. This includes the key information which I’ve described above as well as a detailed understanding of your customers, your competitors and the market in which you operate.
Whether your marketing is being delivered in-house, or by an external agency or consultant, they will need to have the right information at their fingertips and be using it to inform what they do. Resources are always an issue, there’s never enough time or money to do everything you want, so you need to focus what you have, otherwise it’s unlikely to deliver best returns for you.
So if you’re not doing it already, now is a great time to start using all that information to help you achieve greater success for your business.
If you would like to chat through the ideas in this post or need help with identifying, gathering or analysing the key information which will benefit your business, please get in touch