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Your organization has been busy. You’ve been focusing on acquiring representatives and customers, increasing sales, decreasing cost without losing quality, building revenue and profitability, and outpacing the competition. While your organization has worked hard to improve operating efficiencies, you may begin to feel the need to analyze more specifics about what is happening in your business. For example, you may be wondering in what city your reps are performing best, or want to know the buying habits of your best customers. You might wonder what city represents your best sellers, or why a product seems to be struggling. You might have a lot of data, but not many useful reports that dissect that data. You might, like one company, be setting records for the amount of data one Excel spreadsheet can hold. If this picture describes you, it could be time to understand what business intelligence can do for you.
What Is Business Intelligence (BI)?
Business intelligence (BI) is a broad set of methodologies that bring very specific bits of information to you about your business, like those aspects mentioned above. For many years, the budgets that could afford good business intelligence were relegated to those large companies who had deep pockets and talented technical resources to implement the complex systems. Recently, with the power of the cloud, business intelligence has been making its way into medium- and even small-sized companies. Dresner Advisory Services, a Nashua, New Hampshire, company that focuses on the implementation of business intelligence, published a 2014 study indicating that BI usage has increased 53 percent since 2012. As more companies begin to understand the power of business intelligence, it is expected that this growth will continue.
The general definition of BI is that it focuses on a set of performance indicators that measure past performance and guide future business planning. It encompasses methods and tools that businesses use to analyze and understand the data that is important to them. When you start a direct selling company, you don’t have a ton of data to analyze of course, but as your company grows the collected data grows.
As this data grows, trends start to emerge that allow you to have control over key indicators within your business. Most software systems in use in small to medium companies collect all of this data in its raw state, which basically means none of it is presented in a meaningful report. For example, you may have all of the addresses of all of your customers and what products they purchased, but no process that can turn that data into an answer to the above question about what cities represent the best product sales. You might have a gut feeling that Cincinnati is your most popular city for Product X, but wouldn’t you rather know? BI is what allows you to let go of “gut feelings” and focus on hard facts, in order to make better future plans.
How do You Know When You Need BI?
- Your visibility into your business is limited – Your customer and representative base may have expanded greatly, but you aren’t sure which areas are the best recruiting opportunities.
- Your business people are having to become tech experts – Your staff has a job to do; their time may not be best spent focusing on learning how to program SQL (Structured Query Language).
- Your company is using “gut feelings” to guide business decisions – Sometimes gut feelings are accurate, but better to know the actual facts to eliminate wasted money and opportunity.
- You don’t know what to change or where to invest – You don’t know where things are falling apart and where they are gaining momentum. With BI you know exactly where to focus your attention.
- You are hearing multiple versions of the truth – Different departments may be reporting different stories of the same truth and arguing about who has the right data.
BI and the Medium- to Small-Sized Organization
The bottom line is that BI helps your company turn raw data into meaningful information that you can act upon. This information allows your team to make better-informed, timely decisions. Having this view allows medium- and small-sized companies to compete with or even have an advantage over industry giants since they are more nimble and can implement data-driven business decisions faster.
BI can be used by a medium- or small-sized organization to:
- Determine what city has the most reps or customers
- Discover what product has the most sales and what products are most often combined in an order
- Determine the buying patterns of customers to make decisions about purchase incentives
- Determine where your marketing money is best spent
- Determine the best places to hold your convention or conduct educational trainings based on rep concentration and activity
- Determine your average party sales
- Combine multiple growth statistics to determine what products are your best sellers
- Adjust the manufacturing production cycle and supply chain logistics to reduce inventory costs based on previous orders
- Find patterns and trends in recruiting, rank performance, turnover and advancement
The above list contains just a few examples of the meaningful data that can be accessed with BI. Your ability to analyze and utilize data can improve your overall decision making. Better decision making leads to better performance, and better performance leads to meeting your goals.
Collect the Data in a Usable Form
Write down a list of all the areas in which you want more data and visibility. In the case of BI, there are a lot of factors in play. If you have a back office provider, speak to them about their business intelligence solution. They should have the ability to allow you to comb through your data as well as provide you with some easy starter templates for reporting. If you have your own data, you may have a little more work to do to organize and catalog it.
Within your back office system, there is a ton of raw data, but raw data is not very useful. It mostly appears as an abundance of numbers with very little explanation. Most of the data you have is not helpful, and finding the necessary data can be very challenging. The ability to gain value is like searching for a needle in a haystack. However, business analytics can help you use data to your advantage. Using the right tools, you are able to apply a magnet to the haystack and draw out the needles. Once you figure out those questions you want to ask, you have to understand what data you need to answer those questions. This will require some type of data catalog to work from. If one does not exist it will need to be created.
You will need to know:
- What data is available? (Fields, table, object and properties)
- How do you access the data? (Downloads, API, directly from the database?)
- How regularly can your data be updated? (Once a day, hourly?)
If there is a gap between the information you need and the information that is available, you will need to do an analysis and determine how you can get the information you need, whether from an internal or external source. How you jump into your data will be determined by how your back office is set up.
Everyone has data but how well it is set up for BI is as individual as your company. Some organizations have all the data they need but there is no definitive source for how it is set up, who owns it, where it is or how it can be accessed. Other businesses have strong data warehouses that catalog all the data in extremely organized systems.
Analyze Your Data
So you finally have the right data collected, now what? Once you have collected it into a usable form you need to apply a BI tool to analyze it. Typically this means turning the data into tabular forms. You also need to be able to store this data. Databases such as Microsoft SQL, Oracle, MySQL and many, many more can meet your needs.
Data Scrubbing and Normalization
You have your data, and now you will be very excited to see what it says! Before you get too excited you need to understand nothing is as easy as you want it to be. Most data sets have problems. Data comes from a lot of people typing into computers. The computer records every misspelling, duplicate, missing data and every other issue known to man. The first step once you have data is to scrub the anomalies. Typically this is done by an extract tool.
I know that was a lot of dry technical stuff, but it is incredibly important to understand. The old “garbage in, garbage out” adage is very true, and you want your data to tell you the right information. Once you get your data clean, you can then begin to use a variety of tools to analyze it. Some tools are as simple as PowerPivot in Excel, and others are more complex. The tools will allow you to dissect the data in ways that provide you clarity and information. Most answers are not immediately clear, but over time you will be able to pull that needle out of the haystack.
If after reading through this, you decide you do not have the staff, time or patience to do this type of work, there are many companies that provide this service. Costs have come down as accessibility has gone up, but it is an investment. Ultimately, you will have to determine if it is the right investment for your company. It is my belief that if it is done well, you will see a significant impact in your growth, and your ability for decision making will become stronger. The stronger your company, the better prepared you are for the growth that is headed your way.
Serena Ayscue is Executive Vice President of ByDesign Technologies. ByDesign offers a full suite of software products to service your growing direct selling company.